Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

Today 9.1 per cent of household finances are dedicated to mortgage repayments—that is some 50 percent higher than the peak reached under the Hawke-Keating government in September 1989. Australian interest rates are the second highest mortgage interest rates of all OECD nations. This is the new interest rate reality, and it is crushing the dreams of many people in Western Sydney seeking to become homeowners. It is crushing the expectations of those wishing to break into the home ownership market.

South-western Sydney is bearing the brunt of Prime Minister Howard’s broken interest rate promises. For many mortgagees, the great Australian dream is slipping away and those looking to break into the home ownership market of south-western Sydney are wondering if they will ever get the chance. While the government hides behind national statistics, the Prime Minister has promised to protect but has promptly forgotten those he referred to as ‘John Howard’s battlers.’

In south-west Sydney bankruptcies rose 27 percent in the year ended 30 June 2006. Mortgagee closures are on the way up. Recently I was advised by a series of real estate agents that mortgagee sales are at an unprecedented rate. The rising tide of financial stress is made worse by the fact that families face negative equity and are losing money on the sale of their homes. In Liverpool, property prices have dropped by up to 25 percent. Properties in Prestons, Hoxton Park and West Hoxton purchased for more than $500,000 are reselling for as little as $350,000. In Campbelltown, Lifeline Macarthur has noted a significant increase in the number of people seeking financial assistance and counselling.

A recent survey of Sydneysiders by the Wesley Mission found that four in 10 households were unable to draw on their savings or to redraw on their mortgages if they were faced with a large unexpected bill and that 15 per cent would find it difficult or impossible to meet an increase in household expenses of $40 a week. My own constituents report that increases in mortgage repayments and credit card debt repayment are crippling their household budgets.

The impact of rising interest rates is not quarantined to mortgagees and homeowners. Rising interest rates and a reduction in household spending are having an impact on small business. It is estimated that an increase in interest rates of one-quarter of one per cent rips more than $2 billion out of household spending, which is felt by small businesses operating in outer metropolitan areas. Every MYOB survey that has been undertaken since July last year has reported that the greatest concern of small business operators is interest rate increases. They know that an interest rate increase is going to be bad for their costs and is certainly bad for their revenues. The impact of rising rates on regions varies considerably, but it is really belting people in outer metropolitan areas. The University of Newcastle’s Centre of Full Employment and Equity recently noted:

The current wave of interest rate increases is projected to further damage this sector and regions (such as South-west Sydney) which depend highly on manufacturing employment.

Interest rates and the financial pressures faced by working families are impacting on people’s working lives, with one-quarter of employees not wanting to leave their current jobs because of the absolute risk to their financial security. So while this government boasts about its record and mischievously presents national statistics, aggregate figures and averages to create the illusion everything is going well, there are clearly severe structural problems emerging in the economy. It is time to take action to lock in the prosperity that we have gained through the mining boom— (Time expired)