Statements by Senators – Economy, 3 August 2022
Senator BABET (Victoria) (13:24): I note this is not my first speech. I rise here today to speak about the disastrous economic situation we now find ourselves in due to high levels of government debt, which is approximately $963 billion—an absolutely massive amount of money. But how much is a billion dollars? It’s a thousand million dollars. These numbers are almost incomprehensible—$963 billion. Unfortunately, both of the major parties have had a hand to play in racking up this debt and will continue to have a hand in racking up the debt, and it is something that must be dealt with and not just swept under the rug. Neither side of politics has discussed a clear plan on how we can pay back this debt, and we cannot keep ignoring the issue. Paying back the national debt was a core part of the policies that the United Australia Party took to the election.
The increasing interest rates and inflation that we are seeing at the moment are as a result of the high levels of debt. There is a clear relationship between high levels of public debt and higher interest rates. There was a publication from the European Central Bank which studied the relationship between long-term public debt and the increasing interest rates of the economies of Germany, Italy and the USA. This publication set out the relationship between high debt and interest rates in those countries over a 10-year period. It essentially concluded that high levels of debt have little impact on interest rates in the short term but that in the years to follow interest rates start to increase, and at a rapid rate.
Most economists here in Australia agree that interest rates will continue to rise. Millions of Australian families are already experiencing mortgage stress, and this is only set to increase. ANZ and Westpac are predicting that the RBA cash rate will be 3.35 per cent by the end of this year or very early next year. Prices for fuel, energy and other basic essentials are increasing, severely impacting Australian families and Australian businesses, and will go on to destroy the independence and freedom of our nation. We cannot ignore the national debt. If we do not act, if we allow it to continue to grow unabated, it will cause Australian families to default on their mortgages and lose their homes as interest rates continue to rise. It will also remove the underlying security for many of our small businesses.
We must act now to save our homes, to save our country’s economy and to protect our freedom and independence. We need a solution. Sweeping it under the rug, expanding the debt, will only make it worse. We are simply kicking the problem down the road for future generations to deal with. The RBA cash rate is currently sitting at 1.85 per cent, up from 0.1 per cent only four months ago. That means that, compared to four months ago, the average $700,000 mortgage will cost around $550 more per month. Many families cannot afford this rise. Current inflation is 6.1 per cent, with real wages growing at only 2.4 per cent over the past 12 months. Essentially, that means the purchasing power of your money has been reduced by 6.1 per cent and your wages have not kept up. The government has now confirmed that inflation is set to hit 7.75 per cent by the end of this year, making things even worse.
The UAP took to the election a plan to help pay down our national debt. We suggested introducing a 15 per cent export licence for all iron ore exports from Australia and pledging the proceeds of such a licence to the repayment of our near-trillion-dollar debt. Our modelling showed that this export licence and its proceeds would help reduce the debt level and, in the process, save Australia from high interest rates. Australia supplies over 80 per cent of all iron ore exports to the Asian manufacturing markets. Tens of trillions of dollars are invested in manufacturing in China, Japan, Korea and the rest of Asia. Asia achieves its strong position in world trade by using Australian iron ore. Asian economies have no alternative but to purchase our iron ore. We must leverage this position to the maximum benefit of all Australians. In effect, we can have the buyers of our iron ore pay off our debt, thereby taking the burden off the Australian taxpayer.
The United Australia Party has a clear policy to deal with this debt. It is designed to save all Australians’ homes and to increase our living standards and wages, and the best part is that the buyers of our iron ore will pay for it.