The Crest of the Commonwealth of Australia Treasury Portfolio Ministers
Picture of Peter Costello

Peter Costello

Treasurer

11 March 1996 - 3 December 2007

Transcript of 05/12/2001

TRANSCRIPT
of
HON PETER COSTELLO MP
Treasurer

Interview with Steve Price, 3AW
Wednesday, 5 December 2001
4.35 pm

 

SUBJECTS: Interest rate cuts, economy, banks

PRICE:

Thank you for your time.

TREASURER:

Thank you very much Steve.

PRICE:

Our news at 4 o'clock says interest rates are now at their lowest since man walked on the moon?

TREASURER:

Yes.

PRICE:

Pretty amazing.

TREASURER:

The home mortgage rate is now around about 6 per cent and you would have to go back 30 years to find a rate as low as that. In fact, today's rate is probably lower than it was 30 years ago because not everybody could get (inaudible) 30 years ago, they were actually rationed by the banks. You can probably remember Steve, so can I, when you used to go for a loan in those days you could get part of your loan from the bank, but then you would have to take out the rest from a finance company at a higher rate. So, when you take that into account these are the lowest home mortgage interest rates, really, in living memory.

PRICE:

It's good news for everyone who's paying off a mortgage. What is the Reserve Bank trying to achieve by putting them down even further?

TREASURER:

What we're trying to do is we are trying to ensure that in a global economic downturn, and the United States, the world's largest economy, is in recession, the world's second largest economy, Japan, is in recession, in a global economic downturn, that we can keep Australia strong. We had our quarterly result for September come out in Australia today. We had growth of 1.1 per cent. It means Australia is now clearly growing stronger than any of the major industrialised economies of the world. But because they are in recession that is going to affect Australia and we have to do what we can to keep the Australian economy growing at a time when so much of the world is now in recession.

PRICE:

With interest rates that low it is not great news for retired Australians who are living off fixed incomes, is it?

TREASURER:

Well, many retired Australians will be living off shares, and low interest rates are good for companies. It helps companies develop better profits, it is good for dividends. Many Australians have got superannuation invested in shares. I suppose if the only thing you had was interest on a bank account then the interest would affect you much more. But what that illustrates is that it is better to have superannuation, or, if you can, other investments at a time when interest rates are low.

PRICE:

You were quick to jump into the banks on credit card interest rates, what message were you trying to send there?

TREASURER:

I was saying to the banks this, that, official interest rates are coming down and we have insisted that they pass the benefit of that to home buyers. Well, we are now also asking them to pass the benefit to credit cards, because credit card interest rates are still very high and although all of the banks indicated that they would be doing that, some are doing it faster than others. And I urge consumers to have a look, and I am sure it will be in the paper tomorrow, which banks are passing on these interest rate cuts the quickest, because they are the banks that give better service. And I urge consumers if they want better service, switch to the banks that are giving them better service.

PRICE:

So you are saying shop around...

TREASURER:

Mmmm

PRICE:

...and really, seriously shop around.

TREASURER:

Shop around because this is the only thing that will keep banks up to the mark. If the banks think that by delaying, they will lose business, you will find that they will get much quicker at passing on these interest rate cuts.

PRICE:

Appreciate your time very much. Thanks.

TREASURER:

Thanks very much Steve.