Senator FIFIELD (Victoria) (3.19 p.m.)-I really enjoy this sort of contribution from the Australian Labor Party. It is an interesting part of Labor’s efforts to convince the voting public that they have now joined the economic mainstream. Labor are desperately hoping that after 10 years of opposition the community have forgotten their economic record-that they have forgotten that they bequeathed to the Australian people a $96 billion budget deficit and that in 13 years they delivered nine budget deficits. Over 11 budgets, in contrast, we have delivered nine budget surpluses.
The interesting point is that fiscal deficits put upward pressure on interest rates. Labor now say that they are in favour of balanced budgets. They have belatedly discovered the concept of balanced budgets and they are in favour of them. It is just that they have opposed every single measure designed to get the budget back into balance. Labor say they are in favour of lower interest rates. It is just that they are opposed to the sorts of measures required to help create a low interest rate environment, such as not deficit budgeting, not running up huge government debt. A balanced budget, which Labor say they have now discovered, was actually one of the most significant things putting upward pressure on interest rates.
There are two things we should keep in mind if Labor really want us to believe they have learnt their lesson. The first is that, as any good psychologist will tell you, the best predictor of future behaviour is past behaviour. If you want to know what someone’s behaviour will be in the future, the best indicator, the best predictor, of that is what they have done in the past. What did Labor do in the past? Under Labor mortgage interest rates peaked at 17 per cent and they averaged 12.75 per cent. They were still at 10.5 per cent when Labor left office. In contrast, under this government, they have come down from 10.5 per cent in 1996 to 7.8 per cent now and have averaged 7.17 per cent since we were elected in March 1996.
We should not forget that Labor talk about the costs of households today. Let’s think what the costs of households today would be if interest rates were still at the level they were under Labor. There is an interest saving today for a family of about a thousand dollars each month on the average new mortgage, compared to the interest rates which were in place under Labor. And we should not forget the $7,000 first home buyers grant, which is something that state Labor governments are incredibly keen to try and take credit for.
There is a second thing we have to bear in mind when Labor want us to believe that they have learnt their lesson and that they have changed. The second thing we need to do, if we really want to know what a Labor government would do, is to look at a Labor government. Let us look at a Labor government in office. What do I mean here? Let me provide a contrast. A press release that the Treasurer put out last week, ‘Revised ABS government financial estimates 2006-07’, says:
ABS Government Financial Estimates released today show that the Australian Government is budgeting a fiscal surplus of $10.8 billion in 2006-07.
In contrast, the States and Territories are budgeting a cumulative fiscal deficit of $4.9 billion in 2006-07-
we are budgeting a fiscal surplus of $10.8 billion; state and territory Labor governments, a fiscal deficit of $4.9 billion-
including deficits of over $2.4 billion and $1.7 billion for NSW and Queensland, respectively.
These state and territory Labor governments are themselves putting upward pressure on interest rates by virtue of their deficit budgeting. If we want to know what a state Labor government is doing, we look at these statistics. That gives us a good indication of what a federal Labor government would be like. While the rest of the OECD is forecasting deficits for 2005-06 and 2006-07, this government is still forecast for surpluses.
Unlike the party opposite, we have never claimed to have the RBA in our back pocket. We believe in an independent RBA to deal with inflation. And we have never claimed-contrary to the assertions-that interest rates would never rise under a coalition government. What we have said is that interest rates under a coalition government will be lower always than they would have been under a Labor government. That is our claim. We stand by it. Regardless of the mis-representations, that is the case. (Time expired)