Interview with Laura Jayes, AM Agenda

16 August 2023

LAURA JAYES: Welcome back to AM Agenda. The housing crisis is not resolved but National Cabinet when it meets today is looking for solutions. The Commonwealth and State and Territory Governments are set to consider measures to encourage construction, building new social on affordable housing and strengthening renters rights. It comes amid rising construction firm insolvencies as well as higher prices and rents driven by building costs and a lack of supply. Joining me live now is Shadow Finance Minister Jane Hume. It's great that the leaders are getting around the table today. This has been foreshadowed. But what do they need to come up with in terms of outcomes today?

JANE HUME: Well, it's astonishing, Laura, that it's taken this long for leaders to come together particularly, I know, we've discussed this before as their Labor Premiers wall to wall in mainland Australia. So it shouldn't take a National Cabinet. Anthony Albanese should have been able to pick up the phone to his Labor counterparts and say, hey, listen, we're going to do something about this. I was in Moorabool Shire in Ballan, just outside of Melbourne, only a couple of weeks ago. They were telling me that there's 18,000 houses ready to go, waiting for State Government approval. That's what this is going to be all about. Supply, supply, supply, because it's the only way that you could sustainably bring down housing prices and make sure that there is more housing available, whether it be to buy or to rent for everybody. So that should be the focus of the National Cabinet. In order to do that, you're going to have to bring the States into line, you're going to have to make sure that local councils are also on board with rezoning and opening up new opportunities for housing and for building houses. So what we don't want to see, what we don't want to see though, Laura, and this is really important, what we don't want to see is simply more money being thrown at the States without a plan that has tangible, deliverable outcomes. Because that's, you know, that's not a plan - that's just a hope and a prayer and that's what we saw with this, for instance, the $2 billion social housing announcement that Anthony Albanese made, it was simply a sort of bucket of cash thrown at the states, without any KPIs, without any deliverables that are going to be made transparently available, so that the public can see what it is that they're getting for their money.

LAURA JAYES: Right. So, again, a lot of this falls to the States and really mostly local councils. So what can Anthony Albanese actually do?

JANE HUME: Well, that's why it's so important that he uses his influence with his Labor Premiers and quite frankly, if he can't use that influence, what does that say about the level of respect in which he is held by the Labor Premiers. Yes, you're right, there are limited things that a Federal Government can do on the supply side of a housing crisis. Although, can I say when we were in Government, we did things like introduce the downsizer opportunity so that people that were retired, who wanted to downsize from a larger house to a smaller house could put that money into superannuation without being penalised on their caps in superannuation and that encouraged bit of turnover in housing supply. So that was a supply side measure. But there's so much more that can be done and yes, the grit in the wheels does seem to be with the States and local councils. We do need all three levels of Government working together on this. But it needs to have outcomes. It needs to have KPIs. It can't simply be throwing cash at the States and allowing them to go on with business as usual.

LAURA JAYES: All right, let's talk about some other economic news around this week and that is the wage price index. Wages seem to have slowed. Coming in at 3.6% yesterday, is that good news?

JANE HUME: Real wages are actually going backwards. We've had negative real wages now on an annual basis in all of the last four quarters. That's a real concern. You'll recall that when Labor were campaigning prior to the last election, Tony Burke actually said the words you will feel a change in Government in your wallet. They said that real wages will go up under Labor and in fact, they've done the exact opposite and that's because inflation remains stubbornly high, unless the Government is going to tackle inflation. Doesn't matter even if your wages go up 3.6%, you'll actually feel like your wages are going backwards because your purchasing power is being eroded by that stubborn, sticky inflation. That's why we want to see a plan from the Albanese Government to tackle inflation, not just say our Budget won't make it worse, but actually tackle it head on.

LAURA JAYES: So it is good news though, isn't it? That there's not a wage price spiral does yesterday's figure show that? And the Reserve Bank is going to like that?

JANE HUME: It's very important that there isn't. It's very important that there isn’t. This was the big warning sign that Philip Lowe put out there. He said two things. He said if there was a wage price spiral, if we kept getting wage rises without productivity, so that was his second point that we needed to address productivity, well, then inflation was going to be harder to bring back down into that 2 to 3% band. Of course, that's what we've seen, even at 6% inflation is double that 2 to 3%, more than double that 2 to 3% target band. So we need to make sure that wages aren't spiraling out of control. The problem is, of course, when inflation is high, real wages are going backwards. That's why you feel poorer than you did a year ago.

LAURA JAYES: So on balance, though, are the figures we got yesterday pretty good news?

JANE HUME: Well, hopefully they're good news for the RBA’s deliberations. Of course, there are other drivers of inflation as well that they will have to consider in making their interest rates decision. However, it's not good news if you are an average Joe worker out there that's feeling their real wages go backwards. Because every month when you get your pay package, you can afford less and less at the grocery store, you can afford less, you know, petrol in your car. It makes it much harder to make those mortgage repayments and of course, it's impossible to pay those ever increasing energy bills and that's because your purchasing power is going down while your real wages go backwards. So yes, it's good news that there is not an official wage price spiral, but more has to be done, if we're going to improve standard of living and not watch our standard of living erode over time. Surely, that's the first responsibility of an economically responsible Government is to improve the standard of living of the population.

LAURA JAYES: Jane Hume, thanks so much for your time as always.

JANE HUME: Great to be with you, Laura.