02-February-2012
Portfolio Media Releases
Penny Wong’s feeble attacks today on the Coalition over the RBA’s official cash rate highlight a complete lack of understanding about the real borrowing costs confronting everyday Australians.
“While Penny Wong is naively fixated on the RBA’s cash rate, everyday Australian households with mortgages and small business with overdrafts are more concerned with the real costs of borrowing,” Shadow Finance Minister Andrew Robb said.
There is no doubt that interest rates and our exchange rate in Australia today are higher than they should be due to the $87 billion in overblown stimulus the government has pumped into the economy.
“This is reflected by the four largest budget deficits in Australian history that Labor owns as well as well as its record debt levels; both very touchy subjects for Penny Wong.
“Labor’s rather pathetic claim that interest rates are lower “under our watch” ignores the fact that average standard variable mortgage rates under the Coalition were 24 basis points lower than under Labor, 7.26 per cent compared to 7.50 per cent.”
In addition the small business unsecured overdraft rate was on average 134 basis points lower under the Coalition, 8.89 per cent compared to 10.23 per cent.
However, even the flailing Finance Minister’s comments regarding the cash rate tell only half the story.
The RBA’s own figures show that Australia’s cash rate is not only one of the highest in the developed world, but that the cash rate gap between us and other key countries has grown dramatically since Labor came to office in 2007.
For example since November 2007 our cash rate has fallen 250 basis points, while in the UK it has fallen by 525 basis points, in the U.S. by 437 basis points, while Canada’s rate has fallen by 350 basis points.
“Considering her love of comparing us with overseas Penny Wong should take note. If she ‘had any understanding of basic economics’ she wouldn’t be out gloating over a 250 basis point fall when international comparisons do her no favours.
“The higher gap in cash rates has been a major attraction to foreign capital, in turn pushing up Australia’s exchange rate.
“Penny Wong shows a complete lack of empathy for households and businesses struggling against increasing cost of living pressures. It also shows Labor is desperate to divert attention away from its dreadful economic track record and rolling leadership crisis,” Mr Robb said.