I am just a working Australian a unionist and Labor voter rusted on.
Interest rates and even workchoices will not alone win for Labor.
But in my view John Howard will be the last elected conservative Prime Minister of Australia for some time.
He is more likely to win the next election than Labor, not anything other than a nightmare for me ,but realistic.
In handing over to some one , no way its sure it will be Costello, he hands a future full of high interest and failing world economy, bankrupsys and doom a poisoned chalice.
Wishfull thinking will not change the fact this goverment has miss used its power and will leave us all exposed.

I find it hard to understand the attitude to interest rates taken by the media. As far as I can work out, they seem to think the rate should be zero, and that any increase is a disaster. This may not be surprising considering journalists reputation for always being broke. When the Herald had a poll on the rate increase, options offered for choice ranged from "disaster" to "I can cope", with nothing on the other side of the ledger, such as: "wonderful" or even "necessary".

After a life spent saving money before I spend it, (very unfashionable) like many retirees, I find myself in the position that I have more money than I can spend, and hopefully with my frugal habits I will survive the coming financial storm. I am obviously a total failure as a consumer. I welcome all rises in rates, as I consider borrowing money a sign of moral weakness.

The brutal fact is that Australia is living far beyond its means, as evidenced by our level of private foreign debt, and that the standard of living has to be reduced. At least the federal government has eliminated goverment debt, and that has saved us from the possibility of sovereign default, along the lines of Argentina. Nevertheless, the greatest non-military threat that we face over the next few years is having our foreign debt called in, with all the trauma that would cause. In encouraging people to borrow ever-increasing amounts of money, the media will have a lot to answer for in a few years.

A calming and commonsense piece to counteract the hysteria of the media.

Let's not forget that a mere 1/3 of householders have a mortgage (ABS figures) and around the same number of people rely on interest rates for their entire income. It cuts both ways.

People need to stop borrowing on credit cards and learning to do without if they don't like higher interest rates. There is no universal right to home ownership, and the current generation of borrowers wants everything now, even if they cannot afford it.

Very true Leigh, but how do we stop people from racking up debt on plastic cards? I tried to speak to one of my sons about that very subject and was given a severe slapping down. Unfortunately, he falls into an age category whereby he sees what us "baby boomers" have acheived and only wants the very same things. It's also unfortunate that his generation aren't prepared to wait for years like I had to before I could say I owned my own home. It took a lot of skimping, saving and damned hard work to get to that position in life, but they seem to want it all RIGHT NOW and they get it by using freely available credit. I fear for him and his generation. I fear for what effect it will eventually have on my grandchildren when the chooks come home to roost, but I can't see any way this "rack it up on plastic" maddness will end, except very badly for the whole country.

By itself a small increase in interest rates would not have significant political implications. But the latest increase needs to be seen in context of Howard's interest rate promises at the last election, expectations of another rate rise soon, high petrol prices and job insecurity due to the IR changes. All the polls are indicating Labor is neck and neck with the govt or even ahead so if Labor picks up another 2% due to current uncertainty watch Howard go into panic mode. But the govt can't just throw more money at voters as that will add to inflation pressures.
Howard and Costello have boxed themselves into a corner and I look forward to them trying to wriggle out. I wonder whether Costello will really have his heart in trying to help Howard.
I see Howard is now saying petrol could come back to $1.15 a litre. Yeah sure, that will be just after peace breaks out in the Middle East. It is more likely to go to $2.15 a litre than $1.15.

The author may be right, but if rates continue to go up Howard could lose the next election.

I find it so funny that the 2 issues that could bring Howard down, interest rates and petrol prices, are the two things he genuinely has little control over.

It reminds me of Al Capone, convicted of tax evasion after a life of crime.