Interest Rates

Mr McBRIDE (MacKillop) (14:32): My question is to the Treasurer. Could the Treasurer please explain to the house regarding what I have just recently heard: that the Reserve Bank has ruled that we are now down 25 basis points on the national interest rates? With your leave, Mr Speaker, and the leave of the house, I will explain.

Leave granted.

Mr McBRIDE: It is my understanding that under the Marshall government we were heading towards a $35 billion debt beyond forward estimates, and I believe that the Malinauskas government has forward estimates going towards $45 billion. If these 25 basis points are to stay in place every year, the government is going to be better off by about $112 million a year. I am wondering, first of all, Treasurer, will you commit to saving the $112 million? If you are not going to save it, could you spend it in MacKillop for me, please?

The SPEAKER: That's half ministerial statement, half cheeky question, I think, member for MacKillop. Treasurer, you may have some latitude in your answer.

The Hon. S.C. MULLIGHAN (Lee—Treasurer, Minister for Defence and Space Industries, Minister for Police) (14:32): Thank you, Mr Speaker. This is very good news announced by the Reserve Bank that they have cut the cash rate by 25 basis points. I am sure that there were many Australians who were waiting to hear what the Reserve Bank was going to decide at its board meeting today, providing some relief to those people exposed to interest rates—whether it's home owners through their mortgage rates, renters worrying about whether they are going to have some capacity from their landlord for some rental relief, or people who have other personal or car loans, for example, and what it might mean for them—as well as generally how that might flow through to the rest of the economy and how that might flow through to the cost of goods and services.

It has been an extraordinary journey over the last three years as the nation has suffered under high inflation. We have seen the pump priming of the national economy, with more than half a trillion dollars of stimulus to try to combat the economic and financial effects of COVID. That then led us to a period of very high inflation which has made life very difficult for Australian households and small businesses. Today's rate relief will be welcome news for those people who will feel the benefits of that relief.

What it will mean, of course, for the cost of borrowings to the South Australian government or to other semi bonds that state and territory governments will continue to put out into the market to raise capital for their record infrastructure programs, we will wait and see. As the previous government articulated, they had a commitment that they wanted to build a new Women's and Children's Hospital. They had a commitment that they wanted to complete the north-south corridor. On coming into government, we undertook to review those projects to make sure that they were being done properly with the right scope and that they were being costed appropriately.

We have not only reaffirmed the commitment to those projects but made sure that we are making room to fund those projects, which means an increase in the state's debt. That is a bipartisan position, making sure that we've got the capacity financially to invest in the infrastructure of the future. But what we have done as a government is make sure that, as we are taking on those extra borrowings, we are also ensuring the budget is back in surplus. Getting the budget back into surplus under this term of government gives us the comfort to be able to take on these high levels of debt.

If there is any improvement in the cost of that debt, I think the member's question is: will we funnel the fulsome benefit of that into his electorate? I am sure there will be 46 other members lining up to experience as much of that largesse as possible. Of course, there isn't necessarily a directly causative relationship between the Reserve Bank's setting of the cash rate and the capacity for the state government to get bonds into the market at a particular price, but I will update the house when I release the budget in the first week of June.