Tuesday, 7 February 2023

 David DAVIS (Southern Metropolitan) (17:33): (8) I have an adjournment matter for the Treasurer, and it concerns the interest rate changes announced today by the Reserve Bank. Obviously the 0.25 per cent rise is one in a cascade of rises that we have faced over the last 12 months, a very significant series of rises that are putting pressure on families, putting huge pressure on those with significant mortgages and putting significant pressure also on the state government budget. When one looks at the sensitivity analysis in the state government’s budget, at the back of the budget papers, it is clear that about $2.5 billion is the cost over four years of a 1 per cent movement in interest rates. Obviously these changes take time to work through in the budget, and the borrowing cycle is as it is – lumpy – but nonetheless it does have a significant impact.

When one does the calculations now with a significant rise in the order of 3.35 per cent, that is likely over four years to be a more than $8 billion impact on the state government budgetary position – more interest payments in the state government’s budget of that order according to the budget sensitivity analysis that was in the most recent budget. These are very significant impacts, and I ask the Treasurer to come clean and to provide to Victorians and this chamber the precise impact of the recent cascade of interest rate rises – the 3.35 per cent increase in interest rates that the Reserve Bank has put in place – and the impact that that has on the state government budget. So it is a very simple question. He needs to provide a figure over the four years of the forward estimates period of what the cost to the state government budget is of the 3.35 per cent interest rate rises.