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Speaker 1: Good morning and welcome to the Daily OZ podcast for Thursday,

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Speaker 1: the nineteenth of May. I'm Tom Crowley and stepping into

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Speaker 1: the chair this morning with TDA editor Billy Fitzsimon's to

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Speaker 1: take you through the day's headlines, and then later on

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Speaker 1: in the episode, I'll be chatting to Sam about another

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Speaker 1: one of our Jay and I policy Explainer series. This

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Speaker 1: time we're talking about housing First. Billy to today's headlines.

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Speaker 2: So, the Australian Bureau of Statistics has revealed that wages

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Speaker 2: have grown by two point four percent over the past year,

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Speaker 2: which is the equal highest yearly wage rise since twenty fourteen.

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Speaker 2: It's less than the amount prices have grown over the

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Speaker 2: same period, which is five point one percent, and that

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Speaker 2: means that real wages, which is accounting four price inflation,

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Speaker 2: has fallen by two point seven percent in the past year.

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Speaker 1: And from today until election day, licensed TV and radio

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Speaker 1: stations are not allowed to show election ads. It's called

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Speaker 1: the blackout. However, it doesn't apply to online or pre services,

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Speaker 1: so those YouTube ads you've been getting bombarded with are

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Speaker 1: likely to continue right up until election day.

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Speaker 2: On Saturday, during an address on Russian state TV, a

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Speaker 2: retired colonel has criticized the government, saying the country needs

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Speaker 2: to quote take into account that the situation for us

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Speaker 2: will frankly get worse. He also added that quote the

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Speaker 2: whole world is against us. It was a rare moment

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Speaker 2: of dissent on the state television, which is controlled by

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Speaker 2: the government.

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Speaker 1: And to the good news for today, the AFL has

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Speaker 1: launched this year's annual Sir Doug Nichols Indigenous Round. This

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Speaker 1: year's round coincides with the thirtieth anniversary of the historic

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Speaker 1: nineteen ninety two Marbo decision, when the High Court of

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Speaker 1: Australia recognized First Nation's traditional ownership of land and country.

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Speaker 1: All eighteen clubs will wear specially designed jumpers by First

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Speaker 1: Nations artists, and the Melbourne Football Club, for the first time,

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Speaker 1: will change its name to NAM Ladies and Gentlemen. We

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Speaker 1: are now only forty eight hours out from polls opening

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Speaker 1: for the twenty twenty two federal election. It really is

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Speaker 1: getting close. And for our fourth installment of this Election

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Speaker 1: sheet series presented by the Judith Nilsen Institute for Journalism

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Speaker 1: and Ideas, Tom, you and I are going to talk

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Speaker 1: today about what I think has had the most airtime

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Speaker 1: in this election, and that's where we're all going to

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Speaker 1: live one day.

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Speaker 3: Housing. Can you recall a federal election where housing has

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Speaker 3: been such a big issue as it is this year?

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Speaker 3: Well no, I mean so you're right, Sam, and hello again.

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Speaker 3: It's lovely to be back.

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Speaker 1: We're talking a lot about housing. I think it's an

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Speaker 1: open question whether any of the ideas that have been

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Speaker 1: discussed in this election are really significantly going to change

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Speaker 1: the sort of fundamental housing affordability issue. And I think

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Speaker 1: it's worth beginning by setting out the facts of sort

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Speaker 1: of exactly what this issue is and why it's become

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Speaker 1: such a big talking point, and to use that as

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Speaker 1: a frame for all of these different policy ideas that

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Speaker 1: we're going to chat about.

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Speaker 3: Tell me how screwed we are going?

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Speaker 1: Well, yeah, I mean so if you look back to

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Speaker 1: two thousand and this is the sort of thing that

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Speaker 1: I think gets a lot of young people quite rightly

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Speaker 1: riled up. You look at where house prices have gone.

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Speaker 1: They have more than tripled in that period of time. Now,

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Speaker 1: you know, prices go up for a number of things

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Speaker 1: for a number of reasons, but when you compare that

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Speaker 1: to the level of other prices, when you compare that

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Speaker 1: to our incomes and to our general wealth, it has

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Speaker 1: gone well well well above our incomes. And that's where

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Speaker 1: it's not just a question about the housing prices, but

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Speaker 1: specifically housing affordability. How much of people's budgets do they

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Speaker 1: have to save, how long do people have to save

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Speaker 1: before they can buy a house? How affordable are houses

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Speaker 1: particularly for first home buyers. And the answer is, especially

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Speaker 1: in Melbourne and Sydney, but to a greater extent and

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Speaker 1: to a growing extent in other capitals and in regional areas,

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Speaker 1: that housing is not very affordable. It's a big issue.

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Speaker 1: It's something that our audience I think it was sort

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Speaker 1: of number two or three on the list of things

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Speaker 1: that our audience told us was important to them in

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Speaker 1: this election, which is not a surprise. It's clear that

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Speaker 1: politicians have heard that because they're talking about it a lot.

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Speaker 1: But as we'll get to I think it's an open

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Speaker 1: question just how much any of these policies are really

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Speaker 1: going to shift the dial.

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Speaker 3: So perhaps to kind of tackle this topic, why don't

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Speaker 3: we go party by party. So let's start with the

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Speaker 3: current government. Now they've come out with housing policy as

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Speaker 3: recently as a few days ago. What are they offering

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Speaker 3: to voters this election? So let me do my answer

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Speaker 3: in two parts. Sam, I think that when we talk

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Speaker 3: about housing, it's important to talk about two parts of

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Speaker 3: housing housing demand housing supply.

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Speaker 1: So housing demand is really just sort of about you know,

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Speaker 1: who's buying houses, how much money do they have to

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Speaker 1: buy houses. Housing supply, of course, is about how many

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Speaker 1: houses there are, and it's not difficult, it's quite in

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Speaker 1: their economics terms, but it's quite intuitive, I think, to

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Speaker 1: see what both of those factors will do and what

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Speaker 1: role they both play in I guess the broader question

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Speaker 1: of housing affordability. So they're both important. We spend a

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Speaker 1: lot more time talking about demand than we have supplied.

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Speaker 1: So I'll start with the coalition's demand policies, and there

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Speaker 1: are of them. First, we have this sort of home

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Speaker 1: deposit saver, a scheme where essentially what the government does

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Speaker 1: for and it's now about fifty thousand people a year,

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Speaker 1: is they basically offer insurance. They guarantee fifteen percent of

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Speaker 1: the value of your property. What that does is it

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Speaker 1: saves you having to pay lenders mortgage insurance. So ordinarily,

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Speaker 1: if you hadn't saved twenty percent of your house for

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Speaker 1: a deposit you would have to pay some sort of

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Speaker 1: insurance to make up to that twenty percent, and so

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Speaker 1: by coming in and ensuring about fifteen percent of the

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Speaker 1: value of your house, in that sense, the government is

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Speaker 1: saving you a bit of money for the people who

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Speaker 1: participate in this scheme, and some of those were reserved

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Speaker 1: for single parents, some of those are reserved for people

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Speaker 1: in regional Australia and fifty thousand places that get that

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Speaker 1: kind of support. The Coalitions also had this sort of

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Speaker 1: Super saveror scheme. Now we're going to talk about two

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Speaker 1: different parts of Super, but this is the one that's

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Speaker 1: existed for a few years, and what it lets you

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Speaker 1: do is put a little bit of extra money into

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Speaker 1: your super specifically for your house. Benefit for that basically

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Speaker 1: is Super gets taxed at fifteen percent. For a lot

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Speaker 1: of people, that's a discount, and so it was this

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Speaker 1: sort of discount that you could just sort of choose

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Speaker 1: to put a little bit of extra money, use your

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Speaker 1: super fund as a little landing place to sort of

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Speaker 1: keep that safe and earn a little bit of interest

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Speaker 1: on it, and then use that on your house. Now

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Speaker 1: that existed, then over the weekend sort of six days

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Speaker 1: out from the election, we've got this very surprising new

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Speaker 1: policy from the Coalition which was in fact to let

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Speaker 1: you use a significant part of the money that's already

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Speaker 1: in your super money that's there ostensibly for your retirement,

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Speaker 1: to use that money to go towards a deposit. And

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Speaker 1: so it's either forty percent or fifty thousand dollars whichever

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Speaker 1: is lower, that you can use to go towards a

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Speaker 1: deposit for your first home. And then the idea is

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Speaker 1: when you eventually sell the home, that money goes back

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Speaker 1: into your super account. So there are all the demand policies.

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Speaker 1: There's one small supply policy which is about encouraging older

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Speaker 1: people to downsize their homes and giving them a little

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Speaker 1: bit of a tax benefit from doing that, but mostly

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Speaker 1: the focus has been on the demand side.

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Speaker 3: Fascinating to note that that policy was announced on Sunday

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Speaker 3: at the Liberal Party launch. Now it's a bit confusing

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Speaker 3: there because a campaign launch six days out for an

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Speaker 3: election after a six week campaign period that doesn't really

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Speaker 3: make much sense, but that is form in parties of

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Speaker 3: all persuasions holding out until the last week to do

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Speaker 3: a campaign launch. So I guess all of us being

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Speaker 3: voters and the media and economic experts haven't had too

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Speaker 3: much time to think through this policy. But what's the

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Speaker 3: sense as to what this policy would do the house

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Speaker 3: prices but also to the retirement savings of Australians. Yeah,

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Speaker 3: I'll try and put this diplomatically, Sam. It's unusual for

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Speaker 3: a major policy of this sort of scope to be

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Speaker 3: unveiled six days before an election. It's also unusual for

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Speaker 3: incumbent government to release a policy that, as far as

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Speaker 3: I'm aware, hasn't had any modeling, and they've they've certainly

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Speaker 3: not released any modeling or been able to say anything

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Speaker 3: specific in answer to those questions. So, in terms of

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Speaker 3: the questions of how many people are likely to use this,

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Speaker 3: what is the effect going to be on housing prices,

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Speaker 3: and what is the effect going to be on people's

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Speaker 3: retirement incomes, those questions remain a little fuzzy. So to

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Speaker 3: the extent that I can answer them, I can just

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Speaker 3: sort of.

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Speaker 1: Give a bit of a high level suggestion of what

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Speaker 1: I think is likely. Firstly, as far as the impact

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Speaker 1: on house prices, I think it will probably be small,

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Speaker 1: mostly because, as I'm going to come to in a second,

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Speaker 1: I think that the number of people who are going

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Speaker 1: to use this is fairly small, but quite clearly to

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Speaker 1: the extent that there is an impact on house prices,

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Speaker 1: it's going to be pushing house prices up. Quite simply.

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Speaker 1: If you're adding to the demand of housing by giving

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Speaker 1: a bunch of people more money to spend on houses,

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Speaker 1: and you're not doing anything about the number of houses

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Speaker 1: that there are, then there's only one direction that that's

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Speaker 1: going to push prices in. Now, that might be a

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Speaker 1: small effect. We don't know, but I think it is

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Speaker 1: likely that it's going to be small. Then I'll come

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Speaker 1: to the question, well, how many people are actually going

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Speaker 1: to use this? And fifty thousand is the headline that

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Speaker 1: we here talked about and I mentioned at a moment

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Speaker 1: ago as the kind of maximum that you can use

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Speaker 1: under this scheme. I'm not sure how many of our

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Speaker 1: audience members will know exactly how much they have in

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Speaker 1: their super. I can't imagine there would be too many people,

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Speaker 1: especially under the age of kind of thirty thirty five,

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Speaker 1: who have fifty thousand dollars in their super. And keeping

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Speaker 1: in mind that you know it's only forty percent of

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Speaker 1: your super is the other limit there, so you need

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Speaker 1: to have quite a lot of super to be able

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Speaker 1: to start getting the amount of money out of this

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Speaker 1: program that would really sort of shift the dial when

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Speaker 1: it comes to large deposits, which can sometimes be you know,

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Speaker 1: upwards of one hundred thousand dollars. So you know, i'd

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Speaker 1: sort of make that point. I think it's I think

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Speaker 1: Jane Hume, the Superannuation Minister, said that there were about

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Speaker 1: one hundred thousand first home buyers a year, and use

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Speaker 1: that as sort of an idea of the maximum number

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Speaker 1: of people who could benefit from this, but I think

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Speaker 1: that the actual number is likely to be a little

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Speaker 1: bit smare than that. And then finally there's a question

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Speaker 1: of well, you take this money out of your super,

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Speaker 1: what does that mean for the money that you've got time?

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Speaker 1: And that's a slightly complicated question as well, but I'll

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Speaker 1: sort of put it this way. So one of the

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Speaker 1: things that we sort of know it's kind of the

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Speaker 1: magic of investment, I guess, and the magic of your

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Speaker 1: super is this concept of compound interest where you start

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Speaker 1: with a little bit of money and if you leave

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Speaker 1: it in there for a fifty years and it's earning

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Speaker 1: what sounds like a small amount of interest, say like

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Speaker 1: five percent interest a year for fifty years. Then by

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Speaker 1: the time you take that out in fifty years, it

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Speaker 1: can be kind of ten times bigger than what it

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Speaker 1: was when you put it in just the nature of

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Speaker 1: the way that kind of, you know, interest upon interest

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Speaker 1: upon interest.

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Speaker 4: That number gets quite big.

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Speaker 1: Now it's possible you take this money out and you

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Speaker 1: put it into your house, that the value of your

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Speaker 1: house grows by a similar amount if we expect that

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Speaker 1: house prices are going to keep going up and up

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Speaker 1: and up, which is kind of it seems what this

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Speaker 1: policy is premised on.

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Speaker 4: By say, you know, three or five percent a year.

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Speaker 1: Then maybe the money sitting in your house is just

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Speaker 1: as good off as it is sitting in your super.

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Speaker 1: And when you take it out of your house at

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Speaker 1: your retirement, say you want to sell your house and

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Speaker 1: that goes back into your super, you've made the same

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Speaker 1: sort of compound gains on your house as you might

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Speaker 1: have in the kind of, you know, the things that

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Speaker 1: your super fun was investing in. But it's not entirely

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Speaker 1: clear that that's going to be the case. And certainly

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Speaker 1: if the housing market were to take a dip or off,

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Speaker 1: the housing market sort of stops going up. Then you'll

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Speaker 1: be missing out potentially on quite a lot of money

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Speaker 1: by taking this money out of your retirement fund and

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Speaker 1: losing out on all that compound interest. Again, we don't know.

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Speaker 1: It's all based on a whole bunch of different sort

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Speaker 1: of assumptions, and it's something that some of the detail

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Speaker 1: has perhaps.

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Speaker 3: Been lacking all in pursuit of the Australian dream. And

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Speaker 3: what has the Labor Party given in terms of a

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Speaker 3: response to that.

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Speaker 1: So labors opposed that policy, are opposed to touching super

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Speaker 1: are the purposes of buying a house, It's fair to

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Speaker 1: say not only Labor. There are a lot of kind

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Speaker 1: of Liberal heavy hitters over the years who criticized this idea.

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Speaker 1: Malcolm Turnbill call that, I think the craziest idea he's

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Speaker 1: ever heard, and former Liberal Prime Minister to John Howard,

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Speaker 1: former Liberal Treasurer Peter Costello, former Finance Minister Mattias Corman.

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Speaker 1: There's a long list of people who criticized this idea

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Speaker 1: in the past. As far as sort of Labour's substantive

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Speaker 1: response and maybe coming to Labour's policies again, I think

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Speaker 1: there's a little bit more on the supply side in

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Speaker 1: the Labor platform. But again a big part of their

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Speaker 1: pitch to first home buyers has been again on this

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Speaker 1: on the demand side. So Labour's big scheme is the

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Speaker 1: help to Buy program, which is what we call a

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Speaker 1: shared equity scheme, where essentially the government and it's capped

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Speaker 1: at ten thousand people a year, but for ten thousand

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Speaker 1: people a year, the government will buy up to forty

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Speaker 1: percent of your home and they'll own that stake and

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Speaker 1: they can profit from that stake, and then you know,

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Speaker 1: you can buy the government out at any point in time.

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Speaker 1: But essentially the government kind of reduces the deposit you

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Speaker 1: have to pay and the mortgage repayments because the government

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Speaker 1: owns part of the house. And so that's a scheme

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Speaker 1: that's already in place in a number of sort of

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Speaker 1: state governments and other parts of the world. It's a

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Speaker 1: similar scheme that's been proposed at a federal level. Labor

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Speaker 1: also has a slightly smaller version, a smaller number of places,

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Speaker 1: but a similar sort of deposit insurance scheme to the

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Speaker 1: one I mentioned from the Coalition, and then I mentioned

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Speaker 1: the supply side.

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Speaker 4: Labour wants to establish what they call a housing fund.

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Speaker 1: The idea of the fund is basically you put ten

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Speaker 1: billion dollars in it, that gets invested, and then you

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Speaker 1: build houses off the money that that makes. And Labor

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Speaker 1: says that in doing this that they'll build houses with

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Speaker 1: that money, and they'll build about fifty thousand houses, mostly

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Speaker 1: social houses and other sort of affordable housing options over

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Speaker 1: the next five years, including specific ones sort of quarantine

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Speaker 1: for victims and survivors of family violence, and for a

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Speaker 1: number of other kind of priority groups, including frontline workers.

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Speaker 1: And so that, I guess is a supply side policy,

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Speaker 1: and that's Labour's offering.

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Speaker 3: And have we heard anything from either of the major

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Speaker 3: parties about those of us who are a little further

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Speaker 3: away from getting a deposit together and are still renting

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Speaker 3: and they're competing with rental prices that are going up.

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Speaker 1: It's a very good question, Sam, and the answer is

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Speaker 1: not really. And I think that this has been a

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Speaker 1: notable absence in the election campaign. We talk a lot

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Speaker 1: about house prices going up, but when we've got the

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Speaker 1: latest sort of price inflation figures of the first three

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Speaker 1: months of twenty twenty two, it was the fastest that

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Speaker 1: rental prices had risen in a number of years. I

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Speaker 1: think since twenty fourteen, and there are a number of other,

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Speaker 1: you know, kind of indicators of rental stress that suggests

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Speaker 1: that that's a problem for a number of people. And

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Speaker 1: I guess now that we're in a world where interest

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Speaker 1: rates are going up interest rates, so I won't get into

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Speaker 1: all the detail on that, but for those who remember

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Speaker 1: the podcast episodes on it, one of the things that

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Speaker 1: they do is they make mortgages more expensive. That flows

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Speaker 1: through into rents as well, and so we expect if

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Speaker 1: we're in a world where interestrates start going up, that's

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Speaker 1: going to keep sort of driving rents up. So I

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Speaker 1: think it's going to be a significant problem rental affordability

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Speaker 1: for a number of people, especially when they know it's

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Speaker 1: so hard to get into the housing market. That leaves

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Speaker 1: a lot more people renting for a lot longer. So

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Speaker 1: I think it's certainly a big issue. But no, it

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Speaker 1: hasn't got a great deal of attention in the campaign

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Speaker 1: and no significant policies, certainly for renters from either major party.

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Speaker 3: The focus has clearly been on both parties appealing to

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Speaker 3: first home buyers and those already in the housing market

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Speaker 3: to perhaps keep growing their property portfolio and all those

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Speaker 3: kind of things. It's been a fascinating discussion to watch

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Speaker 3: and I think over the course of the campaign Australians

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Speaker 3: literacy on housing has actually increased because of the spotlight,

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Speaker 3: the sustained spotlight that's been put on the housing market.

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Speaker 3: A fascinating chat. We only have time for one more

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Speaker 3: of these before the election. Tomorrow we're going to be

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Speaker 3: talking about the ULARU Statement from the Heart. As always,

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Speaker 3: check us out on Instagram, tell your friends about us,

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Speaker 3: because with only forty eight hours to go before the

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Speaker 3: federal election, we want to get as many Aussies politically

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Speaker 3: informed and active as possible until then, Happy Thursday, and

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Speaker 3: we will speak to you for the last pre election

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Speaker 3: episode tomorrow