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Issue No. 236 | 03 September 2004 |
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Interest Overboard
Interview: True Matilda Politics: State of Play Industrial: Capital Dilemmas Unions: Rhodes Scholars National Focus: Rennovating the Lodge International: People Power Economics: A Bit Rich History: Mine Shafts Safety: Sick Of Fighting Organising: Building a Wave Poetry: Anger In The Bush(es) Review: The Battle Of Algiers Culture: The Word On The Street
The Soapbox Politics Postcard The Locker Room Postcard
 Gold Gold Gold for NeolibsCo-operating At All CostsFan MailAll Good Except You
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Editorial Interest Overboard
In 2001 it was a carefully constructed fear campaign which effectively morphed the collective anxiety about globalisation and economic insecurity into the myth of border protection; driven along by the children overboard lie which, as is still emerging, the government milked mercilessly despite advice from the highest levels that their was no substance to the charade. This time around the big fear campaign is around interest rates and the spectre of fanciful percentages not seen since the Hawke-Keating government completed its grand economic restructure which, more than anything else, has delivered Howard and Costello the platform for a stable economy that they claim as their own. The big lie on interest rates is as dangerous as border protection; under Howard and Costello home prices have sky-rocketed, helped along by a tax regime that rewards property speculation and a banking system prepared to underwriting previously unacceptable levels of personal debt. In 1996, the average loan for first home buyers was $94,400 with average monthly loan repayments of $891; while the average mortgage for all borrowers was $97,600 with average monthly loan repayments of $922. By June 2004, the average loan for first home buyers was $204,000 with average monthly loan repayments of $1,448; while the average mortgage for all borrowers was $202,700 with average monthly loan repayments of $1,400 This is Howard and Costello's legacy - and perversely this is what makes their scare campaign so potent: a percentage point in interest rates today has the practical effect of five points in the early nineties; the entire property market would collapse long before interest rates got anywhere near 18 per cent. That is why the Reserve Bank and whatever government is in power would never use interest rates in the way Keating did ever again; the benefits it delivered in a period of profound economic transition would be disastrous at this point in time. That has not stopped Howard milking it for all its worth - and now that commercial television has ditched its requirement for truth in political advertising, look forward to the full symphony in the coming weeks. Thankfully, unlike children overboard where the truth was controlled within government, we are beginning to hear some economists and business commentators exposing the lies about 18 per cent interest rates..
Anyone lucky enough to see the respected finance journalist, now irreverent morning talk show host David Koch take Howard on this week would take some hear that the truth may prevail this time. For those who missed out there was this exchange: KOCH: Okay, just finally, a quick bone to pick with you. This campaign - A vote for Labor is a vote for 18 per cent interest rates. That is the greatest load of hogwash, with respect. PRIME MINISTER: I haven't specified 18 per cent... KOCH: Some of your colleagues have in their letter box drops around their electorates have done so. PRIME MINISTER: What I do say is that a Labor Government is more likely to deliver higher interest rates because it runs budgets into deficit and it also runs an industrial relations policy that will weaken productivity. KOCH: So can you guarantee that interest rates will not rise if you are re-elected during your next term? PRIME MINISTER: I can guarantee that interest rates will always be lower under a Coalition Government. KOCH: No, can you...? PRIME MINISTER: Well, I'm telling you... KOCH: You can't guarantee it - that's the point. PRIME MINISTER: No, what I am guaranteeing to you is what I've just said. That's what... I mean, David, you don't put words into my mouth. I'll tell you what I guarantee, I guarantee that interest rates will be lower under a Coalition Government than they would be under a Labor Government. Isn't that fair enough... KOCH: Standard & Poor's, the big international credit rating agency, said this week that no matter who gets elected at the federal election it does not see a AAA credit rating under threat. PRIME MINISTER: Well, that's good, that is good. I don't want to... KOCH: Which is a testimony to Labor policy... PRIME MINISTER: No, but I ask the Australian people to look at what has happened over the last eight and a half years. Are you denying that interest rates have fallen sharply over the last eight and a half years? Nobody can deny that. And what I'm saying is, you compare that with the likelihood of a Labor Government spending into deficit, as previous Labor governments did, running an industrial relations policy... KOCH: It's a whole new team. PRIME MINISTER: It's a whole new team, but they still adore the same people. Mark Latham's great mentors are Paul Keating and Gough Whitlam. KOCH: Okay. As they did in 2001 the ALP has the facts on their side, it's just that the truth is a lot more complex than the scary lie. The media preparedness to take on Howard and ensure they are not manipulated in the way they were with border protection will have a big bearing on the outcome of this election. Peter Lewis Editor
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