The Non-Core Promise That Just Will Not Go Away

Howard Says We're Entitled To Believe What He Tells Us To Believe

The story goes that in the lead-up to the 2004 federal election, treasurer Peter Costello and a number of key advisors warned John Howard not to push the claim that his government would keep interest rates at "record lows" and "30 year lows" or even just "low".

It was a con, a bold-faced lie and everyone in Howard's inner circle knew it. Interest rates would go up as surely as they would go back down again, then up again. Don't do it, they supposedly told Howard, it will come back to haunt you. But Howard ignored them all. He went out there and pumped his "keeping interest rates low" promise like a speed-addled evangelical podium pounder granting all who believed him access to Low Interest Rates Heaven.

Howard then rubbed Costello's face in it by leaving it to him to launch the "keeping interest at record lows" ads, which he did, with a very grim face indeed.

Now that interest rates have done nothing but climbed since 2004, and are expected to go up again before election day, Howard is being put on the rack by nearly every journalist who interviews him. It should be excruciating for Howard. It sure is excruciating to watch, and hear. But he doesn't care. He's got a new promise to sell. Under his government, interest rates will be lower than they will be under a Labor government.

Liar, deceiver, prophet.

A few examples from the past week alone.

Radio 3AW :

JOHN HOWARD:…I mean interest rates will always go up and down and I’ve never guaranteed that interest rates would never go up.

NEIL MITCHELL: Well yeah, but your advertising did.

JOHN HOWARD: Well, well the advertising just very briefly in the early part of the campaign and then that was…

MITCHELL: It said, ‘keep interest rates at record lows’. Well that promise is broken isn’t it?

JOHN HOWARD: Yeah well, that particular advertisement lasted two nights and then it disappeared. And you didn’t get out of my mouth…

MITCHELL: No I didn’t but that promise was broken from that advertising wasn’t it?

JOHN HOWARD: Well, interest rates are not at record lows now. I understand that.

MITCHELL: And your advertising promised that.

JOHN HOWARD: Well the advertising did refer to that for two nights. I accept that.

MITCHELL: So it’s a two night promise then Prime Minister?

JOHN HOWARD: No, no well look you’re asking me the question…

MITCHELL: Well you know Labor's going after you on the basis of broken promise...

JOHN HOWARD: Yes I understand that.

MITCHELL: And the advertising was, does now, look dishonest.

JOHN HOWARD: Yes well, look I acknowledge what was said. I acknowledge that. But can I just say to you and to your listeners, that what really matters now is which side of politics is better able to manage an increasingly hostile financial environment. Isn’t that what matters?

MITCHELL: Well I guess it is. But you can’t promise to keep interest lows?

JOHN HOWARD: I'm not doing that

MITCHELL: What are you saying? Same as last time. You’ll be better than Labor, eh?

JOHN HOWARD: Yes I am. I am saying that. …

From the 7.30 Report :

KERRY O'BRIEN : You did say it as a fact, interest rates are now 2.25 per cent higher, as a fact, than when you made that promise. You were not able to keep that promise. Do you simply acknowledge that you weren't able to keep that promise?

JOHN HOWARD: Look, I say again Kerry, people will make a judgment on what I said against what has occurred. But the big question they've got to ask themselves, whatever happened in the past, let's put that aside...it's the future that matters.

KERRY O'BRIEN: But you see, Mr Howard, you want us to put aside the past in relation to your comments, but not with regard to Labor. That is incredibly selective.

JOHN HOWARD: No, I'm perfectly happy to compare past performance as distinct from commentary.

KERRY O'BRIEN: Or past promises.

JOHN HOWARD: Look, leaving ... whatever you like. Look at what happened, look at where we are now...

The Sunday program :

LAURIE OAKES: Wasn't it a mistake to say that you would keep interest rates at 30-year lows?

JOHN HOWARD: Laurie, what I said out of my own mouth...what I said was that they would always be lower under us than under Labor.

LAURIE OAKES: But didn't you actually say you would keep them low.

JOHN HOWARD: Laurie, what matters is precisely what happens in the future.

LAURIE OAKES: But people were, if you like, fooled into voting for you maybe, by what you said, about keeping interest rates at 30-year lows.

JOHN HOWARD: Laurie, the impression that people took from that campaign was that we believed and they believed it that we would do a better job in keeping interest rates down than the Labor Party.

LAURIE OAKES: ...on October 7, 2004...you said 'we don't assume the economy will continue at its own momentum, it will only continue if we continue to do the right things, keeping the budget in surplus, keeping interest rates low, keeping them at 30-year lows.' It did come out of your mouth, Prime Minister.

JOHN HOWARD: Well Laurie, if you look at the average interest rates under the last government, you look at them under us, they're four to five percent lower than what they were.

LAURIE OAKES: We're talking about whether people will believe you this time because you misled them last time.

JOHN HOWARD: You're asking me what I believe they took out of the last campaign and that is that we would do a better job on interest rates. And they'll make up their minds about that.

LAURIE OAKES: They're entitled to believe you or Liberal Party ads last time.

JOHN HOWARD: They're entitled to conclude as they should now that we'll do a far better job of keeping interest rates lower than Labor.

LAURIE OAKES: It's got nothing to do with what you promised at the last election?

JOHN HOWARD: But what matters is what occurs.

LAURIE OAKES: But in an election campaign what matters is whether people believe and can remember what you say.

JOHN HOWARD: But do you know what they believed out of the last election? They believed they should vote for us because we would keep interest rates lower than Labor, and they were right, and the evidence supports that. And the same applies in relation

LAURIE OAKES: Even though you said you would keep them at 30-year lows, they weren't supposed to believe that?

JOHN HOWARD: Laurie, they were entitled to believe that we would do a better job at keeping interest rates down than what the Labor Party would do, and they did. And they were right. And the same will apply in the future.

Activate 'Absolutely No Shame' mode, Mr Howard.

I particularly like the way he repeatedly tells people to forget about what he said last time around, like it doesn't matter a dolt, and to look to the future instead, and then tells voters they are "entitled" to believe what he tells them to believe.

Howard has probably, quite effectively, reduced the election day impact of another rise in interest rates by riddling the subject with a such a strong foundation of boredom, tedium. The more journos raise the issue now, the more likely the punters will switch off, even if it means more dollars out of their wallets.

Howard's Pledge To Keep Interest Rates At "Record Lows" Has Cost Mortgage Payers $3000 Since Last Election

Not being a part of the Canberra press gallery, I'm not too sure how widespread this rumour was, but it goes like this : It was John Howard who insisted on pushing the 'Keeping Interest Rates Low' and 'Keeping Interest Rates At Record Lows' mantras during the 2004 federal election. Treasurer Peter Costello objected, loudly, knowing it was a lie that would probably come back to burn them, but Howard would hear no dissent on the subject.

And how those two lines are coming back to burn the Howard government now.

For the first time in history, interest rates will be raised in the middle of a federal election campaign. This will be the sixth straight rise since that election, and every newspaper, radio station and television news program in the country, is reminding Howard of his pledge to 'keep interest rates at record lows.'

Howard, and Costello, first tried to claim that interest rates were still low, when the fourth and fifth rate rise hit. But that argument is dead now. People are hurting.The estimates of hundreds of thousands of families being pummeled by rising mortgage payments is the news story of the day :

Another rate rise - which would be announced on November 7, just 17 days before the election - would be the sixth straight rate rise since the Coalition was re-elected in 2004, after promising to keep interest rates at "record lows".

The increase in mortgage rates since then would add more than $3000 to the annual cost of servicing a $250,000 mortgage.

Labor treasury spokesman, Wayne Swan said that over the past five years, food costs had risen 50 per cent faster than the overall cost of living, which was up 21.4 per cent. Health costs had risen by 30 per cent while education costs were up by 40 per cent.

Food costs are likely to rise even further, as the effects of a worldwide grain shortage takes hold, leading to larger increases in the price of bread and milk, for starters.

So desperate is Peter Costello to get the focus off him and the PM and their dodgy promises about interest rates, he's now claiming that a Labor government would lead the country in a recession.

So this golden economy that Howard and Costello never stop trying to take total credit for is that weak and fragile, is it?

It's a tactic unlikely to work. Rudd got in early and warned the Australian people that Howard & Company would use The Fear in their campaigning.

But that won't stop them trying. What else have they got now?

Two weeks out from the election, Howard and Costello will be so desperate they'll probably run ads with old footage from the Great Depression of the 1930s, of soup kitchens and lines of unemployed workers and dirty-faced children picking through garbage bins. 'If you want to go back to this, vote for Kevin Rudd.'

Now that would be a fear campaign.

And there's also this - more good news for the government : financial markets are reportedly betting on two interest rate rises by the end of the year.

The Final Nail In Howard's Political Coffin

Interest Rates Hit 10 Year High

Journalists Laugh At Howard's Excuses During Press Conference

"Rising interest rates dominates everything else when it comes to family security. Just a tiny upward movement in interest rates more than devours a few dollars of taxation relief..."

John Howard, September, 2004

The above image is a screen grab from a TV ad the Howard government ran for weeks during the 2004 federal election campaign. More than $100 million of taxpayers' dollars were spent pumping this, and other messages, in a fear-based campaign to convince Australians that if they voted for Labor Party, they would see the economy plunged into turmoil. Their wages would fall, inflation would increase, interest rates would rise and their mortgage payments would soar.

There was nothing subtle about anything connected with the 'Low Interest Rates' ad campaign. The Howard government would keep interest rates at "record lows". Vote for Labor and it will cost you, and your family.

Today, the Reserve Bank decided to raise interest rates for the fifth time since the 2004 election.

The average Australian family will now have to find yet another chunk of money from rapidly depleting household funds to meet their mortgage payments. For more than a million families, already suffering 'mortgage stress', this latest increase in interest rates will destroy their already meager household budgets :

Homeowners were dealt more mortgage pain today with the Reserve Bank of Australia (RBA) lifting interest rates to a 10-year high, amid rising inflation.

Most economists expected the increase which saw interest rates rise by 25 basis points to 6.50 per cent, the highest they've been since November 1996.

Interest rates up, inflation up. The Howard 'Plan' promoted in 2004 lies in tatters.

Voters believed Howard would "keep interest rates low" and he has clearly failed to do so.

The Howard government knew this was coming. Their early reaction? Blame the states. Almost every Australian financial institution and credible economist who has commented so far on the 'Blame The States' claim has dismissed it as worthless garbage :

This week, the Federal Government blamed state government debt for putting upward pressure on interest rates but economists say strong economic growth and Treasurer Peter Costello's latest tax cuts are more likely to have fuelled inflation, paving the way for a rise.

ANZ chief economist Saul Eslake said there was little connection between state government borrowing and interest rates.

"It's true state governments will be borrowing money over the next four years but there's very little historical evidence between government borrowing and the cash rate," he said.

"It's political propaganda. It's not economic analysis."

And Howard's personal reaction? He continues his absurd and irrelevant claims that interest rates are still lower than they were at their highest during the Keating government in the early 1990s.

Pathetic, and downright insulting to every Australian family who now have to ind another $50, $80 or $100 a month to hold onto homes. The Australian public no longer buy this line of spin from Howard, or from the Treasurer, Peter Costello, though they are both likely to keep pumping it.

The latest interest rates rise should prove to be the final nail in Howard's political coffin.


UPDATE : Tim Dunlop, at Blogocracy, unearths the mother of all Howard quotes from his "Who do you trust to keep interest rates low?" period in 2004. Open mouth, insert both feet :

"My friends, we all prize the financial security of our families. Let me say this, and it’s not just my view, but it’s a view frequently expressed to me as I move around this country talking to Australian families. Nothing threatens that security more directly than the prospect of rising interest rates. Rising interest rates dominates everything else when it comes to family security. Just a tiny upward movement in interest rates more than devours a few dollars of taxation relief or additional family benefits. There is no economic credential for office more crucial than a capacity to keep interest rates low."

It's almost unfair how easy it is for Labor to use Howard's own words to crucify him now. Howard was told by key advisers prior in the build-up to the 2004 federal election to tone down the "keeping interest rates low" talk, because they knew it would come back to haunt him, and the Liberals in general. Consider them to be now well and truly haunted.


UPDATE : Matt Price reports that during the joint Howard-Costello press conference held an hour after the interest rate rise was announced :

For the first time I can remember, press gallery members began laughing during a Prime Ministerial answer.

A Canberra source tells us that journalists are already trying to find ways to avoid having to join the 'Howard Bus Of Hope', or whatever it will be called, during the election campaign.

It appears most of the Canberra press gallery have already decided Howard will lose, and they want to hang out with much younger, much more fun, Kevin Rudd crew.

As Howard's Hope Bus winds through drought-devastated rural Australia, and Howard finally realises that he blew it, that he missed his chance to go out on top, and that he will be forever remembered as a loser, it won't be a cheery team to be spending any kind of time with.

Let alone a month or more.

It'll be like a 40 day long wake, without the free booze.

We're still betting that Howard will delay the election until February or March, 2008, or cancel it altogether, in the event of a national emergency.


Howard's "Who Do You Trust?" Line On Interest Rates Will Haunt Him All The Way To Election Day

The Reality Of Interest Rates

Statement From The Reserve Bank Governor

Economists Grim Warming : Expect Another Interest Rate Rise, And Soon

For Sale Signs Go Up All Over Sydney

Millions Of Australians Work Overtime For No Extra Pay

Average Mortgage Payments For Sydney Homes Hit $3000 A Month

This story is a perfect example of why so many Australian workers don't like the ways in which prime minister John Howard is transforming their pay and working conditions, and therein, their home and social lives.

Workers are now saying goodbye to the standard working week (five days a week, eight hours a day) whether they want to or not, and most of them don't like it.

The Australian government can propose all the safety nets it wants to back up its industrial relations policies, and the corporate media can howl night and day on behalf of its big business clients about how Labor's plans to toss out most of Howard's IR changes will sink Australia back into some Depression-like union dominated dark age, but most Australian workers are not listening.

Well, they're listening, but not to Howard, or to the corporate media that takes the side of big business and the government.

They're listening to their friends and family members and relative complaining about the unholy hours they are racking up at the office or factory and how they aren't seeing any financial benefits. And they're recognising for themselves that working longer for less pay, while trying to meet soaring mortgage and debt commitments, is chewing up their lives and social time.

This is why John Howard and his coalition government are so far behind Labor in the polls, and have been since last year.

Howard is trying to sell them another part of his Dream Australia - no unions in the workplace, 'flexible' working conditions - but for many Australians the earlier parts of that dream they brought into, with Howard's financial and inspirational encouragement, primarily committing to property investments and first homes they now can't afford, is biting them all too hard where it hurts the most. They have to work longer hours to pay off the mortgage, but Howard's IR changes mean they won't necessarily earn more money for those longer hours.

Howard's Dream Australia is becoming a vicious, crippling circle for millions of workers, and they will vote for Labor because Labor is, so far, successfully selling them a way out of the hole they're in, or at least a better way forward.

From the Sydney Morning Herald :

Almost a third of Australian employees work unsocial hours - between 7pm and 7am - and even more complain they have no say about when they start or finish.

As the Howard Government seeks to soothe unease about its workplace laws, a Bureau of Statistics survey reveals the deep incursion work has already made into family and community life.

The figures show 37 per cent of employees work overtime or extra hours - and about half of them do so for no extra pay.

Thirty per cent said their shifts regularly overlapped the hours between 7pm and 7am as part of their main job. Three in five said they had no say about when they started or finished.

As for weekends, 16 per cent said they were required to work on Saturdays, and 8.5 per cent on Sundays. One in four were not always allowed to choose when to take their holidays.

"It is not just family life, but community life that is being compromised," said the director of the Workplace Research Centre at Sydney University, John Buchanan. "It just rips the heart out of the football team."

...a professor of industrial relations at Griffith University, David Peetz, said the shift was driven more by employer demands than employee wishes.

"I don't think people have decided, 'Gee, I wish I could work late at night.' Sometimes it is driven by employee wishes, but the trend we have seen over the long term, of an increasing incursion into the balance between work and life, is driven more by what employers want."

Dr Buchanan said the new laws had sped up a trend that was in place over the past two decades. "Work Choices legislation formalised the abolition of the standard working week."

And then comes the pain of the mortgage payments, using first home buyers in Sydney as an example. Howard promised in 2004 that he would keep interest rates low, while some of his election advertising promised record low interest rates would continue, which combined with more easily accessible loans, further encouraged young couples to buy their first homes. Then the interest rates started to climb :

The average monthly repayment needed to buy a typical first home in Sydney has hit $3000 for the first time.

This is up $442 on a year ago...

About half the increase is due to last year's three interest rate rises, which added almost $200 a month to repayments on a $400,000 loan.

The rest is due to rising home prices, which have forced people to take out bigger loans.

The NSW executive director of the Housing Industry Association, Graham Wolfe, said that even assuming interest rates remained low, housing affordability in NSW would not return to acceptable levels until 2022.

Mortgage repayments are now soaking up 38.5 per cent of an average first home buyer's income, enough to put them within the official definition of "housing stress". This is when people pay at least 30 per cent of their disposable income on mortgage repayments or rent.

Recent testimony to a Senate committee by the inspector-general of the Insolvency and Trustee Service Australia, Terry Gallagher, indicated Australian families are under increasing financial stress.

Mr Gallagher said bankruptcies had risen 12.5 per cent in the nine months to March.

"You could go back 10 or 15 years, when bankruptcy numbers were 13,000 a year, and now they are 30,000 a year," he said.

Keep in mind, too, that John Howard recently said in Parliament that Australian families had never been better off, meaning life was sweet under his government. If only he actually went and knocked on some doors.

Howard's You've Never Had It So Good line will no doubt come back to haunt him, as it should. It was an absurd and insulting thing to say to young families watching almost half their wages get chewed up in meeting their mortgage payments, while property prices started to fall.

Howard should have said no Australian prime minister had ever had it as good.

After all, he lives rent-free in one of the most beautiful and best-positioned homes on Sydney Harbour. A house owned by the Australian taxpayers, of course, who have also forked out for more than $1.3 million worth of renovations and new furnishings since John Howard moved in in 1996.

Australians Going Broke In Record Numbers

Housing Affordability At Lowest Levels In Two Decades

More People Working Longer For Less Pay : Howard's Gift To Big Business

Howard Promises Business Council That If They Help Him Win The Election, IR Changes Will Stay Forever

You Should Get More Than Free Pizza For Working Overtime....Maybe