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Monday, 11 May 1987
Page: 2892

Mr PORTER —I refer the Prime Minister to the figures released yesterday by the Real Estate Institute of Australia showing that average home loan repayments in Australia have increased by a staggering $281 a month under the Hawke Government, from $350 per month in the March quarter of 1983 to $631 per month in the December quarter 1986. Given that the Prime Minister's 1984 Australian Labor Party policy speech contained the pledge to bring home ownership within the reach of ordinary Australians, I ask: What excuse does the Prime Minister offer Australian families for this massive increase in the cost of home ownership?

Mr HAWKE —At the outset I remind the honourable gentleman again of the correspondence that I read to the House last week from the Housing Industry Association, which said, quite simply, that the Association and its 16,000 members owed a debt of gratitude to this Government-and that was very correct. I suggest that the Housing Industry Association could speak with more authority in this area than could the honourable member who asked the question which indicated his jaundiced views.

However, directing myself to the question that the honourable member asked, I must say that in interpreting the statistics that were released on Sunday, to which he referred, it is important to note that the increase in the so-called affordability index over the course of 1986 has been substantially overstated, and let me explain to the honourable member, if he will listen, why that is so. It has been substantially overstated because the banks stopped rationing loans after our April 1986 package, which means that borrowers no longer have to top up their traditional mortgage from other sources. For example, the Australian Bankers Association says that proper accounting for so-called cocktail loans would more than halve the published growth of the average loan size, on which, I remind the honourable member, the affordability index is based.

Moreover, new home borrowers on medium incomes have now received the benefit of a tax cut worth $10.30 a week. As I have explained on a number of occasions in this House, the fact is that interest rates have had to be kept high so that Australia could adjust its internal economic operations to the fact that we have had $9 billion wiped off our national economic capacity. In this respect not only would the honourable gentleman who asked the question but also the Leader of the Opposition do well to take a lesson from, of all people, the Premier of Queensland-who has got this right if not much else. I remind the honourable gentleman and the Leader of the Opposition of what the Premier of Queensland said about this question of interest rates. His comments were reported in the Bulletin of 31 March this year. He said:

You can't force interest rates down arbitrarily. You can't do that because it would be a disaster.

I will say this to the honourable member for Maranoa: You can take some comfort that he has got something right at least; he is absolutely right in that regard.

The fact is that this Government is taking the necessary steps to create the condition within which a sustainable fall in interest rates can occur. We have addressed ourselves to the longer term questions of the restructuring of Australian industry to give it a more diversified export orientation. We have taken, and will continue to take, those steps which are necessary to reduce the public sector borrowing requirement as a proportion of the gross domestic product and, as honourable members will find when my colleague the Treasurer brings in his statement on Wednesday night, further substantial steps will be taken in that direction. I had hoped that there would be some joy on the other side of the House, although I doubt it, in noticing that these policies are already bearing fruit.

Since mid-February official yields have fallen 3 percentage points for the shorter maturities and 1 1/2 percentage points for 10-year bonds. The major bank prime rates are down by up to three quarters of a point, to 17 1/2 per cent, with some banks edging lower. I also remind the honourable member that the Civic Advance Bank Ltd and Citibank Ltd have announced lower mortgage rates.

For all these reasons I and my colleagues in government are cautiously optimistic of further falls in the general level of interest rates. Insofar as the record of this Government is concerned in making housing available for the people of Australia, we have an extremely solid record of achievement which stacks up so much better than anything to the Opposition was ever able to do. I remind the House of those facts. There has been a 42 per cent real increase in public housing funds. By June of this year we will have enabled the best part of a quarter of a million home owners to be assisted into home ownership by the first home owners scheme. Also the honourable gentleman should recall that the latest package includes a wide eligibility for the FHOS and it also includes measures to release up to $900m of savings bank funds for housing. That is what we have done in housing, significantly a better record than anything the Opposition was able to do. We make no apologies for the fact that high interest rates have been necessary during the last year to meet the economic crisis imposed from outside on this country.

I bring it all together by saying that a body which knows something about housing in this country, the Housing Industry Association, which is able to speak with authority on this issue, makes the comment directly to us that it and its 16,000 members owe a debt of gratitude to this Government for the nature of its housing policies. It is an informed judgment. It is a correct judgment.