John Howard (Bennelong, Liberal Party, Prime Minister) Share this | Hansard source

I will be interested to know whether it is the policy of the Australian Labor Party, if it wins office, to abolish any business bankruptcies. The reality is that from time to time firms do get into difficulty; it is also the case that, sadly, from time to time, individual households do. I take the opportunity of counselling people against taking on obligations beyond their capacity to repay.

But the truth is overwhelmingly that the problem of housing affordability is not a problem of interest rates; it is a problem related to the disproportionately large increase in the price of housing over recent years. We all know that. The Governor of the Reserve Bank knows that and any sensible analysis will tell you that. People are borrowing more because interest rates are low. When interest rates go high, people will borrow less. It is axiomatic that if interest rates are low people will borrow more and take on greater obligation; that is happening and, as a consequence, some of them, sadly, will get into difficulties.

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