Nick Sherry (Tasmania, Australian Labor Party, Shadow Minister for Banking and Financial Services) Share this | Hansard source

We are currently debating a motion moved by my frontbench Senate colleague Senator Carr concerning the issues relating to housing affordability. Homeownership is very important—and rightly so—to all Australians. It is central to the Australian ethos. Central to homeownership is the cost of borrowing money to pay for your home: interest rates. It is in this area that we have seen some very worrying movements over the last 18 months.

Before I go into interest rates in more detail, I have to say that where I live, on the north-west coast of my home state of Tasmania, interest rates are not the only issue worrying the local community. I frequently have raised with me the issues of petrol prices, which are putting a real squeeze on the family budgets of low- and middle-income Australia; the recent extreme and radical industrial relations changes, which are designed to reduce the wages and conditions of Australians; and price increases—in particular, food price increases—and, I have to say, not particularly of bananas but price increases across the board. Middle Australia has been feeling much greater financial pressure over the last year in particular, so I think the concern is very understandable.

What have we had from the government in recent times? What have we had from the Howard-Costello Liberal government? This is a government increasingly divided and out of touch and uncaring. Look at what has been occurring in recent months. We have had the Treasurer, Mr Costello, and the Prime Minister, Mr Howard, more preoccupied about who was going to have the top job then focusing on the real everyday concerns of Australians. We had the Treasurer, Mr Costello, effectively calling the Prime Minister a liar and, in retaliation, the Prime Minister, Mr Howard, effectively calling Mr Costello arrogant. On this occasion they were both right, and they are both out of touch.

It is not just Mr Howard and Mr Costello who are out of touch. Look at what has happened in the Senate this week. We have got the ‘minister for parrots’, Senator Ian Campbell, who has been undermining investment confidence by banning a wind farm on the basis that a parrot might hit the wind farm once in a thousand years. We have got Senator Coonan, Minister for Communications, Information Technology and the Arts. What a mess communications is in at the present time. Next week we will have the withdrawal of the privatisation of Telstra because of the shambles. We have got Senator Vanstone presiding over a flood of overseas workers coming into this country. It is not just the Prime Minister and the Treasurer who are out of touch.

There is Mr Turnbull in the other place, referring to the interest rate increases being overdramatised. How out of touch can you get! The government has the gall, after almost 11 long years in office, to try to blame the Labor Party for it—or bananas, and I will get to the bananas a little later. Then there was the earlier contribution from Senator Humphries, the Liberal senator from the ACT. He is out of touch. He still thinks that interest rates are low at the moment. He resorted to the old excuse and spent almost half his speech talking about the ACT government. What did that have to do with the issue at hand? I suppose we can be thankful that at least he did not go on to bananas. But it was the old game of blaming the state government—or blaming the ACT government, in his case.

Let us have a look at what has been happening with interest rates. We have had three interest rate increases since the last election. Interest rates now stand at 7.8 per cent, and that is not low, despite the out-of-touch view of government members on this issue. A small increase in interest rates packs a very big punch now. Why is that the case? At the present time, after the last increase, the average mortgage repayment by an Australian family now stands at $1,685 per month. Compare that to 1989, which this government is very fond of doing. In 1989 the average repayment was $959. So an interest rate increase now packs a much bigger punch. That is because general debt levels are far higher under the Liberal government—significantly higher. If you look at the repayment levels and the proportion of income that Australians are having to devote to paying off their mortgages, it is much higher today than it was back in 1989, a period with which they are so fond of making comparisons.

Recently we had the Treasurer, Mr Costello, boasting on the Sunday program that if you ‘see a single digit in front of your interest rate, that is low’. Interestingly, the transcript of the program was mysteriously airbrushed off the Treasurer’s website recently. He did not want that quote continuing to appear on his website. I think he probably wishes he could airbrush the Prime Minister out of office quite as easily. The fact is that a 7.8 per cent interest rate is not low yet for Middle Australian families. The three interest rate rises we have seen since the last election have added a massive $108 a month to the average new mortgage. This is at a time of dramatically higher petrol prices. Last week I saw some interesting statistics. We heard a lot about tax cuts in the last budget, but, with the interest rate rises and the petrol price rises and the food price rises, the tax cuts that we saw in the recent budget have been wiped out for most low- and middle-income Australians.

I referred earlier to household debt levels today. Household debt now stands at the equivalent of some 150 per cent of household disposable income. Household debt is far higher today than it was in 1989, when it stood at 60 per cent. That is fundamentally why a small rise in interest rates, as the government claims time and again, has such a significant impact. The government is fond of making historical comparisons. We hear a lot about interest rates back in the late 1980s and early 1990s. I thought I should have a look at it historically. If we want to look at history, let us have a look at interest rates going back to 1971—