Transcripts

DOORSTOP INTERVIEW 3PM FRIDAY 12 JUNE 2009

12th June 2009

Topics:  Commonwealth Bank’s interest rate increase, Labor’s reckless spending and borrowing

E&OE……………………………………………………………………………………………….

JOE HOCKEY: 

The increase in interest rates by the Commonwealth Bank today is directly linked to Kevin Rudd’s debt.  If Kevin Rudd is going to borrow up to $3 billion a week, it is inevitably going to put upward pressure on interest rates and the decision by the Commonwealth Bank today is just the beginning. 

If the Government is borrowing so much money in competition with the banks, then the cost of funds to the banks will inevitably rise. You cannot continue with low interest rates whilst the Australian Government is borrowing billions of dollars every week to hand out cheques for $900. 

Today I hear that Kevin Rudd and Wayne Swan are outraged about it.  Kevin Rudd and Wayne Swan are so upset about this decision they’re going to do absolutely nothing about it.  That says everything about the fact that their debt is now contributing to higher interest rates and their debt is going to make it more difficult for the Australian recovery. 

Handing out cheques for $900 came at a price and Australian homeowners are going to start feeling that price from today.

JOURNALIST: 

inaudible

HOCKEY: 

Well the Government should reduce its borrowings.  The Government should spend less money.  If the Government is borrowing money in direct competition with the banks then it inevitably pushes up the cost of money to the banks and it inevitably has an impact on the price of a mortgage for everyday homeowners. 

We have always been warning that when the Government borrows so much money in competition with the banks who themselves borrow money, then inevitably the cost of money is going to rise and the ultimate price of that is going to have to be paid by homeowners because of Kevin Rudd’s debt. 

And Kevin Rudd and Wayne Swan know.   They’ve feigned outrage about this interest rate increase and yet they are directly responsible for it.  This is the beginning.  You will end up with higher interest rates directly as a result of the spending binge of the Rudd Government and the massive debt that they are accruing.

JOURNALIST: 

inaudible

HOCKEY: 

But the Government does have an influence on the cost of borrowings for the banks.  When the Government is out there borrowing $3 billion dollars a week to fund their $900 cash splashes, to fund waste and mismanagement, building classrooms in schools that are about to be demolished – this is the price Australians are paying for Kevin Rudd’s debt.  There’s no argument about it. 

It is also the case that the Government bungled its guarantee and in turn that’s going to have an impact as well.  But ultimately the most direct impact on the cost of funds to the major banks and Australian home borrowers is going to be Kevin Rudd’s debt.

JOURNALIST:

Will other banks follow the Commonwealth’s lead?

HOCKEY: 

I would expect that this is the beginning because of Kevin Rudd’s debt.  This is the price Australians are going to pay for the Federal Government borrowing tens of billions of dollars and the Federal Government being out there in competition with the banks in borrowing markets. 

There’s only so much money in the world and if the Federal Government for the first time is borrowing money on such a large scale in competition with the banks then the cost of funds to the banks is inevitably going to rise and they’re going to pass straight through to home borrowers. 

Kevin Rudd and Wayne Swan will feign indignation.  Kevin Rudd and Wayne Swan will pretend to be outraged about it but they know that their borrowing binge has directly contributed to this initiative from Commonwealth Bank and it will lead to higher interest rates into the future.

[ends]