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.

It is funny how Howard can control interest rates when they go down, but it is market forces when they go up.

Did anyone notice that petrol in Qld is about 8c a litre cheaper (No state petrol excise) Then deduct 36c a litre excise plus about 14c GST.

22c a litre to state govts. 28c a litre to federal govts.

Wouldn't a cut in excise instead of income tax cuts have been less inflationary? But Johnny and his mates are the great economic gurus aren't they?

IT makes no diffrence,time after time academics have written,their version of why it is so,in this case,it concerns interest rate rises,but from a laymans point of view,the voters have been conned for the best part by John Howard,ever since he was elected to govern Australia,look back on hid record of promises backflips,and for every one,he made excuses,the last budget was supposed to be the best for all Australians?and the economy was good and improving,and that things will just get better and better,these words spoken by both John Howard and Peter Costello,with the assurance that my government will do everything in its power,that the prosperity,under the Howard government will continue,what now,John Howard now has become a prophet,saying that interest rates is going to rise,because of the general increase of the world market prices,Peter Costello,now says voters should scout around for cheaper rates,but replay his speech when he delivered the budget?in fact no worries fellow Australians,you have a government that has a big surplus,and things will just get better and better,and will not return to the bad days when the ALP was in government,now John Howard,blames Paul Keating?bananas,bananas,and the price of oil?Peter Costello now urges peopleto scout around for cheaper rates,what a contradiction,and then there is John Howard joing George Bush,in their terrorist invasion of Irag,and saying that he had a" mandate?"from the voters,wrong,a rough guess,nearly 63%,of Australian voters,did not vote for that mandate,he also promised the battlers that his government will imptrove their living standards,none of this has taken place,he did a dirty on the workers,by selling their rights,to BIG BUSINESS,this is the John Howard ,that said,all Australians will be better off with him as our Prime Minister,those that were sucked in and conned,and voted for the Howard Government,are to be blamed for,what is now,an Australia that benifits the well to do,and the 5% ELITE that are the main people,that John Hoard,and his policies,have created,the poor and the battlers,are just second class citizens,of the LUCKY COUNTRY,this does not even include the Aboriginal nation,they still just remain outcastes,in the land that they are the true and legitimate owners of

Karsoon you should familiarize yourself with a literary device known as the "paragraph". Millenia ago writers discovered that text separated into logical units was more readable than undigested blocks of the author's stream of consciousness.

There is no logic to the claim that the interest rate must go up because of the increase in the petrol prices... Why

If you hit your foot with a fallen object.. is that a good reason for hitting it harder...

What is basicly being stated is... you are idiots.. now that we have drained some money off you for fuel, which has made life extremely difficult for those at the bottom of the wages bracket, we will now really bury you , for no valid justifiable reason..

And as far as the idiot who stated that he was retired and regarded borrowing was something it scoffed at as a form of weakness, perhaps he should pull his head out of his rectum and see what real life struggle is all about..

If there were no borrowers, you would have no income for your interest rates you idiot.. then no income for you, you would have to keep working..

That is... if ever you had to work at all..

Mr Bean,
Did you get your information from Malcolm Turnbull.
The housing rate rise has been over dramatised.
It is only a quarter of one percent.
So what has petrol gone up by?
About 33percent. Well gee that is only 132 percent of a quarter of one percent of a interest rate rise. Wow all the world is about drama, drama, and drama.
It's nothing really, it's only money.
I wonder if water rates will go up.
How about Council rates.
How about food prices.
House prices will come down.
How about inflation. Yes going up, up, up, up ,up, up, and up.
When all is factored yes the people will vote for John Howard.

Mr Bean

Check out the Morgan Poll published on the same day you wrote this crud.

ALP Jump Ahead With Electorate Focused On Interest Rates And War In Middle East

Finding No. 4062 - August 04, 2006

The latest Morgan Poll shows a jump in Labor support with the ALP leading the L-NP 53.5% - 46.5% on a two-party preferred basis. The Morgan Poll was conducted with the electorate focused on the pending interest rate rise from higher than expected inflation figures, Opposition Leader Kim Beazley’s plans to expand Labor’s ‘three-mines’ uranium policy, and the intense violence that has gripped Israel and Lebanon in recent weeks.

Primary support for the L-NP was 40% (down 5%), ALP 42% (up 5.5%)

Steve Madden, the Morgan Poll is arguably the least accurate of the polls. There is general movement in the polls based on staistical "noise", but it is often only the parties local electorate polling that has the real key to results in marginal seats. Also Howard won in 98 on 48.8% tpp and given success in campaigning in key seats could do so again. Too early to tell.

I agree that WorkChoices is being badly received, but I would expect some compensation for minimum wage earner - like LITO uplift or EITC's: the Fair Pay Commission will likely request it anyway.

See the recent OECD report which paves the way for reducing effective marginal taxation rates on the welfare transition - I think Labor could struggle against a bouyant labour-market with income distribution offset for minimum wage earners and other low paid workers. Whether Aussies prefer jobs and compensation over minimum wage uplift - well the Accord was popular for years in that context - though not now perhaps.

Labor will be tested if they don't get a welfare to work framework out soon. Because they will play catch up on job creation ... small target is still as risky as releasing policy direction.

Houses are far more expensive than they were 15 yrs ago as a proportion of income.Low interest rates and cheap car prices have made housing proportionately far more expensive.Just a small rise in interest rates will have an enormous impact on incomes,employment and economic activity.It won't take much to send us into recession.

Cheap fuel underpins our living standards,and this coupled with rising interest rates means disaster for the Coalition.NSW has been suffering low growth rates for two years already with Govt spending out of control and infrastructure languishing from neglect.

If the wheels fall off,there is no way I'll be voting for either of the major parties,since the Labor alternative would be a weak kneed disaster.