10 June 2015
Transcript - #2015145, 2015

Interview with Michael Brissenden, AM

MICHAEL BRISSENDEN:

Joe Hockey is in our Sydney studio and he joins me now. Treasurer, good morning.

TREASURER:

Good morning Michael.

MICHAEL BRISSENDEN:

Doesn’t this show just how out of touch you are with ordinary Australians, I mean the answer to getting into the housing market is just to get a better job?

TREASURER:

Well, let’s not play the man, let’s actually deal with the policy. Yes it is difficult for first home buyers to get into the market, there’s no doubt about that, particularly in Sydney. So the best thing we can do as a government is help to create more jobs and better paying jobs, that's why we had a $5.5 billion small business and jobs package in the Budget in May. That's why we got rid of the carbon tax, to reduce the cost of living. That's why we've been able to contribute to everyday lower costs of living, particularly associated with the lowest interest rates on record. Now they all work in favour of people being able to have more money in their pocket. Yes, we have more work to do but of course it's a challenge, living in an expensive city particularly like Sydney is a real challenge…

MICHAEL BRISSENDEN:

Sure, but do you accept that these comments have certainly upset a lot of people who have been hoping to get into the market? What do you say to nurses, to teachers, to policemen, all of whom would say they have a good job but earn just under $80,000 a year?

TREASURER:

Well we are doing everything we possibly can, not only to ease the cost of living burden on families but, importantly, we're doing everything we can to help to make housing more affordable for new entrants. Now, for example, before this debate really started I raised it with the State Treasurers who have primary responsibility for housing stock in Australia, and the Victorian State Labor Treasurer is chairing a taskforce that is looking at the supply side of the equation. As I've said on numerous occasions, we have to increase the supply of housing in Australia.

MICHAEL BRISSENDEN:

But isn't that a state responsibility? Isn't the reality that investors are now buying more than half of all properties in Sydney and shouldn't you be concentrating on trying to contain that?

TREASURER:

Well, the fact is that around two-thirds of housing finance in Australia is for owner occupied dwellings. The average home loan balance in Australia is around $243,000…

MICHAEL BRISSENDEN:

But isn't it true that in Sydney investors are buying half of all properties for the first time?

TREASURER:

Well, it may be on - I'm interested in those statistics I read this morning because if you look at the general statistics, home owners are the major borrowers in Australia. But there’s no doubt that we need to increase supply in Australia and that's why I said repeatedly yesterday the response has to be to build, build, build, because we have a supply problem. There's no shortage of demand, there is a supply problem in Australia and particularly in Sydney and Melbourne to a lesser degree in Brisbane over time.

MICHAEL BRISSENDEN:

Now the Reserve Bank says the Sydney property market is unbalanced due to the power of investors. People have been talking about this for some time but no-one, no political side appears ready to look at things like doing something about negative gearing for instance which is driving housing investment. Why not look at that?

TREASURER:

Let me touch on two issues. If you change negative gearing in a market like Sydney, which has a very low vacancy rate, you are going to push up rents, which will have a horrendous impact on some of the lowest income families. The Greens policy of abolishing negative gearing will push up rents. The Labor Party's policy is…

MICHAEL BRISSENDEN:

It might make housing more affordable mightn’t it?

TREASURER:

I’m sorry it doesn't, because if it pushes up rents it will make life incredibly difficult for families. If you adopt the Labor Party's policy of trying to cut the value of homes, reduce the value of homes - how they're going to do it I don't know - but this is what they've said. They want to reduce house values then that reduces the amount of money that Australians have invested in their homes, it reduces their asset value, their wealth value and in particular lot of small businesses use the equity that is available in their home to finance their own small business. This is what Labor doesn't understand, so we actually want…

MICHAEL BRISSENDEN:

That doesn't help anybody who doesn't have a house, does it?

TREASURER:

We want people to have rising house values, importantly we want to increase the amount of supply of housing which gives people a better opportunity to get into the market. That's the fundamental point and the states have primary responsibility in this regard. But we are going to work with the states to try and increase the amount of supply in the marketplace.

MICHAEL BRISSENDEN:

Now the Treasury last week warned of a housing bubble. Do you accept that houses have become unaffordable for many people in Sydney and Melbourne at least?

TREASURER:

Well they're very expensive. For a lot of people, a lot of Australians in Sydney and Melbourne, some other parts of Australia, housing is very expensive and I understand that. Look, I totally understand that. When you're committing so much of your wage to your mortgage it's a big ask, with all the other pressures in life, but what we've got to do is increase the stock, increase the supply of housing which is going to respond to the demand side of the equation and you can't just have a range of different policies that smash house prices which is what Labor wants. That is the wrong policy response. You've got to increase supply. On the lending side, the Australian Prudential Regulatory Authority is using macroprudential initiatives with the banks to try and ensure that there is - there are loans going out to people that can afford to repay the loans and this is a fundamental point - you've got to be careful that people don't borrow so much money that they're unable to repay the money if and when interest rates start to increase. So what you've got to do is make sure that as a government you work towards creating more jobs with greater income, and that’s exactly what we did in the Budget.

MICHAEL BRISSENDEN:

At the moment wages growth is flat and there are at least 800,000 people out there who can't even get a job.

TREASURER:

Which is all the more reason for us to continue with our program in the $5.5 billion jobs and small business program. But also I might add, one thing the Federal Government can do, and is doing, is help to fund new infrastructure in cities that opens up new land release opportunities. One of the things we've done in the asset recycling program is over 60 per cent of what we expect to spend in the nearly $5 billion asset recycling program is going to go into public transport initiatives that the states are rolling out, which in turn helps to open up new opportunities for supply of housing in our major capital cities.

MICHAEL BRISSENDEN:

The fact that so many people can't get a job and the fact that there are so many people who do have what they call good jobs who don't really have much scope to get more money or to get better pay makes your comments even more insensitive. Is it any wonder that people are questioning your judgement?

TREASURER:

Well that's all the more reason for us to work harder and harder to create more jobs and to create better paying jobs. Michael, they're going to come from the private sector, they're going to come from innovation, they're going to come from small business and investment and that's exactly why we have our $5.5 billion jobs and small business program…

MICHAEL BRISSENDEN:

That's all very well for the future but what about people now?

TREASURER:

Well I’m sorry, that's now. The program is rolling out now. The tax cuts roll out from the 1st July but the instant asset write-off up to $20,000 applies right now. So if small business goes out and invests in their own business and they're purchasing the products that improve their productivity and improve their…

MICHAEL BRISSENDEN:

All of these measures arguably are not going to have an impact tomorrow for people in Sydney and Melbourne struggling to buy houses who do have jobs that they believe are pretty good jobs, like nurses and policemen.

TREASURER:

They are good jobs, they’re good jobs, and we want those jobs to be even better. That's what we're working towards. That's the point. You can't be in a position where you're not given the opportunity to get ahead. You've got to actually have a government that helps facilitate aspiration and what we're doing is endeavouring to give everyone in Australia the opportunity to get ahead, to own their first home, and the best way to do that is to increase supply. The best way to do that is help people get a job and a well-paid job and that's exactly what we're doing.

MICHAEL BRISSENDEN:

Almost immediately you said these things, social media lit up with people who are on these sorts of wages criticising you, outraged about the comments. Do you understand the depth of feeling among those people?

TREASURER:

Well I understand the depth of feeling, of course I do, and that's why we are working so hard to build the infrastructure, to build the jobs, to build the opportunities for people to get ahead. That's the fundamental point. You've got to be able to create aspirations, to give people hope that it will get better and everything we are doing as a government is about building a stronger economy that helps to lift everyone, lift everyone Michael. That's the key. If you don't lift the economy, it you don't lift prosperity, if you don't lift opportunity, that's when you cannot afford to deliver the services to those most in need in the community. So we are focused on jobs, we are focused on well-paid jobs, we're focused in particular on housing, on working with the states to increase the supply rather than following the lead of Labor and the Greens and trying to smash house prices, smash house values, and reduce the assets that belong to families.

MICHAEL BRISSENDEN:

Okay, Treasurer Hockey, we'll leave it there. Thanks very much for joining us.