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Tuesday, 2 December 2008
Page: 14

Senator WILLIAMS (2:00 PM) —My question is to the Minister representing the Treasurer, Senator Conroy. I refer the minister to the fact that there has been a two per cent reduction in official interest rates since 3 September this year and that most small businesses and farmers have received only a one per cent reduction. What steps is the government taking to ensure the full cut of two per cent, plus whatever the Reserve Bank decides today, is passed on to the vital small business and farm sector?

Senator CONROY (Minister for Broadband, Communications and the Digital Economy) —I thank Senator Williams for his question. After 10 interest rate rises under the Liberals the Rudd government wants to see interest rates as low as possible. At times like this it is critical that fiscal policy and monetary policy are working in tandem to strengthen the Australian economy and to protect households. We do not comment on future movements in rates; that is a matter for the independent RBA. However, let me be clear: we understand that families, pensioners and small business operators are under pressure from the global financial crisis. That is why we have acted early and decisively to strengthen our economy. It is also why we wholeheartedly welcomed the substantial rate relief delivered by the Reserve Bank in recent months. We have also delivered the Economic Security Strategy, and that relief was vital for families and vital for the strength of our economy. For those reasons we expect banks to pass on any future official interest rate cuts in a timely manner.

Australians can take heart from the fact that both the government and the RBA are doing their bit to strengthen the Australian economy and protect jobs in the face of the global financial crisis. We will not hesitate to take further action to strengthen growth and limit the impacts of the global financial crisis. Already, the Treasurer today and yesterday has made it abundantly clear that we expect the full benefits to be passed on to— (Time expired)

Senator WILLIAMS —Mr President, I ask a supplementary question. How does the government expect businesses, especially in rural communities that have suffered up to seven years of drought, to maintain employment levels and remain financially viable if the full reduction in interest rates is not passed on to the borrower?

Senator CONROY (Minister for Broadband, Communications and the Digital Economy) —I think that Senator Williams and the government are at one. It must be another split in the coalition! Clearly, those opposite me are happy to sit on their hands and do nothing but,  Senator Williams, you are prepared to be proactive like this government, and say, ‘We want those interest rate reductions, if that is what is to occur, to be fully passed on.’ Unlike those opposite, this is a government that intends to act decisively and quickly to ensure and protect Australian families, small business and the rural sector. That is why we have been prepared to act so quickly and we will continue to put pressure and expect and demand that, if there is movement today, that that is fully passed on to Australian families, small businesses and the rural sector. But, unlike many of those opposite, Senator Williams— (Time expired)

Senator WILLIAMS —Mr President, I ask a further supplementary question. Given that taxpayers have underwritten our banking system, surely it is incumbent upon the government to take firm action and show real leadership to ensure the survival of our private sector. So I ask again: will the government ensure fair treatment for our small businesses and farmers from the banks, rather than deliver just spin and weasel words?

Senator CONROY (Minister for Broadband, Communications and the Digital Economy) —As I said, after 10 interest rate rises under the Liberals this government wants to see interest rates as low as possible. The government has called on banks to act competitively and responsibly. We expect them to behave fairly to all sections, not just the rural sector but small businesses and Australian families. We have made it clear that this includes credit card users. I understand that some financial institutions are yet to pass on the RBA interest rate cuts to credit cards and many personal loans. The government recognises that the risk profiles of credit cards and personal loan products are different, but it is important that the RBA rate decreases are passed on just as quickly as the rate rises. Credit cards are offered by a broad range of bank and non-bank providers— (Time expired)