Interest Rates Hit 10 Year High
Journalists Laugh At Howard's Excuses During Press Conference
"Rising interest rates dominates everything else when it comes to family security. Just a tiny upward movement in interest rates more than devours a few dollars of taxation relief..."
John Howard, September, 2004
The above image is a screen grab from a TV ad the Howard government ran for weeks during the 2004 federal election campaign. More than $100 million of taxpayers' dollars were spent pumping this, and other messages, in a fear-based campaign to convince Australians that if they voted for Labor Party, they would see the economy plunged into turmoil. Their wages would fall, inflation would increase, interest rates would rise and their mortgage payments would soar.
There was nothing subtle about anything connected with the 'Low Interest Rates' ad campaign. The Howard government would keep interest rates at "record lows". Vote for Labor and it will cost you, and your family.
Today, the Reserve Bank decided to raise interest rates for the fifth time since the 2004 election.
The average Australian family will now have to find yet another chunk of money from rapidly depleting household funds to meet their mortgage payments. For more than a million families, already suffering 'mortgage stress', this latest increase in interest rates will destroy their already meager household budgets :
Homeowners were dealt more mortgage pain today with the Reserve Bank of Australia (RBA) lifting interest rates to a 10-year high, amid rising inflation.
Most economists expected the increase which saw interest rates rise by 25 basis points to 6.50 per cent, the highest they've been since November 1996.
Interest rates up, inflation up. The Howard 'Plan' promoted in 2004 lies in tatters.
Voters believed Howard would "keep interest rates low" and he has clearly failed to do so.
The Howard government knew this was coming. Their early reaction? Blame the states. Almost every Australian financial institution and credible economist who has commented so far on the 'Blame The States' claim has dismissed it as worthless garbage :
This week, the Federal Government blamed state government debt for putting upward pressure on interest rates but economists say strong economic growth and Treasurer Peter Costello's latest tax cuts are more likely to have fuelled inflation, paving the way for a rise.
ANZ chief economist Saul Eslake said there was little connection between state government borrowing and interest rates.
"It's true state governments will be borrowing money over the next four years but there's very little historical evidence between government borrowing and the cash rate," he said.
"It's political propaganda. It's not economic analysis."
And Howard's personal reaction? He continues his absurd and irrelevant claims that interest rates are still lower than they were at their highest during the Keating government in the early 1990s.
Pathetic, and downright insulting to every Australian family who now have to ind another $50, $80 or $100 a month to hold onto homes. The Australian public no longer buy this line of spin from Howard, or from the Treasurer, Peter Costello, though they are both likely to keep pumping it.
The latest interest rates rise should prove to be the final nail in Howard's political coffin.
UPDATE : Tim Dunlop, at Blogocracy, unearths the mother of all Howard quotes from his "Who do you trust to keep interest rates low?" period in 2004. Open mouth, insert both feet :
"My friends, we all prize the financial security of our families. Let me say this, and it’s not just my view, but it’s a view frequently expressed to me as I move around this country talking to Australian families. Nothing threatens that security more directly than the prospect of rising interest rates. Rising interest rates dominates everything else when it comes to family security. Just a tiny upward movement in interest rates more than devours a few dollars of taxation relief or additional family benefits. There is no economic credential for office more crucial than a capacity to keep interest rates low."
It's almost unfair how easy it is for Labor to use Howard's own words to crucify him now. Howard was told by key advisers prior in the build-up to the 2004 federal election to tone down the "keeping interest rates low" talk, because they knew it would come back to haunt him, and the Liberals in general. Consider them to be now well and truly haunted.
UPDATE : Matt Price reports that during the joint Howard-Costello press conference held an hour after the interest rate rise was announced :
For the first time I can remember, press gallery members began laughing during a Prime Ministerial answer.
A Canberra source tells us that journalists are already trying to find ways to avoid having to join the 'Howard Bus Of Hope', or whatever it will be called, during the election campaign.
It appears most of the Canberra press gallery have already decided Howard will lose, and they want to hang out with much younger, much more fun, Kevin Rudd crew.
As Howard's Hope Bus winds through drought-devastated rural Australia, and Howard finally realises that he blew it, that he missed his chance to go out on top, and that he will be forever remembered as a loser, it won't be a cheery team to be spending any kind of time with.
Let alone a month or more.
It'll be like a 40 day long wake, without the free booze.
We're still betting that Howard will delay the election until February or March, 2008, or cancel it altogether, in the event of a national emergency.
Howard's "Who Do You Trust?" Line On Interest Rates Will Haunt Him All The Way To Election Day
The Reality Of Interest Rates
Statement From The Reserve Bank Governor
Economists Grim Warming : Expect Another Interest Rate Rise, And Soon
For Sale Signs Go Up All Over Sydney