Mike Symon (Deakin, Australian Labor Party) Share this | Link to this | Hansard source

My question is to the Treasurer. Will the Treasurer inform the House of the decision taken by the Reserve Bank board today?

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

I thank the member for his question. I can inform the House that the Reserve Bank has just announced that it will be reducing the official cash rate by 100 basis points to 4.25 per cent. We join with the families and the businesses of the nation in welcoming this very substantial relief. This is a vital rate cut from the Reserve Bank, delivered at a time when all our joint efforts are directed towards strengthening the economy and protecting Australian jobs. For these reasons the government does expect the banks to pass this on in full. Decisions taken by the RBA since September can give savings of up to something like $600 a month for families with a $300,000 mortgage.

I am pleased to say that I have just been informed that the Commonwealth Bank has just announced that it will be passing on the RBA rate cut in full. This means that someone with a $300,000 mortgage at the Commonwealth Bank will receive a monthly saving on their mortgage of $193 per month. This is certainly welcome news for all of those who have a mortgage with the Commonwealth Bank.

With this cut in official interest rates and the Economic Security Strategy that we have put in place and those payments coming on stream this month, monetary and fiscal policy are working together to give relief to families and to protect jobs. I would just like to quote from the Reserve Bank’s statement, which said:

Together with the spending measures announced by the government, and a large fall in the Australian dollar exchange rate, significant policy stimulus will be supporting demand over the year ahead.

So what we have is fiscal policy and monetary policy working in tandem to strengthen the Australian economy. That is why the government took early action. That is why the government took decisive action to support Australian families and businesses in the context of the global financial crisis. This means that all arms of policy are directed at buffering this country from the worst that the world can throw at us. That is why strong action and early action are so vital and the government will not hesitate to take further action should that be necessary.

Luke Hartsuyker (Cowper, National Party, Deputy Manager of Opposition Business in the House) Share this | Link to this | Hansard source

My question is to the Prime Minister. Prime Minister, the standard interest rate charged by the big four banks ranges from 19.24 per cent to 21.14 per cent on credit cards. Given today’s reduction in the cash rate to 4.25 per cent, what decisive action is the government taking to ensure that credit card holders benefit from the reductions in the cash rate?

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

In response to the honourable member’s question, it is important that the banks act to pass on interest rate cuts to the maximum number of customers using the maximum range of credit instruments. That is absolutely the case. The honourable member should reflect on the historical record of the credit card rates during the period his own party was in office. But, then again, the facts can be very discomforting.

This government, as the Treasurer has just indicated, welcomes the statement by the Reserve Bank. It represents a significant further easing in monetary policy. As the Treasurer has just indicated to the House, what we have now is monetary policy and fiscal policy acting in order to stimulate the economy. The government’s policy and the nation’s policy is clear: we are confronting a global financial crisis that is becoming a global economic crisis and this government is determined to act ahead of the curve and to act in partnership with monetary policy to do everything within our power to support growth, families and jobs into the future. That is our policy; what is yours?