One of the great talking points for this Federal Coalition Government is their consistent claim that interest rates would be higher under a Labor Government. Every time I hear or read this little chestnut, I have to resist the urge to shake a Liberal voter by their collar. It's simply crap. There's no clearer or easier way to put it.
Historically, they say, Labor presided over 17% interest rates!!! Overlooking for a second the global economic factors that contributed to those figures, let's just look at the numbers, shall we? I'm borrowing here from Seeker's illuminating summary, in comments over at Blogocracy. (Thank you, Seeker, and in all cases below emphasis has been added by me)
Compare and contrast Howard’s interest rate track record when treasurer, with Labor’s interest rate track record from Mar 83 to Mar 96 (the last time Labor held power federally):
• The lowest interest rate (90 day RBA bank bill) during Howard’s time as treasurer (Nov 75-Mar 83) was 7.65% (Jan 76), and the highest was 21.39% (Apr 82).
For Labor the lowest interest rate was 4.78% (Aug & Nov 93), and the highest was 19.56% (Dec 85).
• When Howard became treasurer interest rates were at 8.05%, when he left the treasurer’s office 7 years later they were nearly double at 15.26%.
When Labor took office (Mar 83) interest rates were at 15.26%, when they left (Mar 96) interest rates were less than half at 7.53%.
• Howard: From Sep 79 to Mar 83 interest rates were above 10%, often well above.
Labor: With two exceptions (Dec 83 and Jan 84), from Mar 83 to Aug 91 interest rates were above 10%, often well above.
Labor: Sep 91 to Mar 96 interest rates were well under 10%, as low as 4.78% (Aug & Nov 93).
• Howard: From Oct 79 to Apr 82 interest rates more than doubled (10.04 to 21.39%), and then fell to 15.26% when the Coalition lost office (Mar 83).
Labor: From Dec 83 to Dec 85 interest rates more than doubled from 8.89 to 19.56%, then from Dec 85 to Aug 93 interest rates went from 19.56 to 4.78%, and then rose again to 7.53% when Labor lost office (Mar 96).
Obviously this is not the full picture, in particular it doesn’t include Howard’s time as PM, but clearly Howard’s overall track record on interest rates when he was treasurer is no better than the subsequent Labor government. And Labor didn’t have the advantage of relatively low interest rates when they took office. But Howard did, both as treasurer, and later as prime minister. Notice him giving much credit to Labor for that? Me either."
And from pre-dawn leftist, in the same comments thread:
Dont forget that in 1982, housing interest rates got to 13.5% when the bond rate was 21%. The only reason they didnt go higher then was because they were capped at that rate by the Government - I remember this distinctly because I worked for the then Bank of NSW. Do you remember who was treasurer then? It was John Winston Howard.
And some more, from The Age:
"Impossible as it sounds, the data records that at one point in Howard's last year as Treasurer, the cash rate briefly hit 85 per cent as the Reserve tried to stave off a run on Australia's overvalued currency. It has never been that high before or since.
From go to whoa, interest rates in fact fell under both Hawke and Keating.
Howard argues that high interest rates occur because governments run deficits. Is the PM unaware that in the United States, President Bush is running a deficit of about 5 per cent of GDP, yet cash interest rates are just 1.5 per cent? Or that Japan is running a deficit of almost 8 per cent of GDP, yet cash rates are zero? And has Howard forgotten that when interest rates hit 17 per cent here, the Hawke government in fact was running up two years of the largest budget surpluses Australia has ever seen?"
And lastly, some snippets from various places via Alert And Alarmed:
"[from The Australian's letters page, 05/05/04, referring to the 90-day bank bill interest rate - which peaked at 21.39%, as mentioned above, under a Fraser Govt with JW Howard as Treasurer]
'The highest during the Hawke government was 19.56 per cent in December 1985. The highest under Paul Keating was 7.95 per cent in December 1994, which is only marginally higher than the highest under the Howard Government of 7.57 per cent in April 1996.'
Dr Allan Thomas, Lochinvar, NSW"
Not only was Treasurer Howard not concerned with high interest rates as Treasurer, but he was defending them. In the Australian Financial Review of 22 April 1982, journalist Tom Connors reported a Howard interview on the Channel 9 Today program.
'Mr Howard said that while he copped flak over higher interest rates, there was little he could do about it.'"
It's a far cry from his claims about keeping them lower than a Labor Govt could, isn't it? So please, can we put this myth about dream interest rates under the Coalition to rest? Can we see some evidence that Coalition supporters can listen to reason and facts, rather than just parroting the old promotional soundbites?
Sigh. A blogger can dream.