George Campbell (NSW, Australian Labor Party) Share this | Hansard source

I also seek to take note of the answer given by Senator Minchin on the issue of interest rates. Before dealing with some more general comments, I want to take a couple of moments to respond to something that Senator Chapman raised in his contribution and nail the lie once and for all that the interest rates on mortgages in this country were 10½ per cent when this government came to power. It is true that in 1996 the mortgage rates offered by the banks in this country were 10½ per cent, but Senator Chapman should know that in fact the banking sector mortgage rates had been deregulated under the Keating Labor government and that the mortgage rates from non-bank lenders were averaging around seven to 7½ per cent—and they have not moved much over the past 10 years. The deregulation of the mortgage sector, and in particular the opening up to non-bank lenders in the nineties, actually put pressure on the banks to reduce their interest rates to match what was available in the market. So let us nail the lie once and for all that somehow or other interest rates were 10½ per cent in 1996. That was certainly what the banks were charging, but that was not what was available in the rest of the marketplace.

I want to deal with the question of interest rates much more generally. I make the point to those listening that on 29 August 2004 the Prime Minister asked Australian families, ‘Who do you trust to keep interest rates low?’ The reality is that interest rates have just risen for the sixth time since 2001 under this government. So it is pretty clear that families should not trust this Prime Minister, because he has not been able to meet the commitment that he made in August 2004. It was during the last election campaign that the Liberal Party claimed that they would keep interest rates at record lows. In fact, interest rates have risen twice since that promise was made. They have risen twice since August 2004. The average cost of a mortgage for Australian home owners is something like $879 a year more than they were paying at that point in time. And I have to disagree with my colleague Senator Sherry, who says that it is $73 a month—it is a little bit more than that, because that works out to only $876 a year. There is a $3 difference. It is actually more than $73 a month.

Two weeks ago, the Treasurer was crowing that it was a debt-free day. However, what the Treasurer failed to mention when he was making that statement was that families in this country are more sensitive to interest rate rises than at any other time in our history. Families are more in debt than they have ever been. Ordinary household debt in this country has exploded under this government. People are borrowing to survive. They are not borrowing to buy assets, as is commonly argued by those on the other side, but borrowing to survive and living on their credit cards. That is what has happened to average families in this country and they are in more debt than they have ever been. And of course they are particularly sensitive to any interest rate rises under that set of circumstances, because they are spending more of their income to service the debt that they are accumulating day in and day out.

Let us also look at the question of the country. The country is in massive debt: $473 billion. We owe the rest of the world more than 50 per cent of our annual GDP. What did Prime Minister John Howard say in 1995 when he launched the Liberal debt truck? He said:

If it weren’t for the level of foreign debt, interest rates in this country would be much lower and every Australian today who owes money on his or her home is paying a higher interest rate than would otherwise be the case because of the size of our foreign debt.

He also said:

I can promise you that we will follow policies which will, over a period of time, bring down the foreign debt.

That is another promise that was broken. Perhaps the promise that was made back in 1996 was a non-core promise, because we know that foreign debt has exploded since that point in time. (Time expired)