Wayne Swan (Lilley, Australian Labor Party, Shadow Treasurer) Share this | Hansard source

What if they were to take the Prime Minister’s advice seriously? They would flood the market with land. What would be the outcome of that? There is a report from the Institute of Public Affairs. The Prime Minister has taken a shine to this report. He has been quoting from it all week—quoting in a way which I believe does not reflect the true facts—to back his argument. But this report makes it very clear that if there was a mass release of land to the market it would have a downward impact on prices for all existing homeowners. His solution, in effect—particularly in the outer suburbs of our cities—is to dramatically reduce house prices. People who are suffering from negative equity at the moment would be worse off, as the member for Prospect spoke about in his remarks.

What the Prime Minister is actually talking about would have a dramatic impact on the current median prices in different Australian capital cities. If you go to page 64 of this document you will see the median prices in our capital cities. On page 67 of this document you will see the expected median house price after the market was flooded with more land. It is sober reading. I know now why the Prime Minister does not quote the rest of this report. If you were to follow through—and I do not accept these conclusions necessarily from the IPA—you would see a reduction in the median house price in Sydney of 67 per cent. This is the report the Prime Minister is quoting from to validate his argument about what is going on in the housing market. This will be a report that will haunt our Prime Minister. As I said, Labor is happy to have a balanced debate about this matter. Land is part of the equation; we do not dispute that for a minute. But what we know is that seven interest rate rises, three since the election, is a huge factor in the new interest rate reality.

Why has the government ramped up this argument about land only in the last couple of weeks? I will tell you why. On 19 August the Governor of the Reserve Bank blew the whistle on the dishonesty of the Howard government and the lie of the last election campaign. They went to the last election campaign saying they would keep interest rates at record lows, and people in the western suburbs of Sydney and across this country went out and borrowed money. They said that the Prime Minister took personal responsibility for this. They believed him and now they are in trouble. On 19 August Peter Hartcher in the Sydney Morning Herald interviewed the Reserve Bank governor—perhaps the most independent, credible commentator and authority on interest rates not just in this country but around the world. His standing is that high. What did he say on 19 August? He said that the Prime Minister’s claims during the election campaign were incorrect and not plausible.

That explains why we have had this frenetic activity over the last couple of weeks trying to find a new scapegoat for rising interest rates because the Reserve Bank governor blew the whistle on the Prime Minister and put a torpedo into his credibility when it comes to interest rates particularly and economic management more generally. That is why we have had that activity. He has exposed our Prime Minister as the doyen of deception and the master of misinformation. That is why we are seeing these answers in this House from the Prime Minister, not only this week but over the previous two weeks of sitting. They are acutely embarrassed by what the Reserve Bank governor had to say.

Of course, before the Reserve Bank governor entered the scene, we had all of the other scapegoats rolled out when the interest rates went up in August and we had them back in May. If you want an example of someone being terminally out of touch in this government, try the Treasurer. The Treasurer said that interest rates with a single digit were low. He does not understand the new interest rate reality. And in August when interest rates went up the Prime Minister and the Treasurer were blaming bananas. They went out and said, ‘Oh, it’s the fault of bananas.’ We have had all of these other deflections; we have had them out there talking about the history wars, about facts and figures. Of course, when we pointed out to the Prime Minister that there had been a certain Treasurer who had had interest rates at 22 per cent he lost his memory. We have had all of these deflections because the government knows there is pain out there and it is not facing up to the responsible economic decisions that this country requires to put downward pressure on inflation and on interest rates. (Time expired)

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