Interview with Laura Jayes, AM Agenda

9 August 2023

LAURA JAYES: One of Australia’s largest banks has just posted a $10.2 billion cash profit. Which bank? The Commonwealth Bank. Joining me live now to discuss this and other matters this morning is the Shadow Finance Minister Jane Hume. Jane Hume, thanks so much for your time. What does this enormous cash profit tell us about what’s going on in the economy?

JANE HUME: Well, it certainly tells us that our banking system is strong and that's something that Australia should be very proud of, indeed, its highly regulated sector, and we want our banks to be profitable. Now I know that it's slightly uncomfortable for people that are under mortgage stress when they see that their banks are making a profit. However, let's remember that that profit goes back in the form of dividends into superannuation funds. So yes, we want to make sure that banks are certainly, when interest rates rise, that they're passing on those interest rate rises to depositors, as well as to lenders. But at the same time, no, I don't think that we should be bank bashing, which I know is a national pastime, our banks when they turn a profit because it is certainly good for everybody's superannuation.

LAURA JAYES: Yeah, certainly. But do they pass on that? Well, these profits to depositors fast enough.

JANE HUME: Well, that's something that I think we can pursue, and it's certainly something that we would expect the ACCC to be looking at, and it's a question that certainly we've been asking the banks when they have appeared and the Australian Bankers Association when they have appeared at the Cost of Living Committee that I chair, because it is very important for depositors. It's very important, particularly for older Australians that have their money in conservative investments, including things like term deposits, that those interest rates that are the return that they're getting increases at the same pace as lending rates that affect double tops.

LAURA JAYES: When we see cash profits like this, and you hit on the straightaway, Jane, you'll know that people will be pretty exercised about this level of profit when yet their household budgets are under a huge amount of pressure. But what about small businesses who are paying fees left, right and center? You know a lot of people know that they need to pay a small fee to a bank to access their own money even. Is that something that needs to be front and center?

JANE HUME: Well certainly we want to see any costs that are imposed on small businesses alleviated whether it be through the payment system having a much fairer payment system whether people use credit cards or Buy Now, Pay Later or you know, Afterpay or wherever it is, or whether they use EFTPOS machines. There's some friction in the payment system there that actually is a cost imposed on small businesses and potentially then passed on to consumers. So of course, we want to see those sorts of costs leave yet alleviated. And we want to make sure that small businesses can access credit when they need to so that they can manage their cash flows. If that credit is available at inflated rates, that's a real problem for the economy and certainly would be a dire warning to those that are potentially predicting an economic downturn as a result of this increased inflation, this persistent sticky increased inflation that we've seen, that we simply can't seem to get down just by raising interest rates.

LAURA JAYES: And yet well, it seems that these interest rate rises are bringing down inflation, but they're certainly going into the bank coffers. Anyway, let's talk about housing. I know there's a Senate committee that will be grilling the RBA on Friday as well and we look forward to that because cost of living is number one, but let's talk housing because that is number one in that category. If not number two, at the moment, the premiers are going to meet with the Prime Minister. This needs to be more than just a talkfest. What can they get done reasonably when they have this meeting? What can be done in the short term Jane Hume?

JANE HUME: I'm actually astounded that it's taken this long to have a National Cabinet that addresses the issue of housing. I know that rent caps and renters rights are the top of the agenda but how about opening up supply of housing. Because we know that supply really fixed with the response is the responsibility of the states. So when you've got wall to wall Labor premiers across mainland Australia, surely you don't need a National Cabinet for this? Anthony Albanese should be able to pick up the phone to whoever it is Chris Minns, Dan Andrews and say ‘hey, listen how can we get rid of this problem? How can we work together to address this problem?’ I was down in Victoria in Ballan in the Moorabool Shire and they were telling me that there were 18,000 houses ready to go, just waiting for state government tick off from their centralized planning authority. 18,000! Now, if you cannot open up this supply, that is going to mean that the housing crisis that Australians are facing whether it be renters, whether it be buyers, whether it be current mortgage holders is going to continue. This is the only way to sustainably bring down the price of housing generally, is to open up supply. Why has this not been done before? Why has it taken National Cabinet? It could even be done at the Labor Party National Conference for goodness sakes, they’ll all be there. They're all mates apparently.

LAURA JAYES: You could pass the housing bill too?

JANE HUME: The Housing Australia Future Fund only deals with social housing. Let's be very, very clear, and it is a flawed policy. That's a flawed policy because it's borrowed $10 billion. It's going to cost about half a billion dollars a year just to service and it's only the returns on that $10 billion dollars that would ever be invested in social housing. If the Future Fund doesn't make a return. There is no guarantee that any money will go into social housing so not a guarantee of even a single social house. One single social housing policy built. Now we've already seen $2 billion that magically appeared after the Budget already allocated to social housing by the Albanese government. Now we did some questioning at the Cost of Living Committee last week about that social housing $2 billion that's been set aside to be distributed to states. Apparently even though it has to be expanded over the next two years, has to be expanded over the next two years, the state governments don't have to tell us how many houses. They don't have to tell us whether they've completed building social housing with that money that they've been given. There is actually no compulsion for them to be accountable for how they spent that $2 million dollars. That's outrageous.

LAURA JAYES: Just before we let you go, Tony Abbott has said last night that he is growing quote, “tired of Welcome to Country ceremonies”. What do you think have they become, I guess the opposite of what was intended when we started these Welcome to Country ceremonies?

JANE HUME: Well, I think certainly Acknowledgement to Countries which occur is pretty standard part of the beginning of most meetings that I attend indeed to the opening of the Senate each day for me, it's a little bit like the Lord's prayer at the beginning of the Senate. I'm not a particularly religious person. But when we recite the Lord's prayer at the beginning of each day in the Senate, I think deeply about the words and what they mean. You know, quite frankly, an Acknowledgement of Country or indeed a Welcome to Country should be delivered and received in exactly the same way it should mean something I would hope it does for those that are delivering it.

LAURA JAYES: Jane Hume, thanks so much for your time, appreciate it.

JANE HUME: Great to be with you Laura.