Nick Minchin (SA, Liberal Party, Minister for Finance and Administration) Share this | Hansard source

What I know is that, under Labor, interest rates hit a record 17 per cent. Under Labor, interest rates averaged 12.75 per cent. When we came into office, interest rates were 10½ per cent. Under our government, interest rates have consistently been lower than they were under the former Labor government, who ran massive budget deficits, built up the debts of this country and squeezed savings in this country. This put pressure on interest rates and led to the collapse of businesses all over the country and unemployment in the hundreds of thousands. That was the record of the Labor government.

Our whole strategy through our fiscal policy is to ensure that we put no undue pressure on interest rates as a result of our management of the economy and our management of public finances. The record speaks for itself. Interest rates have been consistently lower under our government than they ever were under the former Labor government. We are proud of that record, and that record will continue.

It is of course true that the Reserve Bank, by virtue of our instrument when we came into office, is an independent entity and runs monetary policy independently. It has done a superb job and is widely regarded throughout the world for its conduct of monetary policy in this country. Last week, the Reserve Bank raised the official rate by one-quarter of one per cent, taking account of the strength of the global economy and the impact of that on the Australian economy. Australia, as a commodity supplier, is benefiting enormously from the very strong global economy, particularly the economies of China and India, and that is of course feeding through to the domestic economy, which is running at a strong rate.

It is a fact that the Reserve Bank thought it best to—what you might colloquially describe as—‘touch the brakes’ to ensure that the economy did not overheat and that we did not exceed the two to three per cent band on underlying inflation. Our job in the budget ahead of us tonight is to make sure that there is nothing in that budget that puts any further undue pressure on interest rates. Indeed, the Reserve Bank has made it abundantly clear that there is nothing in relation to fiscal policy that is having an effect on its conduct of monetary policy.

As to so-called ‘nation building’, we know that the Labor Party wants to rort the Future Fund by using it for its favourite pet projects and as a slush fund to buy its way back into office. We will not allow the Future Fund to be used like that. Consistent with our responsibilities as the federal government—not a state government—we have invested significantly in road and rail and infrastructure. I ask the opposition to have regard to the budget tonight, where they may see further initiatives in that regard. We have a major AusLink program which has led to a very big increase in our investment in road and rail, in particular, in this country to improve our transport networks. We have invested substantially in skills, innovation and education. We believe we are playing our part in ensuring the productive capacity of this economy and we are ensuring that whatever we do puts no undue pressure on interest rates.