Media Statement - 7th November 2007
Australian families and businesses have today been hit with a tenth consecutive interest rate rise due to uncontained inflation in the Australian economy.
Today’s interest rate comes amid rising cost-of-living pressures - notably rising grocery, petrol and childcare costs – already weighing on family budgets.
In a statement accompanying the rate rise today, Reserve Bank Governor Glenn Stevens has pointed directly to ongoing capacity constraints and skills shortages as critical factors in today’s decision:
…reports of high capacity usage and shortages of suitable labour persist.
At the last election John Howard and Peter Costello took personal responsibility for interest rates – promising to keep them at record lows.
But they have since ignored repeated warnings from the Reserve Bank about capacity constraints – particularly skills shortages and infrastructure bottlenecks - putting upward pressure on inflation and interest rates.
As a result of this neglect, families have endured ten straight rate rises since 2002, including six since the last election.
With household debt now three times the level of 1990 each interest rate rise packs a bigger punch than ever before.
As a consequence mortgage interest repayments are now consuming a record share of household income – higher now than any period during the last Labor Government:
NOTE: The above graph is available in higher resolution
in the PDF under 'downloads' on this page.
For millions of Australian families, Mr Howard and Mr Costello’s economic “experience” now means ten straight interest rate rises – despite their promise at the last election to keep rates at record lows.
Australian families and businesses now have every right to ask why they should believe anything Mr Howard and Mr Costello say about economic management at this election.
At the same time, Mr Howard’s extreme Workchoices laws are threatening the wages and conditions that families need to pay their rising mortgages.
Only Federal Labor has a comprehensive economic strategy focused squarely on putting downward pressure on inflation and interest rates. Federal Labor will:
- Invest in an Education Revolution, including Trades Training Centres in our secondary schools, to boost productivity and help tackle the skills crisis;
- Provide much-needed national leadership on critical economic infrastructure, establishing Infrastructure Australia to overhaul infrastructure planning, development and reform;
- Partner with the private sector to deliver world-class high-speed national broadband to provide a platform for business growth and productivity; and
- Implement policies to enhance incentives for workforce participation, through improving child care affordability, delivering better health outcomes through our Health and Hospitals Reform Plan, and putting incentive in the tax system.