Q: You start paying it back, that 2-year grace period. Can you explain that child or whoever in that circumstance, how long – I know it’s probably case by case, are we talking years or…?
It depends on a person’s income and their capacity to pay. They talk to the bank about it. In Victoria, they have been running this scheme for a while, I was talking to the Victorian Government about this the other day, they tell me one in six people who signed up to the scheme have already paid the government out. And bought it out. Of course Aussies want to own their own home outright. This is about making the dream a reality.
The thing that really gets me here, the hypocrisy of all this. Albo read out those quotes. Scott Morrison has been banging the drum for this for years. Hang on a second…
Q: I think the government was trying to say that Scott Morrison was talking about private companies, they’ve been trying to defend it on. Can you address that?
Sure. There’s different types of shared equity. But he’s been talking about government equity as well. Where’s that quote – so 2017, he’s the Treasurer of Australia. The Victorian government has just announced this. And he said the third thing they have done is shared ownership, a government owns a quarter of your house and you own the other 75% which means you don’t need a bigger deposit. Two days later, the housing minister, is on the ABC, he says, the Treasurer, that’s Scott Morrison, he’s on the record in highlighting his admiration for the scheme.
And then a couple of months later he’s talking to ACOSS, saying he’s promoting this as an idea. That’s just rank hypocrisy. Was he lying then or is he lying now? I think Australians have had a gutful of all of this lying.
Q: Your view on a couple of things. So, Scott Morrison said yesterday that interest rates aren’t political, I want to get your view on that. Secondly, he says that your equity sharing scheme will operate in the way if the principal owner passes on and it hands it down to their children, they will need to sell the house that makes it an effective death tax.
He’s getting desperate, isn’t he? That’s what it shows. This is a Prime Minister who is getting really, really desperate and the comments are getting more and more extreme. For this guy to say that anything is not political, this is a guy who gets up in the morning and what he has for breakfast is political.
This is a guy, when he was in the Lodge, quarantining, didn’t take his economic policy advisor, he didn’t take his national security advisor, he took his photographer. He took his photographer.
Everything that think this guy does is political. It’s nothing about the national interested. Nothing is exposed by his opposition to this scheme.
This what is he had to say. Kevin Rudd and the Treasurer should now move to invest in shared equity. He went on to say, “That shared equity is a very good opportunity. It’s a good suggestion.” About the Victorian scheme, he said, “The government will also “this is in an address to ACOSS, an address to ACOSS as the Treasurer of Australia – the government will promote rent to buy and shared equity schemes to support low income Australians to own a home.”
When we see a good idea, it comes from someone else, we say it’s a good idea. This guy, for everything is an opportunity to play politics. He doesn’t have legislation, he has wedgieslation. They didn’t think about the national interest, they think about how can we wedge Labor on this issue? How can we wedge Labor?
Everything this guy does.
I reckon in the cabinet room there’s sour cream and sweet chilly sauce there’s so many wedges there. You remember that scene in Happy Days when Fonzie jumps the shark? This is more baloney than a New York deli.
What we’re doing here is helping Australians to pass on their wealth to their kids rather than passing on nothing because they’re renting for the rest of their life. My grandfather rented all this life. Never owned a home. When he died, he died in intensive care, and he was in intensive care for three weeks.
Now, the only reason we had enough money for the coffin and for the funeral is because he was in intensive care for three weeks and his pension accumulated. This is good policy.
For people to own their own home and pass it onto their kids. If they qualify under the eligibility rules, everything is sweet. Nothing changes. If they earn more than that, they start to buy back the government’s equity. That’s the way it works in the Victorian model. It’s the way it works if you go from earning $90,000 to $150,000, there’s a 2-year grace period and you start to pay it back. This is sensible. This is about helping Australians who need little bit of help.
Q: Like, electricity and childcare, be eaten up by any sort of interest rate rise.
What we know is that interest rate rises will put more pressure on families. We know that’s the case. And we know that Scott Morrison has failed on increasing wages, we know that low wages is a key feature of their economic architecture. It’s a design feature. It’s not bad luck, it’s bad policy to have low wage growth. We have high inflation and potentially increasing interest rates. Now that will put more pressure on families. What is the government’s response?
Have a look at their whole campaign. It implies that things are easy right now. Well, for Lydia, and her partner here, struggling to get by in terms of paying a mortgage, Lydia told us inside, she’s a student, she has to have three months practical placement last year as part of her honours degree.
These are practical issues that people are dealing with.
Now, government – government needs to try to lend a hand where it can. We’re putting forward practical measures. This is just one of them.
Q: There could be multiple hikes over the coming months. Westpac [says] by May next year [the cash rate] could be 2%. On an average mortgage of $500,000, that’s about $500 a month extra. Does your cost of living package factor in the interest rate hikes over the next 12 months? And will it be effective in that case to put downward pressure on prices?
What we know is 3.4 million Australians have mortgages at the moment and the average new mortgage is around $595,000. (Those numbers are from the transcription).
A 0.25% increase, which is one of the possibilities being speculated about today, will increase payments by $124 a month. What that does is it just shows the need for a whole of government approach.
This government isn’t even trying to address cost of living pressures. We have a plan for cheaper childcare. Now, Lydia and her partner, [the people whose rental house they are using for the press conference], if they’re planning to start a family at some time down the track, families want that security. They need to know about where they’re going to live.
They need to know about the costs of childcare and factor all of that in. Jodie is here with me today. She grew up and spent the first half a dozen years of her life just a couple of blocks away. A couple of streets away in Wells Street. You would have come here on the way.
Now, her brother and partner and they’ve got a little 2-year-old, they’ve just moved up to Umina. They found it difficult. They’re not buying because they can’t afford to at this point in time, but they found it difficult to find a place to rent that they could afford. These are real issues out there, which is why we have practical plans.
This is a practical plan, like cheaper childcare, cheaper electricity bills … These are all measures aimed at making life better for people because we can do better.
So a scheme like this helps, because you get to live in a home that you own with a smaller deposit, a smaller mortgage and smaller mortgage payments. And that’s why this has been backed, as Albo said, by everybody from the Master Builders, to the Property Council, to the UDIA, to the Grattan Institute, to Acoss, to National Shelter. It’s even been backed by the Liberal party. The Liberal party are doing this right now. They’ve been doing it in WA for years. You know, this is bipartisan in WA.
Labor governments and Liberal governments have been doing this and making a difference to people’s lives for years. The Gutwein government was doing this in Tasmania. Before the Premier retired in February, they announced that they were doing that. And we were doing a similar model, 40% equity to create extra incentive to build rather than just buy. And as Albo said, premier Perrottet flagged it here. Have a look at the front page of the Sydney Morning Herald on the day of the by-elections back on February 12. This will be in their budget in June.
Even Scott Morrison has backed this. You saw that video that went viral last night where he was calling on the government back in the Rudd days to do this.
But not just that. He’s been admiring and supporting what the Victorian government has been doing for years here. And now on the eve of an election, he’s doing a backflip. Well, Scott Morrison, instead of doing a backflip worthy of Nadia Comaneci, you should be backing hardworking Aussies who want to own their own home.
Jason Clare is also at this press conference. He says “it’s not an overstatement to say that we’ve got a housing crisis in Australia”.
It’s harder to buy than ever before. It’s harder to rent than ever before, and there are more homeless Aussies than ever before. House prices have jumped by 25% in the last year nationwide. Here on the Central Coast, it’s more than that. About 31%.
And in some places, it’s in the 40s. And rent has jumped by about 15%. It’s getting harder and harder, not easier.
Now, lots of Aussies are still making the plunge.
Lots of Aussies are still doing their absolute most to make the great Australian dream a reality.
But for more Aussie, it’s getting harder and sometimes impossible. Think about this – if you go back almost 40 years to when Bob Hawke was the prime minister of Australia, you’d find that about 60% of young Aussies owned their own home. Think about that – 40 years or so, 60% of Aussies on low incomes owned their own home. Today that’s 28%.
That’s a big change for the worse. It means that our society is moving apart between people who own their own home and think that they can own their own home and people that think that they’re going to rent for the rest of their life.
The Labor leader Anthony Albanese is on the NSW central coast, where he is talking Labor’s shared equity housing scheme.
This is a practical measure to assist with a cost of living measure. Because when people have a secure roof over their head, they have that sense of belonging. That sense of ownership and the sense of security that comes with that and Labor is determined to do all that with to give people a more secure future
Just as the RBA board sits down this morning to weigh up raising rates, the ANZ- Roy Morgan weekly gauge of consumer sentiment has landed, and it’s not pretty:
The 6% drop is the most since mid-January’s 7.6% slump when Omicron was busy snarling supplies and ruining more than a few Christmas-January holidays. (And worse. The 23 Covid-related deaths alone in NSW overnight tells us the problem hasn’t disappeared.)
The RBA board members will already have a lot of data, but this isn’t a sign that the government will be happy to see, given a grumpy electorate is not what they want just now.
David Plank, the head of ANZ’s Australian economics team, said the surprise consumer price index number was to blame for sentiment sinking as people brace for rising interest rates.
Indeed, “confidence dropped 9.6% amongst people ‘paying off their home loan’, while for people who already own their home or are renting confidence dropped by 4.7% and 4.2% respectively,” Plank laid out.
The RBA, though, is also watching out for people expecting inflation to rise because that’s the thing they would rather stamp hardest on.
On that score, the arrow has tilted up again, the survey found. The weekly gauge is up 0.2 percentage points to 5.3%. The rolling four-week average is slightly down because of that 22.1-cent cut in the excise for fuel that happened just over four weeks ago.
The fuel price meanwhile has been quietly creeping up, and is hovering around $1.81 in NSW today at least.
There are much better people to explain this than me (taps the *I am not an expert* sign) but they are very busy, so you are stuck with me.
There have been a few questions about what is going on with inflation and how it is different if its driven by supply pressures (rather than demand, which is what we are used to).
When demand outstrips supply (which is what we are seeing happening) people want to buy, but can’t. So the cost of the available goods goes up (which has been compounded by transport costs)
And central banks can’t really do a lot about that, because it’s not a spending issue, it’s a supply issue.
Now, raising rates could cut spending so that demand *matches* the supply, which can slow it down, but that won’t help the long-term goal of getting unemployment down (now that borders are open, the labour force will change again) and wages up.
In that sense, this isn’t something the government can control either.
But – the lack of real wage growth over the last decade has compounded the issue. Because costs have gone up, but in a real sense, wages have not. The cost of living has outstripped your pay. And that is something the government has *some* influence over – there are levers it can pull to encourage wage growth (increase public sector wages, supporting wage increases with the Fair Work commission, supporting minimum wage increase).
The reserve bank could wait until the wages data comes out before making a decision because it would want to see how much people are earning. If a decision to raise rates doesn’t come today, it would be hard to see how it couldn’t come next month. Either way, it is coming.
(Apologies to Ms Driver, my high school economics teacher, for the whoosh- whoosh explanation.)
Simon Birmingham responded to some of those claims from Labor on Sky News this morning:
I don’t accept that thesis when, in the last budget, we made the biggest improvement in a budget bottom line in some 70 years.
The vast majority of the improvements we put towards reducing deficits, as I said before, by $103bn, compared with what they’d been projected to be.
Our policies have got Australia to have the lowest unemployment rate in around 50 years. They’ve got us to a point where we’re in a position of economic strength relative to other countries. But that doesn’t mean we’re immune from global shocks.
And when you’ve got a war in Ukraine, oil price spikes, energy crises in parts of Europe, continued after-shocks from Covid-19, closure of large parts of China’s economy at present due to Covid, all of those pressures are going to put shocks right around the world. Thankfully, here in Australia, we’ve been withstanding them better than most other countries, and our inflation rate remains lower than the US, or UK, Germany or Italy, Canada or New Zealand.
But we’re not completely immune, and the choice at the next election is one very much between a Coalition government that’s driven people into jobs and created that strong economic environment better able to withstand these positions, and a Labor government with risky policies and big spending ideals, all of which would create the risk of even more pressure on inflation and interest rates than we’re getting from overseas.
Katy Gallager was asked about the possibility of an interest rate rise this morning on ABC radio RN and who was to blame for Australia’s situation:
Q: Now the prime minister is essentially saying that an interest rate hike has nothing to do with him. Is he right about that? Or will you be blaming Scott Morrison if the official cash rate goes up today?
We’ve been responsible and reasonable about this and always accepted that there are a number of causes, you know, factors at play here. But I think what we saw from the prime minister yesterday is an attempt to shift responsibility elsewhere, which we’ve seen him do in a number of areas. Where things are going good he’s – you know, you can’t get between him and a camera, frankly, but when things are not going so good, it’s always someone else’s issue. I think the point we’ve been making is the triple whammy people are facing now. So wages are going backwards, things’ prices are going up and now, you know, we’re getting the potential for interest rates to rise and that affects this cost of living crisis that is front and centre of this election campaign.
Q: So you will hold him responsible?
Well, that is the prime minister’s responsibility. The cost of living crisis, frankly, is something that the prime minister should have a plan to deal with and should have had a plan to deal with not just in the last month, but over the last few years. And that is the critical point and a point of criticism that we’ve been making about him.
Q: And the interest rate rise, if it does occur, certainly [it] will imminently whether it’s today or soon. That’s his responsibility too?
Well, I think I said at the beginning, you know, we have always accepted that interest rates are at record lows, that the Reserve Bank is the institution that makes the decision about that. The point we’re making is the prime minister doesn’t have a plan to deal with his own cost of living crisis that has occurred on his watch. And when we have interest rates rising and that will affect household budgets, without a doubt, the prime minister can’t just walk away and say this isn’t my fault. He’s been in charge of this economy for nine years. You know, this is the reality for people, it’s front and centre in this election campaign. And I don’t think anyone thinks that it’s reasonable for the prime minister to put his hands up and say, ‘well, this is not my problem, sorry, everybody. Hope you’ve saved some money. You know, because that’s all I’m going to do about it.’
There was also a lot in that interview about Labor’s shared home equity scheme (Labor calls it Help to Buy). Richard Marles did an interview on Sky News which has led to a lot of these criticisms today (Marles is not the best person to have communicating policy, outside of his specialties at the best of times, but he is also the deputy leader, so here we are)
Scott Morrison is very critical of the policy, claiming you’d have to ‘check with Canberra’ before going to Bunnings for home improvements as well as:
If you’re one of the lucky ones who get some of these 10,000 places where the Labor government can own 40% of your house, if your wage goes above your household income goes above $120,000 a year, Anthony Albanese will put a for sale sign on your lawn.
You actually have to dispose of the asset and pay back the government.
I mean, this is insane. I mean on top of that, if something terrible happens, and your property is passed to your children, and children have to sell the house if their income is not eligible for the scheme, and then on top of that, you’ve got the situation that you know, where do you sit in the conga line? When it comes to owning your own house? Firstly, the bank. Then there’s the Labour government. And then there’s you.
There is a lot there from someone who was in support of these schemes until he wasn’t.
According to Labor’s policy which is based on schemes already running ion Australia in some states, any renovations will benefit the homeowner if the property is sold.
An independent evaluation will be carried out and value of the renovations goes to the home owner.
On the children point, Labor says the scheme ‘works like a mortgage, people will keep the share of the home they own.
If your kids earn more than the eligibility of the scheme, they can buy out the share held in equity by the government if they wish, just like a reverse mortgage (which some people use to fund their retirement)
Labor expects, as ha happened overseas, that older people who used the scheme while younger would have bought their equity back, as has happened in other markets such as the UK.
Neil Mitchell asks Scott Morrison why he takes credit when things go well, but is not to blame when things go badly. He also asks about whether the RBA should have been more prepared, given it said it wasn’t planning on raising rates until 2023.
Well, let me tell you what’s happened the last 12 months. The IMF, the International Monetary Fund a year ago, was predicting inflation globally would be 3.2%.
The most recent estimate is 7.4%. And that’s happened in the last 12 months.
Now the reason for that is, of course, the global energy price shock that we’ve seen coming out of Europe, with the war in Europe. And in addition to that, there are other factors such as the Covid situation in China, which has severely constrained in supply chains, and then you’ve got the broader hangover of the pandemic affecting transport costs and supply chains all around the world.
So the issue in terms of – what Australia has been able to achieve over the last few years, is we put up a very strong economic shield and protecting the Australian economy from the worst of the impacts of these pandemics.
That’s why inflation is higher in Europe, New Zealand, North America, Canada and United States and UK.
It’s why we’ve been able to get employment up and unemployment down and as we go into this election, this is – this is a reminder, I think [of] the pressure that’s on interest rates right now. It is a reminder of why the economy is so important, and it was only three weeks ago, the bloke who wants to be prime minister didn’t even know the cash rate.
Q: Yeah, but again, you’re telling me that the the interest rates have been low because of you and now they’re going up? It’s not because of you.
I didn’t say that. What I said was, was we have been in a rather extraordinary global environment.
If you’re interested in finding out what rural voters want and how are they changing this election, be sure to catch Guardian’s rural editor Gabrielle Chan’s Q&A with former Nationals leader Michael McCormack this lunch time.
The event will be hosted live at 1pm today on the Rural Network Facebook group. If you are not a member, search Guardian Australia Rural Network on Facebook and ask to join. Then you can send Gabi a question and watch the event live. NB: sharp questions welcome, but no abuse tolerated
A bracing figure from NSW Health today.
Victoria has also reported 12 deaths.