Linda Kirk (SA, Australian Labor Party) Share this | Hansard source

I rise to take note of answers given to questions asked by the Labor opposition today in relation to the economy. This week we have had the ninth interest rate rise since Prime Minister Howard has been at the helm of this nation, and it is the fifth since he promised to keep rates at ‘record lows’ at the last election. This interest rate rise is going to hit working families hard. With the cost of living pressures already straining many household budgets, yesterday’s decision by the Reserve Bank to lift interest rates will only add to already high levels of mortgage stress.

It is the case that yesterday’s rate rise has seriously damaged the Prime Minister’s economic credentials. It is going to make it very difficult for Australian families to believe anything that the Prime Minister says in the lead-up to this year’s election. Rather than making excuses and pointing fingers—which is what we saw today during question time, particularly from Senator Scullion, who, in answers to questions that I asked him, simply said that it is the fault of the states—this government needs to actually accept responsibility for its broken interest rate promises, get down to work and put downward pressure on inflation and interest rates.

All we see from the ministers of the Howard government, whether it be the Prime Minister himself, the Treasurer or the Minister for Finance and Administration, Senator Minchin, as we saw today, is their simply pinning the blame on the state governments. But it is pretty clear, and a number of commentators have pointed out, that there is very little direct linkage between borrowing by the government and interest rates. The Chief Economist of the ANZ Bank, Saul Eslake, in the Australian on 7 August said that very thing. A number of other commentators have pointed out the fallacy in the government’s argument. For example, in the Financial Review it was reported:

The Prime Minister’s claim that his government is in the clear because it is running a budget surplus and that it is all the fault of the states and their budget deficits is nonsense.

Federal Labor, when we are elected to government, have committed ourselves to economically conservative policies that will be directed towards keeping interest rates as low as possible. We have committed ourselves to keeping a tight rein on the economy and disciplined spending, and we have said that we will run budget surpluses, on average, over the economic cycle. Labor is committed to the independence of the Reserve Bank and its inflation targeting regime. The Leader of the Opposition, Mr Rudd, in his press conference earlier this week emphasised that we very much believe in the independence of the Reserve Bank and we do not intend to depart from that in any way when we are in government. What we have emphasised is that we will implement policies to fight inflation by tackling skills and labour shortages and infrastructure bottlenecks that push up business costs.

As I said at the beginning, this interest rate rise that we have seen this week is a very concerning development for Australia’s working families. And it seems from the comments that we heard here today in the Senate that the government is out of touch with the reality of working families and the pressures that are upon them. In the 11 years that the government has been in office, what we see is that whenever interest rates go down, Mr Howard and Mr Costello take credit for them, but whenever they go up, they refuse to take responsibility. It is certainly the case that Australian families expect a better response than the response that we receive from the Prime Minister and the Treasurer when it comes to changes that could be made to economic policy settings.

When it comes to fiscal policy, Labor has made it clear that it will maintain a doctrine of budget surplus. This does not mean increasing taxation as a proportion of GDP. (Time expired)