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

We are getting rather bored with this line of questioning from Senator Carr. He keeps trying but is really making no impact whatsoever because the Australian people have a lot of common sense—and a long memory. They remember what interest rates were like under the Labor Party, the party that Senator Carr represents. The interest rates under Labor were horrendous. Young Australian families suffered immeasurably under the former Labor government.

One of the great things we have done in government is to bring inflation under control. The new Governor of the Reserve Bank made the point that in the 10 years we have been in office inflation has averaged between two and three per cent—unlike our predecessors, who completely lost control of the economy: inflation went through the roof, interest rates went through the roof, and people lost their homes, their businesses and their livelihoods. It is one of the great achievements of this government to have worked to give the Reserve Bank the independence that it must have in order to ensure that the great scourge of any economy—that is, inflation—is kept under control.

The way it keeps inflation under control is by having independent responsibility for setting interest rates. Interest rates, of course, are much lower under our government than they ever were under our predecessors, the Labor government. The reason mortgage payments may be higher is that Australians, in a situation where we have unprecedented prosperity—as we have seen, 4.8 per cent unemployment, high participation rates, the lowest unemployment for 30 years—have enormous confidence in the prosperity of this economy and their own financial positions. They are borrowing more because they have more confidence in their capacity to service those loans. They are buying bigger houses and they are taking out bigger loans. Interest rates are lower than they were under our predecessors and they have confidence about their jobs, so they are able to take on bigger mortgages. That means, by definition, their payments are higher than they otherwise would be but off the base of a much lower interest rate than was the case under our predecessors.

Of course many commentators have made the point that one of the big issues with house prices is land affordability. It so happens that it is state Labor governments that are responsible for land release policies in this country, so it is Labor governments in this country that are responsible for land release problems. The Urban Development Institute of Australia has noted that there has been a failure throughout Australian capital cities to adequately match land supply and demand and that a subsequent affordability crisis has prevailed. If Senator Carr cares about young Australian families wanting to buy a home, he should talk to the state Labor premiers and get them to do something about land affordability to enable young Australian families to have a chance to have a home.