LEON BYNER:
But in the meantime I caught up earlier this morning with our Treasurer Josh Frydenberg. Josh Frydenberg, thanks for joining us today.
JOSH FRYDENBERG:
Good to be with you, Leon.
LEON BYNER:
Are you worried that more people are tapping in to their super savings to pay for medical procedures?
JOSH FRYDENBERG:
Well there are processes there but we're also conducting a review of how all these processes work. Look, when people face certain illnesses, then there should be an ability for them to use some of their funds that are available. But again, it's about getting the balance right and that's why there is a review underway.
LEON BYNER:
Do you think Medicare should be involved in this, given people are not getting any help from the taxpayer on this?
JOSH FRYDENBERG:
Oh look, my Department, Treasury, will be speaking to the relevant other Departments, including the Health Department.
LEON BYNER:
Alright. Now, there's a couple of other important issues on the Budget. There's a push for increasing the Newstart allowance significantly, $75 a week. What do you think of that?
JOSH FRYDENBERG:
Well in terms of Newstart, it is unlike many other welfare benefit payments. In that, people who receive Newstart also receive other payments like the parenting payment, or Rental Assistance. Indeed over 90 per cent of Newstart recipients receive those other payments. At the same time, around two thirds of the people on Newstart move into a job within 12 months, and the best thing we can do as a Government is create the environment where jobs are created and jobs are available. We're proud of the fact that since we came to Government over 1.3 million new jobs have been created and in the last 12 months about eight out of 10 of those jobs have been fulltime.
LEON BYNER:
I want to talk about the banking regulator because there's a big story in The Australian about APRA, that is the Australian Prudential Regulatory Authority. Their leadership, well, a lot of people should go. What is your input into this?
JOSH FRYDENBERG:
Well there's two points here. The first is APRA have a responsibility to ensure the financial stability of our system. So they need to ensure the banks have the right capital adequacy needs and that they are met, and that they need to ensure that when the troubles hit, the banks are resilient to respond. And they've done that very effectively and this report actually says they've been an impressive and forceful regulator in matters of traditional financial risk. Then there are the broader issues which is how effectively does APRA protect member outcomes in superannuation, and that's where they've been found wanting by the regulator, as well as some of their cultural and governance performance. In particular, too many of their negotiations with the organisations that they regulate have been conducted in secret, as opposed to more public discussions.
LEON BYNER:
So heads are going to roll?
JOSH FRYDENBERG:
Well there's going to be new organisational changes at APRA, including a new superannuation division; and Wayne Byres, who I've spoken to and has taken the recommendations of this report very seriously and will implement them, he will adopt more of a CEO role, rather than focusing particularly on one part of their role.
LEON BYNER:
Your Housing Minister Michael Sukkar says that people should snap up houses now before prices go up. Might this not artificially overheat the market?
JOSH FRYDENBERG:
Well, I think he's just pointing out the fact that the housing market, particularly in Sydney and in Melbourne have started to turn. So after a period where their prices came down by about 10 per cent, we've started to see their prices started to rise just a little, and we've also seen clearance rates at about 70 per cent last weekend whereas the same time last year they were around 50 per cent. So what he's pointing to are improvements in the housing market and obviously there are lower interest rates than there have been previously, and some of the regulatory settings have been loosened by APRA with respect to the banks' loan book.
LEON BYNER:
I was going to ask you about that, because there is still feedback that, okay, the prices might be more favourable, I go to the bank, it's harder to get the loan and what they're going to give you is less than they would before all the inquiries. So is this a good thing?
JOSH FRYDENBERG:
I think through the Royal Commission process and the immediate period after there has been more risk aversion on behalf of the banks, but what we have also seen is in the last month or two, the loan books of the banks, including for business loans, become more open, and hopefully this is going to be the trend we see going forward, and certainly the interest rate cuts are going to be important for the affordability of homes.
LEON BYNER:
Are you putting any pressure at all, even morally on banks and lenders, to be more easy to borrow from?
JOSH FRYDENBERG:
Well, I think there is a case there for the banks to focus on the reasonable free flow of credit and what I mean by that is that of course they're businesses; they need to undertake decisions that are financially responsible and not everyone may be able to get the loan that they want. But at the same time, banks need to ensure that there is this flow of credit across the economy.
LEON BYNER:
Treasurer, thank you very much for joining us.
JOSH FRYDENBERG:
Good to be with you.