TRANSCRIPT

THE HON PETER COSTELLO MP

Treasurer

Interview with Kieran Gilbert
Sky News

8.05 am

(Pre-record)

SUBJECTS: Interest rates

PRESENTER:

…reporter Kieran Gilbert. Kieran began by asking how Australians with

home loans should be feeling this morning with the banks looking likely to

pass the rate rise on as of today.

TREASURER:

Well, I have said on numbers of occasions, that we have historically low

interest rates at the moment, 30 year lows. And if you see a mortgage interest

rate with a six in front of it, it is an historically low rate, even under

our Government the average interest rate has been 7.15 and under Labor the

average interest rate was 12 per cent, double. So people should bear in mind

that when they are taking out long term interest rates that rates can move.

And I always say to people they should try and allow some cushion in their

mortgage.

GILBERT:

Treasurer, Labor says Australians are paying more as a ratio of their income

on home loans than ever before. What is your response to that?

TREASURER:

Well, you saw that Labor came a cropper in the Parliament yesterday when

they tried that. Because Labor’s own spokesman said that what Australians’

debt has to be measured against is their assets. And Australians have higher

assets than they have ever had before. The ratio of assets to debt is about

six to one. So, Labor fell on its face with that claim yesterday.

GILBERT:

You have said that the global economy is slowly turning. The Prime Minister

said last night that there is no case in his view for a significant rise in

rates in the near term. Are they veiled messages to the Reserve Bank not to

go too far?

TREASURER:

Oh, the Prime Minister is making an assessment of the international economy

as we all are. And I think it is very important that we have a very open debate

about what the state of the world economy is. Look, I hope the world economy

recovers. The United States has been in recession, and Japan has been in recession

and Europe has been looking very sick. And I hope it recovers. It will be

good for all of us. But I wouldn’t say that that recovery has emerged

yet. We hope it is emerging. But I think it is a question of waiting to see.

GILBERT:

Most pundits are predicting another quarter of a per cent rise next month.

Clearly your preference would be not to have the significant rate rise over

the next 12 months?

TREASURER:

People always speculate. I have watched some of these economic forecasters

forecast six of the one, last one interest rate rise. They will always forecast

but the important thing to bear in mind is what is happening in the economy,

what is happening in relation to inflation and to make sure that we can keep

the Australian economy growing.

GILBERT:

Treasurer thanks for your time.

TREASURER:

Thanks very much.