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Tuesday, 17 September 1996
Page: 3519

Senator COONAN —My question is addressed to the Leader of the Government in the Senate and relates to the budget. Over the last few days housing affordability results and figures from the Federal Office of Small Business have shown how home buyers and small business are benefiting from lower interest rates. The government's budget aims to increase national savings and cut Labor's legacy of debt to take pressure off interest rates and to help all these groups and encourage growth. Despite this, Labor is proposing to sabotage the plans to reduce the debt it created—more than $7 billion. What will be the consequences if its proposals succeed?

Senator HILL —I welcome the question from the honourable senator because it's more good news for Australia, and a further demonstration of good government in effect. Yesterday, the Real Estate Institute of Australia released figures showing that Australians on average are now spending 28 per cent of their household income on home loan repayments compared with 30 per cent this time last year. Furthermore, last week's housing finance figures showed that the number of new loans approved in July leapt by 16 per cent. So housing affordability has improved and the home loan take-up rate has increased. Australian home owners and would-be home owners are benefiting under a lower interest rate policy. That is the first point.

The second point is that having reduced interest rates is good for small business and small business will also applaud the policies of this government. The Federal Office of Small Business reported on Friday that small businesses across the nation are expected to save around $110 million through cuts in variable interest rates alone. Madam President, you and all honourable senators would know that nothing is more important to small business than keeping interest rates low. It provides the capacity to grow, make profit and employ more Australians.

I remind honourable senators that the first official reduction in interest rates in three years came after this government got into office and the trends are therefore positive. The trends are positive because we are the first government that has been prepared to take hold of public expenditure, reduce it and take pressure off interest rates. Therefore, small business and home owners can be confident about the future. It is interesting to see that today's ABARE report picks up the same sentiment.

Senator Sherry —What about low inflation?

Senator HILL —Listen to this, Senator Sherry. ABARE said:

The prospect of further reductions in Australian interest rates in the short term has improved given the outlook for continued low inflation and fiscal tightening announced in the 1996-97 budget.

In other words, giving the Australian government, the coalition government, full credit for the improvement that is occurring and further improvement that is likely.

It is important that these benefits are not put in jeopardy in this Senate by the opposition parties in this place voting down significant parts of the budget and therefore undoing the good work that is being done by this government. I simply draw the opposition's attention to the sentiments of people such as Ian Salmon of the Business Council of Australia who said, `You can be pretty sure that if the savings side of the budget does not get up, that's going to put pressure on interest rates.' In other words, if you vote down our budget, that puts pressure on interest rates to go up. The same sentiment was expressed by the National Farmers Federation; not surprisingly by the Real Estate Institute; and also the Chamber of Commerce and Industry.

So the trend is in the right direction. It is important that that trend continues. But it will only continue if the opposition parties in this place also recognise their responsibility and support the budget and the fiscal tightening that we have put in place.