“The impending mortgage crisis in the western suburbs of the eastern capitals has taken another step closer with reports of a quantum shift in market repossessions. (“Stress sales on the Rise” Courier Mail, 03/03/08). Not wanting to be a Jonah, but this is an issue I have been stating my serious concerns about, on the public record, for some time.

“The issue is that an increase in listings, stress sellers, restricted access to capital from higher interest rates, fixed rate refinancing rolling from low interest rate to high interest rates on low owner equity housing loans, which is further exacerbated by high personal debt on consumer items, is the recipe for a major mortgage meltdown. These items combine for a very unpleasant time not just for those with the debt but those who wish to rent as high interest rates are passed on.

“What are Mr Rudd and Mr Swan going to do? It is no good echoing the problem clearly already identified. How does the key economic management pair of Messrs Swan and Rudd take the pressure off the Western Suburbs? It is certainly not helped by talking up interest rates and with the current obvious economic uncertainty it appears counter intuitive that we slow down our economy when a US recession could bring it to a screaming halt. How does a federal government reduce the pressure without pulling the mat out from underneath working families?

“State Governments are the benefactors of the GST, which was to take the place of State Government taxes, such as stamp duty. Stamp duty removal could buffer the impending fall in the real estate market and if the State Governments choose not to remove stamp duty then Mr Swan should make residential building materials and other associated costs GST free and reduce the distribution to the states of GST revenue accordingly. This at least would be a sign that Mr Swan and Mr Rudd are genuinely serious rather than rhetorically concerned and generally lost.

“Mr Swan and Mr Rudd can be the architects of the deflation of the housing bubble but currently they are inspiring its explosion with all the personal financially disastrous implications for the working families of the western suburbs.” Senator Joyce said. Ends