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

My question is to Senator Minchin, the Minister representing the Treasurer. Is the minister aware that the latest HIA-Commonwealth Bank Affordability Report shows that housing affordability is now at its lowest level since December 2003? Hasn’t the HIA also said, ‘Housing affordability is at critically low levels everywhere across Australia and is suffering an additional hit in 2006 because of higher interest rates’? Given that the industry has blamed recent interest rate hikes for the ‘critically low levels’ of housing affordability, why has the Prime Minister given the green light to yet another increase in rates? Won’t another rate rise simply add to the $2,000 a month that many low- and middle-income families are already paying on their mortgages? How does adding even more money to mortgage repayments make it easier for young Australians to buy a home?

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

Before I answer that question, Mr President, may I have your indulgence to, on behalf of the government, warmly congratulate Senator Stephen Conroy and his wife, Paula, on the birth of their daughter, Isabella. They have the best wishes of everybody on the government side.

Honourable Senators:

Hear, hear!

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

In relation to Senator Carr’s question, he chose to quote the HIA. As I recall, the HIA has campaigned strenuously in relation to housing affordability on the basis of the negligence, and indeed the woeful behaviour, of state governments in their approach to stamp duties—their outrageous imposition of stamp duties on new and first home purchases—and their hopelessly incompetent policies with respect to land release. This has been a major campaign of the HIA, an independent housing body. Senator Carr chooses to come in here and quote the HIA. Let me quote back at him what the HIA is saying about the outrageous behaviour of state governments in penalising new homebuyers through their land release policies and their stamp duty policies. Senator Carr is a member of the Labor Party. He should talk to the six state Labor governments about those policies if he is concerned about housing affordability.

In relation to interest rates, these are independently set by the Reserve Bank in accordance with its charter to keep inflation low; it is their responsibility. It is the position of the federal government that we want interest rates to be as low as is possible, consistent with keeping inflation under control. The record of the Reserve Bank on that matter in relation to the Australian economy over the last 10 years has been, as I said yesterday, exemplary. Inflation is half the average, over our 10 years in government, that it was under the 13 years of the former Labor government: 2.6 under us and 5.2 under Labor. That is the prerogative of the Reserve Bank. That is what is critical for new home purchasers: to keep inflation under control and to make sure that they have jobs. Unemployment is as low as it has been in 30 years, so the capacity of new home purchasers both to take on a mortgage and to service a mortgage is much better than it ever was under our predecessors.

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

Mr President, I ask a supplementary question. Why does the government continue to try to blame everything and everyone but itself when it comes to rising interest rates? When will the Howard government actually do something about the crisis in housing affordability other than blame the states for it? Can the minister now confirm that the proportion of household income consumed by mortgage interest payments is 50 per cent higher than it was under former Treasurer Keating?

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

It is this government that introduced the First Home Owners Scheme, one of the most significant things that any federal government has ever done for first home purchasers. It is our government that has made sure the economy has grown consistently throughout the 10 years of our government. It is our government that has eliminated the $96 billion in debt that Labor left us, which was an upward force on interest rates. By eliminating that debt and returning the budget to surplus, we are doing what a federal government can to take the pressure off interest rates. (Time expired)