Interest Rates

I can hear cries coming from the other side of the chamber, but I am more concerned about the cries of working families in places like Western Sydney and cries from working families in my electorate. Inflation is the great menace that confronts us. It erodes savings and productivity, destroys businesses and communities and hurts working families. Last year, the member for North Sydney said on the record that inflation is:

…the curse, the evil that cuts to the core; inflation is like a cancer on the economy …

I agree; I think that is right. The problem is that the former government did nothing about it. They allowed it to gather momentum. It did not just pop up on 25 November last year. This is something that has been brewing, causing problems and hurting working families for the last two years or more. The problem is that all of the 20 warnings from the Reserve Bank were ignored.

The member for Higgins is often accused by others of lying back in his hammock, doing nothing about inflation, but we learn by reading the Howard biography that he was trying his best, doing his hardest and trying to rein in the spending spree of the former Prime Minister. But he tried in vain. He failed and the working families of Australia are paying for the price of that failure. Inflation is now at 3.6 per cent. That is the highest level in 16 years and there is the threat that it will go even higher. We learnt this week from the Assistant Governor of the Reserve Bank, Malcolm Edey, when he spoke at a CEDA conference, that it could reach closer to four per cent next month. That is what we inherited: the highest inflation in 16 years, the second highest in the developed world and the threat of it going even higher if we do not act. I am not saying it is the highest inflation in the world-not by a long shot. It was reported yesterday that Zimbabwe’s inflation has gone to 100,000 per cent. I do not think anyone here is about to say that is a precedent or template that we should aspire to replicate. It is not the type of good government and responsible economic management that Australia benchmarks itself on.

The shadow Treasurer told us only very recently that the inflation problem is a fairytale. The member for Lindsay put it very clearly today when he said that it is not a fairytale; it is a nightmare. It is a nightmare for people around the country, in Western Sydney, and very particularly in my electorate of Blaxland. They are paying the price because the former government failed to act.

In my first speech to this House earlier this week, I mentioned very briefly what the impact of that failure is. Three hundred families in Blaxland lost their homes this year because they could not keep up with the rising cost of interest rates and the pressure that put on them. The value of their houses has also dropped by 16 per cent over the course of the last three years. They lost their homes because the former government lost their way and, as a consequence, the government also lost their jobs.

What lies ahead? The Reserve Bank has advised that interest rates are expected to be at or above the target band for the next two years. If we do not heed this warning, it is not going to be a problem for the next two years; it will be a problem for the next generation. Monetary policy is a very blunt instrument. It ends up hurting about a third of the people in this country-the people with mortgages. We as a good government have a responsibility to do more than just use monetary policy to help the Reserve Bank.

What we have got here is a stark contrast. There are two types of people in this chamber, the Rudds and the duds. The Rudds have got a plan for the future and the duds have lost their way. You have got the Rudds, who have got a plan to tackle inflation, and you have got the duds, who only had one plan to tackle inflation, and that was Work Choices. They said Work Choices would help keep inflation under control. Now they say it is dead. Earlier this week they said it was alive again. Now it is dead again. It is the zombie policy that they are going to bring back to life at the next election. The nightmare of Work Choices will soon be over for the people of Australia, but the nightmare of inflation, which was let loose, let out of control by the former government, is going to hurt the people of this country and the people of my electorate for a lot longer unless we do the work needed to put it in its place.’