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Transcript of doorstop interview: Parliament House, Canberra: Ken Henry; interest rates.



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Wayne Swan MP Federal Labor Shadow Treasurer

TRANSCRIPT OF DOORSTOP INTERVIEW, PARLIAMENT HOUSE CANBERRA E & OE - PROOF ONLY

SUBJECT: KEN HENRY; INTEREST RATES

SWAN: The Howard Government’s claim that it can be trusted to manage key economic challenges has been completely demolished by its senior economic advisor, Dr Henry. If the Government’s most senior economic advisor doesn’t trust John Howard and Peter Costello, why should the Australian people trust John Howard and Peter Costello?

I’ll just remind you of what Dr Henry had to say this morning. All of us would wish that we had been listening to him more attentively over the past few years with regards to water and climate change. There’s no doubt that policy outcomes would have been far superior.

Essentially the message here from the senior economic advisor to John Howard and Peter Costello is that the Government has been putting its short term political interests ahead of the national interest and that’s the problem.

Now I just wanted to say a couple of words also about interest rates. I think Australian families today will breathe a sigh of relief at the decision of the Reserve Bank. But it’s odd isn’t it? John Howard once upon a time used to have a lot to say about interest rates. In fact he said before the last election that he would keep interest rates at record lows.

Four interest rate rises later, Australian families are now paying a higher percentage of their disposable income in mortgage interest rates than they did many years ago. Under Mr Howard they are paying a higher percentage of their income than they did under Mr Keating. Mr Howard has stolen Paul Keating’s interest rate crown.

But you listen to him on the radio this morning you see that he just doesn’t understand it. He simply doesn’t walk in the same shopping aisles as the average Australian. People are struggling to pay their mortgages and they are under tremendous financial pressure.

That’s why we need the Howard Government to get back to the main game and put some policies in place which put downward pressure on inflation and downward pressure on interest rates. And that’s going to be the test of Peter Costello’s next Budget - the extent to which it puts downward pressure on inflation and therefore downward pressure on

interest rates in the long term because we’re not out of the woods yet.

Journalist: Now that we’ve learned today we’ve had interest rates put on hold, what impact will that have on your campaign leading up to the federal election?

SWAN: It’s got nothing to do with what it means for the Labor Party. It means a lot for Australian families who are paying the highest percentage of their disposable income in mortgage interest repayments in Australian history - higher now under Mr Howard than under Mr Keating.

Australian families are struggling to meet their mortgage interest repayments in many parts of the country, so they’ll be very relieved today that there’s been no change. But the pressure is still on. That’s why we need John Howard and Peter Costello to stop playing their silly political games and running their scare campaign and get back to some strong economic management by putting downward pressure on inflation and downward pressure on interest rates.

We need them to bring forward a modern economic agenda which lifts productivity by investing in education and skills, putting in place a modern infrastructure and doing something about innovation.

Journalist: (Inaudible)…. say that today’s decision to hold interest rates is the sign of a strong Australian economy. Doesn’t that take the sting out of your challenge leading up to the election?

SWAN: We’ve got a substantial problem out there and that is that capacity constraints within the economy are putting upward pressure on inflation and upward pressure on interest rates. And all sorts of bodies have been calling for action from the Howard Government to ease those capacity constraints so we can put downward pressure on inflation and downward pressure on interest rates.

John Howard and Peter Costello have been playing politics. They haven’t been putting in place the long term policies which put downward pressure on inflation and that’s what Dr Henry’s speech today shows.

The Government has been putting short term politics ahead of long term policy and one of the consequences of that has been that the inflation genie is out of the bottle. Core inflation is too high and that’s why we have pressure on interest rates.

We need the Howard Government to get back to the main game of putting downward pressure on inflation. That’s the only long-term way of putting downward pressure on interest rates.

Thanks

ENDS Wed 04 Apr 07

Contact Matthew Coghlan: 0415 098050