Grant Chapman (SA, Liberal Party) Share this | Hansard source

Two issues have been raised by Senator Sherry this afternoon following on from question time. The first of those is mortgage interest rates. He began his remarks by completely misrepresenting the position of the government at the last election when he claimed that the government had said that interest rates would not rise under this government. That is absolutely false. What the government did claim—and claimed quite justifiably—was that interest rates would be higher under a Labor government than they would ever be under a Liberal-National Party government. That is evident from the history of interest rates in this country.

Under the last Labor government, we saw mortgage interest rates rise to 17 per cent and borrowings for business purposes at times at 24 per cent. During Labor’s entire 13 years in office, home loan interest rates averaged 12.75 per cent. When we came to power in 1996, they were still high at 10.5 per cent. In contrast, home loan interest rates today, even with the recent quarter per cent rise, are at 7.55 per cent—a dramatic and substantial improvement on that dreadful record of Labor’s economic management which led to those enormous interest rates that people experienced between 1984 and 1996.

In fact, if home loan interest rates were now at the average level that they were at under that Labor government, home owners with an average new home loan would be paying $215 a week more than they currently pay. One of the reasons interest rates were higher under Labor—apart from general economic mismanagement—was that they left the federal budget some $10 billion in deficit and they left an accumulated federal government debt of $96 billion. The government was in the market borrowing money to pay that $96 billion of accumulated debt. Of course, inevitably, that puts upward pressure on interest rates because they are in the market competing with home buyers and businesses that want to borrow money to sustain their activities as well. In that way, that puts a competitive upward pressure on interest rates.

Over the last 10 years, as of April of this year, that $96 billion has been eliminated by the Howard government as a result of 10 years of hard work and effective financial management. The Reserve Bank said that the reasons for the decision to lift the official rate by a quarter of a per cent were primarily international factors relating to the outlook for growth internationally and were not domestic inflation, which is well under control and within their two to three per cent band. They also said that, with a surplus between a half and 1½ per cent of GDP, there is no upward pressure on interest rates flowing from the government’s fiscal settings. So, as I said, the rise in interest rates to the extent it has occurred is due to international factors. The present government’s position with regard to interest rates and their record with interest rates is far superior to that of the previous Labor government.

Let me turn now to the issue, which Senator Sherry also raised, of Westpoint and the disastrous situation there as far as investors are concerned. Senator Sherry has sought to use this to attack commission based selling of financial products. That is not the issue here at all. What is the issue, of course, is the ethics and honesty of the particular people involved with the Westpoint company and marketing their financial products.

We have legislation in place, which ASIC is applying, that will bring those people to book, but to use this particular issue to attack commission based selling when it is conducted by ethical and honest people is simply to use a particular case to further Labor hostility in general, and Senator Sherry’s hostility in particular, towards commission based selling, which is a legitimate activity when people do it on an ethical and honest basis.

In relation to Westpoint, as I said, ASIC has taken action against the perpetrators of the scheme which has cost people so much in lost investments. They are helping people to deal with Westpoint on a number of fronts and they are also working to bring charges against those who have been responsible for the financial losses suffered by investors. As long ago as 2003, ASIC started working in relation to this issue of Westpoint. (Time expired)