Perhaps Mr Howard has trouble recalling the time when he was treasurer under Malcolm Fraser. A visit to the Reserve Bank?s historical interest rates page on its website reveals that the highest 90-day bank bill interest rate of 21.39 per cent occurred in April 1982 during the Fraser government with Mr 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.
Home loan rates peaked at 13.5% in 1982 for John Howard versus 17% in 1989 for Paul Keating.
See RBA spreadsheet below: http://www.rba.gov.au/Statistics/OP8ExcelFiles/3-21b.xls
The key difference between the two though was that Howard was Treasurer under the protection of a regulated finance industry with caps on home loan interest rates. These caps were removed by the Hawke/Keating government in their bold reforms in deregulating our Banking industry - reforms which have been critical to Australia?s modern financial strength after initial birthing and growth pains.
Given this massive reform, what then is a proper tool for comparison? The answer lies in that the key measure of interest rates is the 90 day bill rate.
In 1982 the 90 day bill rate reached: 22% vs 18.5% in 1989.
If you had residentially secured lending other than capped home loans you were paying 22% in 1982 and in fact, as mentioned, I have clients who did pay those rates then and slightly higher meaning they were at the 90 day bill rate and above. There can be little doubt that had Howard not benefitted from regulation uncapped home loan rates would have been at that 22% and higher level.
This makes Paul Keating?s 17% home loan rates against a 90 day bill rate of 18.5% actually an impressive achievement by comparison - not that any of us want to see those sorts of rates at any time.
RBA bill rates: http://www.rba.gov.au/Statistics/OP8ExcelFiles/3-22b.xls
You would be interested to know that the 90 day bill rate is currently 6.55% meaning that the standard home loan rate is 1.52% above that rate. This represents bank margins of course but the inference is that yet again Howard is responsible for expensive borrowing when compared with proper benchmarks. This is confirmed when looking at Australian rates in comparison to other western economies. We have been consistently more expensive than other appropriately comparable nations.
Funny how the facts seem to consistently undermine the Coalition?s myths isn?t it? Let?s not get started on the fact we are headed for 1.5% productivity gain for the decade - the worst since the 1950?s.
Conclusion; Howard is one tinny b.astard who has benefited from a his own persistence and a series of fortunate events. How Costello must regret his own inexperience and naivety in delivering him leadership after Downer.
