Kim Carr (Victoria, Australian Labor Party, Shadow Minister for Housing and Urban Development) Share this | Hansard source

I move:

That the Senate take note of the answers given by the Minister for Finance and Administration (Senator Minchin) to questions without notice asked by Senators Sherry, Sterle and O’Brien today relating to inflation and interest rates.

I first draw the attention of the Senate to the fact that we have now had four interest rate rises since this Prime Minister said that the government would keep interest rates at record lows. What we have seen in recent times is that this rate of increase in the cost of maintaining a roof over your head has had very serious consequences for many hundreds of thousands of Australians.

We have already seen over the last two years an increase of some 60 per cent in the rate of defaults in New South Wales, Victoria and the Australian Capital Territory. We have seen the rates of default increase by a third in South Australia. We have seen increasing numbers of Australians put in the clutches of the loan sharks, as a result of the failure of this government to regulate mortgage brokers.

We have seen hundreds of thousands of Australians forced into acute financial stress as a result of the policies of this government. And this has occurred in a context where this government went to the last election claiming that they would keep interest rates at record lows. Four rises later, we can now clearly see that that was a proposition predicated upon a lie—a fundamental lie.

We have a situation in this country where home buyers are rightly losing confidence in the record of this government. We have a situation now where, for the first time, we are seeing that the number of people actually buying a house has fallen—the percentage of people buying a house has fallen. If the proportion of families owning their homes in Australia had been maintained at 1996 levels, we would see 70,000 more Australians actually owning their homes.

For the first time, we are seeing first home buyers with mortgage rates much higher and less affordable than they were when interest rates were at 17 per cent. The percentage of income that is required to maintain your interest payments to keep a roof over your head now is much greater—in fact, 50 per cent greater—than it was when interest rates were at 17 per cent. And that is a simple mathematical equation that is predicated on the assumption that people are now required to borrow much more because the price of housing has skyrocketed.

We have a situation where, as a result of the rise yesterday, there has been a $50 increase in the monthly repayments on a $300,000 loan—that is an extra $195 a month since John Howard took personal responsibility for interest rates, as he did in the last election. That is an extra $380 a month since interest rates started to rise in May 2002.

We now have a situation where, as a result of this government’s actions, there are more and more Australians who are being forced into the hands of the loan sharks and are now losing their homes because they cannot meet the increased costs of debt; they cannot meet the increased costs of financing their mortgages. We have a situation where there are increasing numbers of Australians who are forced into the deregulated section of the market—the completely unregulated section of the market—where people are lent money on 100 per cent of the total value of a property.

In the west of Sydney we see declining rates in sales of property, where people now have negative equity in their properties. With interest rates increasing, people who cannot meet those payments are forced to sell their house and end up with less money than they started with. The four increases in interest rates are placing increasing burdens upon the families of this country, and since this government is responsible it should be held accountable. (Time expired)