INTEREST RATE HIKE BAD FOR BUSINESS– MICKEL
Published Wednesday, 08 November, 2006 at 09:44 AM
Minister for State Development, Employment and Industrial Relations
The Honourable John Mickel
Queensland businesses will pay some $600 million a year in increased interest payments following the Reserve Bank of Australia’s decision to raise official interest rates by quarter of a per cent to 6.25 per cent.
Minister for State Development John Mickel said this increase, the eighth under the Howard Government since 2002, was bad for Queensland business as the costs of servicing borrowings has increased by about 50 per cent in just four and half years.
Mr Mickel said that in the last three years alone, there have been five straight interest rate rises.
“The Prime Minister says this rate hike is necessary to cool the economy, his words will hold little comfort for owners of medium-size Queensland business, for those with a $1 million loan, it means handing over $7,500 a year more than at the beginning of 2006.”
Mr Mickel said the rate rise was likely to push the Australian dollar higher which would hurt exporters and also affect the manufacturing and tourism sectors.
“The rate hike will increase pressure on businesses, particularly in regional Queensland, already affected by high fuel prices and drought.’’
He said the skills shortages are fueling inflation as they add to the growing costs of labour as employers are forced to pay higher wages to attract and retain staff.
“The Howard Government has failed over ten years to get its priorities right, they have ignored the need to increase the number of apprentices and trainees.
This leads to higher inflation as additional costs are passed on to the consumer in higher prices for goods and services.’’
Minister Mickel said the higher cost of credit and uncertainty of future directions of monetary policy would result in lower business borrowings and this would affect the level of investment as increasing cost and uncertainty mean postponed or abandoned investment projects.
However, it’s not all doom and gloom, thanks to the strong performance of Queensland’s economy, he said.
“The greatest assistance to business, especially to small and medium-sized firms, was the strong economy the Queensland Government continues to provide.’’
Media contact: Chris Brown 3224 7349 or Elouise Campion 3224 6784
8 November 2006
Minister for State Development John Mickel said this increase, the eighth under the Howard Government since 2002, was bad for Queensland business as the costs of servicing borrowings has increased by about 50 per cent in just four and half years.
Mr Mickel said that in the last three years alone, there have been five straight interest rate rises.
“The Prime Minister says this rate hike is necessary to cool the economy, his words will hold little comfort for owners of medium-size Queensland business, for those with a $1 million loan, it means handing over $7,500 a year more than at the beginning of 2006.”
Mr Mickel said the rate rise was likely to push the Australian dollar higher which would hurt exporters and also affect the manufacturing and tourism sectors.
“The rate hike will increase pressure on businesses, particularly in regional Queensland, already affected by high fuel prices and drought.’’
He said the skills shortages are fueling inflation as they add to the growing costs of labour as employers are forced to pay higher wages to attract and retain staff.
“The Howard Government has failed over ten years to get its priorities right, they have ignored the need to increase the number of apprentices and trainees.
This leads to higher inflation as additional costs are passed on to the consumer in higher prices for goods and services.’’
Minister Mickel said the higher cost of credit and uncertainty of future directions of monetary policy would result in lower business borrowings and this would affect the level of investment as increasing cost and uncertainty mean postponed or abandoned investment projects.
However, it’s not all doom and gloom, thanks to the strong performance of Queensland’s economy, he said.
“The greatest assistance to business, especially to small and medium-sized firms, was the strong economy the Queensland Government continues to provide.’’
Media contact: Chris Brown 3224 7349 or Elouise Campion 3224 6784
8 November 2006