Kevin Rudd (Griffith, Australian Labor Party, Prime Minister) Share this | Hansard source

I can inform the parliament that the Reserve Bank of Australia has just announced that it will cut interest rates by 0.25 per cent. This, the first interest rate cut in seven years, will take the official cash rate down to seven per cent and will provide some modest relief to mortgage holders right across Australia. The government knows that there is still much, much more to be done in helping Australian families dealing with cost-of-living pressures.

For the average mortgage, today’s interest rate cut will put nearly $600 each year back into the family budget. I am advised that for 740,000 first-time buyers this will be the first time they have ever experienced an interest rate cut. The government expect the banks to pass on this rate cut because, given the high levels of profitability for Australia’s commercial banks, we believe that they have a responsibility to do so. If you pass on interest rate hikes, you have a responsibility also to pass on interest rate cuts.

This interest rate decision is welcome, but it is not a day for celebration. Interest rates took a long time to rise, and they will take a long time to come back down—and the road will be a very uneven one on the way through. That is why the government is committed to continuing a policy of responsible economic management designed to make it as easy as possible for the Reserve Bank in the future to reduce interest rates further.

I would add one final point. There will be more tough times ahead as we continue to battle the economic turbulence abroad and high inflation and interest rates at home. That is why the government is absolutely committed and determined to prosecute its program of responsible economic management into the future—a program of long-term economic reform based on an education revolution, based on our reforms to infrastructure and based on our program of business deregulation—because the government is determined to steer the Australian economy through the difficult times which lie ahead.

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