Interview with Sally Sara on ABC Radio National

Subjects: Reserve Bank interest rates and inflation, property price downturn and housing taxes, recession risks, superannuation for housing, Mid-Year Budget Review and Government spending and net savings.

E&OE....

Sally Sara:

To the Opposition now, and Andrew Bragg is the Shadow Minister for Housing, Homelessness, and the Environment, and joins me now. Andrew Bragg, welcome back.

Senator Bragg:

Morning Sally, how are you?

Sally Sara:

Very well, thanks. If the Reserve Bank hikes interest rates today, do you expect that national house prices will continue to fall further?

Senator Bragg:

Well, I'm not a house price forecaster, but what I can tell you is if they raise rates today, it's because fiscal policy has been ridiculously loose in this country for too long. The Government have been spending at a 40-year high, and that has pushed massive pressure onto the RBA. And for the Prime Minister over the weekend to blame the RBA for his appalling mismanagement is one of the lowest points I can recall in any discussion of the Australian economy in my lifetime.

Sally Sara:

In your view, if we're staying with property briefly, what proportion of the property price downturn is due to high interest rates compared to the Federal Government's property tax reforms?

Senator Bragg:

Well, obviously the taxes have destroyed a lot of confidence in the system. And the fact that the taxes have made it harder for renters, harder for investors, harder for owner-occupiers—I mean, no one has won from these taxes. And you can see it as measured in the data with higher rents, fewer houses being built, and fewer loans to owner-occupiers. So that has hurt the housing market massively, because the last thing that market needed was more taxes. So of course it's had an impact overall on that system.

Sally Sara:

Are you concerned that a potential fifth interest rate rise could increase the chances of a recession?

Senator Bragg:

Well, I mean, I think we've been in a per capita recession for some time anyway. The only reason we haven't had a technical recession has been because of the very high levels of migration and Government spending. So I'm not sure it matters as much in a technical sense as it did in the past.

I think what really matters is whether or not this Government can actually use fiscal policy—that's the measure it has at its disposal—to try and reduce some of the pressure on the RBA, which is just doing its job. Because when inflation's at 4.3%, effectively they feel compelled to do their job and to keep on increasing interest rates, because that's how they have to get inflation out of the economy.

Sally Sara:

You're listening to Radio National Breakfast. My guest is the Shadow Minister for Housing and Homelessness, Andrew Bragg. Let's move on to superannuation briefly. Fellow Liberal Garth Hamilton told the ABC last week he's confident that a majority of his colleagues want to rule out any early access to superannuation for first-home buyers. You've previously suggested a range of policy options should be considered that would see Australians access their super early to buy a home. Have you failed to persuade your colleagues?

Senator Bragg:

Well, I mean, people are entitled to their views, but what we want to try and do here is make sure that we align the housing systems with the retirement and super systems to ensure that we don't have a nation of retired renters, and that's something that's under review at the moment.

We are going to hit 1 million retired renters over the next five years. That's going to mean that there's going to be a lot of Australians that are going to have a very hard retirement, because if you are a retired renter on the pension, it's pretty hard going. So that's something that we want to avoid at all costs.

Sally Sara:

But if they're taking money out of their super, could that land them as renting pensioners?

Senator Bragg:

Well, as I said, when super started back in '92, the whole idea was that you would have a house, you would own a house. Now we're seeing a million people in just the next five years who won't have a house in retirement. So that's been a massive shift, and we want to make sure that we avoid that, because the best form of a secure retirement is a house. And so that's why it has been under review, and at the end of the day, we want to make sure that we maximise home ownership. That's one of the most important parts of our policy.

Sally Sara:

Would allowing Australians to access their super before retirement increase inflationary pressures on the economy, in your view?

Senator Bragg:

Look, I'm not convinced that people paying down debts and reducing mortgages can be inflationary. That's not any evidence I've seen myself. But I make the point that we should never be afraid of ensuring that people have the choices that they need to make the best judgments for their families. I generally think that individuals make the best choices, not governments.

Sally Sara:

Just returning finally to the mid-year Budget review. In your view, looking at the numbers, is it possible, if the Government goes in hard, to achieve net savings?

Senator Bragg:

Well, of course they need to achieve a fiscal consolidation. We've already identified some $30-plus billion of savings, and there'll be many more, because that's what they need to do to get some of the pressure out of the economy. At the end of the day, when they're running the highest-spending Budget since 1986–87, I don't think we should be surprised that the Reserve Bank is under pressure to manage inflation, because the Government is the 10-pound gorilla in the room here.

Sally Sara:

Andrew Bragg, thank you for joining me this morning.

Senator Bragg:

Thanks, Sally.

Sally Sara:

Andrew Bragg is the Shadow Minister for Housing and Homelessness, and also the Shadow Minister for Environment.

[Ends]