Wednesday, April 04, 2007

Statistics ignored due to lack of interest

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.


The Editor said...

But I've got a $700,000 mortgage on my home in and outer-suburban development, three kids I've got to put through private school because there are no values in public schools, and five cars to fill with petrol! Only John Howard can let me afford all this.

QuietStorm said...

Wow, my first real comment! (not counting Sozzy trying to get me blogging, bless her heart. I hope she comes back soon) And from The Ed, no less! I'm honoured. :D

And I stand corrected. Clearly Australia's more prosperous. Even though the lowest paid workers are seeing a decrease in their real wages and the mid-level trained working level has nearly disappeared, those managers are getting paid HEAPS more now! Just because I'm not seeing any extra prosperity, I shouldn't gripe and fight my submission to the greater good of the hivemind.

QuietStorm said...

Orright, I give up. I haven't linked to this blog yet, anywhere. How'd you bounce across me - someone else's Blogger profile somewhere?

The Editor said...

How'd you bounce across me?

I have my ways.

Actually, there were referrals from your site to Grods in my stats.

QuietStorm said...

Oh duh. Of course, you webmasters and your mastery of the mysteries of the interwebs.

That would be traffic from me, seeing as this has pretty much been my own personal bookmark list until I felt compelled to rant about the interest rate thing.

The Editor said...

Looks promising so far -- keep it up!

Anonymous said...

You forgot one very salient point: Paul Keating was/is the world's greatest treasurer. It is only natural that less celebrated treasurers might stumble.


sozzy said...

Q, I blogged! I did! So did you. We're blogging bloggers.

I guess we're economically related too, since we're not upper-level management reducing costs by stagnating our workers' wages while skyrocketing our own.

We have so much in common!