Ross Solly:
Andrew Leigh is the Member for Fenner, and also Assistant Minister for Productivity, Competition, Charities and Treasury. Andrew Leigh, good morning to you.
Andrew Leigh:
Good morning Ross, great to be with you.
Solly:
And thank you for joining us. So what do you say to people in Canberra, Andrew Leigh, who at the moment are sitting on a house that’s suddenly dropping in value, they’re in danger of having negative equity – what do you say to those people this morning?
Leigh:
Well, house prices are still up over the last year and over the last 5 years, they’re up almost 25 per cent. If we look over the last quarter century, house prices have been rising about 6 per cent a year, and our Treasury modelling of the effect of the tax policies in the Budget is that that growth would slow by about 2 per cent. So take about 4 months of house price growth out of the market. As PropTrack has said, the main headwind for property prices right now is interest rates, as well as some global uncertainty also having an effect.
Solly:
So, with interest rates set to apparently go up again before the end of this year, at least once, if not twice, Andrew Leigh, can people expect that their house values are going to drop even further?
Leigh:
Look, I don’t get in the business of giving advice on interest rates to the Reserve Bank or making forecasts of things like house prices, but certainly what we’ve seen is strong house price growth over recent decades and it wouldn’t be unreasonable to think that that will continue. The government’s aim, through our increased investment in housing supply, is to slow the growth of house prices, and really housing supply is most of the action there.
But of course it takes time. After the 10 years in which the Coalition dropped the ball on housing supply, we’re working with the states and territories doing all we can to get more houses built. Yesterday’s national accounts showed that building approvals and dwelling investment were up. That’s a very positive sign. There’s a lot more work to do.
Solly:
So, you think there will be a correct – or, there will be a turnaround at some stage. Is this what the government was expecting? Were you predicting, were you thinking, was your advice from Treasury that these sorts of drops would probably be the result of interest rates plus, coupled with the budgetary measures?
Leigh:
Well as I’ve said, the modelling in the Budget says about a 2 per cent reduction in house prices as a result of our policies over the next few years.
Solly:
And what have they gone down at the moment in the last 6 months? More than 2 per cent, isn’t it?
Leigh:
They’re down a little more than that.
Solly:
Yeah!
Leigh:
As I said, interest rates are clearly playing a part. House prices, to put it into perspective, are back around where they were at the end of last year, the beginning of this year. It’s not uncommon for house prices to come off. It’s happened about 7 times in the past couple of decades. In 2019, we saw a 13 per cent fall in Sydney house prices. We have had ups and downs in the property market before and we’ll have that in the future again. And as I’ve said, tax policies are a driver, but not the primary driver of house prices right now.
Solly:
I’ve got a long text from Brendan and I can’t read it out because it is a very long text, but he was basically talking about back in the 90s when interest rates got to 18 per cent and it scarred a lot of people, including his own family for a long, long time and they were never able to recover from that. With the interest rates going up, Andrew Leigh, do you have any concerns at all about people who may find themselves getting into situations from which they can never recover and that they may have to end up selling their house for a price below what they paid for it a couple of years back?
Leigh:
Look, negative equity is still quite rare. The estimates from the Commonwealth Bank are that house prices will be growing in coming years. We do have estimates from a range of other respected forecasters suggesting modest house price growth. Again Ross, our aim is to ensure that young people have a crack at getting into the market. That was the whole aim of the measures in the Budget and the aim of our 1.2 million home target. We’re working very collaboratively with the ACT Government.
We’ve just got to do more on building homes. We’ve been behind population growth over recent decades. We have fewer homes per person than many advanced countries. All these objective indicators point to the need to build more homes in Australia, and that will allow housing affordability to remain within the reach of a young middle class Australian family. And that is really essential to the Australian dream.
Solly:
Interestingly, on the text line, a lot of people can also see no problem here. This texter, ‘We own our home. We’re not planning to sell. House prices have risen so much over the last decade. It is time for them to go down finally’. Greg says, ‘Falling house prices are a good thing. I own a house, but young people need to buy houses. I hope prices keep falling’. Jen says, ‘Prices need to go down. The media overhypes them going down despite the fact they went up dramatically since the start of 2020’. And another text that says, ‘Lower house prices are good for first‑home buyers. Homeowners are not worse off. Sure, they get less if they sell but pay less if they buy. Only people with more than one house are impacted’.That’s just some of the response coming through on the text line, Andrew Leigh.
While I have you here, earlier this morning we were talking to the CPSU. They had a town hall meeting yesterday. Overwhelmingly, more than 90 per cent of the people attending that meeting put a call out saying the government needs to put a hold on going down the path of using too much AI. They were talking about recent episodes, Andrew Leigh, with aged care home practices et cetera, where it’s left to computers to decide who qualifies and who doesn’t. Jim Chalmers last night said that this is the future, we need to embrace it, but we need to make sure the checks and balances are in place. Do you share the concern from some in the public service, Andrew Leigh, that we’re going at this too quickly and that we don’t have the checks and balances in place and real people, real families are going to get hurt?
Leigh:
I think the CPSU under Melissa Donnelly, who will soon become the new head of the ACTU, has done terrific work on artificial intelligence. They had a survey a couple of years ago that found that there had been 12 per cent of public servants using AI daily. Of those, two‑thirds reported it saved time and most noted it improved effectiveness. But it did point to the lack of training. And that’s why the AI Plan for the Australian Public Service is about ensuring every public servant has foundational training, access to generative AI tools and clear guidance about how to use those tools responsibly.
Solly:
But if it’s not – I think the concern is, Andrew Leigh, that in some of these instances there won’t be a real person checking out this, and there’ll be no avenue to have a real person checking about it. You know, someone will send in their details and it will go through the AI system and that will spit out some numbers and some recommendations?
Leigh:
Well Ross, if you look at Medicare claims, Medicare claims are processed in many cases electronically. That’s why we’re able to process over a billion claims a year in a matter of minutes in many cases. That is done through automated systems. In other areas, such as Robodebt, we’ve clearly seen the consequences of taking the human out of the loop. And that’s why we’ve got those Chief AI Officers in departments promoting adoption but also ensuring that there are clear ethical guardrails and leadership and support provided to public servants as they look to use these AI tools.
Solly:
Alright, 14 to 9. Just a couple of other quick things before I let you go.
Leigh:
Sure.
Solly:
The Opposition – federal Opposition is going to announce today that they will slash the tax on cigarettes by 80 per cent, Andrew Leigh. They’re also going to make vapes and nicotine pouches legal. Their argument is that if they reduce the excise on tobacco – so their talk is a packet of 20 cigarettes, the excise will fall from $30 a packet down to $6 and that will kill off the black market or help kill off the black market. It is a big issue, Andrew Leigh, isn’t it? Is it something, is it a discussion we need to have?
Leigh:
Yeah, look illicit tobacco is a serious concern and the growth of illegal cigarettes is something the Budget’s been very focused on. We’ve put $350 million for extra efforts on compliance and law enforcement trying to bust up that market –
Solly:
But you won’t entertain a reduction in the excise?
Leigh:
Well, we’re taking our advice from law enforcement and health authorities and our focus as a government has been on resourcing those law enforcement efforts, trying to bust up the syndicates that are bringing illegal cigarettes in, trying to bust up the stores that are selling them. I know that there are frustrations among many of those who are selling legal tobacco about the growth of the illegal market. We’re working with law enforcement authorities to crack down on those selling illegal tobacco –
Solly:
But is it working, Andrew Leigh? Because I reckon if I said now, ‘Text in with a picture of a place near you that’s selling tobacco illegally’, I reckon I’d be inundated with – because people are calling all the time saying they know where it’s being sold, they can see it happening.
Leigh:
Well, people can certainly report that to the relevant authorities and they will welcome that. There are busts going on around the country cracking down on this illegal trade, heavily funded by new resources from the federal government. So, we’re focused very strongly on the law enforcement side. We have had great success in bringing down smoking rates in Australia, including the latest numbers. And we need to continue that momentum because smoking is a product that kills half of its users if used as intended.
Solly:
One other quick thing because I know you have another commitment, but the by‑election result on the weekend in Perth. I asked Kristy McBain about this yesterday. She didn’t seem too concerned about it. Do you think there are concern – there are warning signs there for major parties in the One Nation victory on the weekend, Andrew Leigh?
Leigh:
Look, outrage politics is on the rise around the world. We’re seeing this in Italy, France, Germany, the UK, US and here in Australia. Part of the demand is on us delivering: increasing bulk billing rates, providing tax cuts to people, increasing minimum wages, delivering on those fundamental cost of living issues –
Solly:
But as I said –
Leigh:
But it’s also about how we communicate.
Solly:
Yeah, well that’s what I was going to say. It seems people aren’t hearing what you’re saying.
Leigh:
And this is an environment in which more and more people are getting their news through social media, a medium that rewards outrage and anger, which is more favourable to right‑wing populists.
Solly:
So, how do you change that? How do you get on top of that?
Leigh:
We need to do better at communicating on those platforms. Certainly –
Solly:
You need to have more outrage on social media, Andrew Leigh?
Leigh:
No, no. Finding constructive ways. You can’t fight fire with fire. That’s not going to work for sensible centrists. But we do need to be meeting people where they’re at and engaging on those platforms which are where so many Australians get their news right now.
Solly:
I’m so glad that I’m not on social media. I was glad before this that I’m even gladder – not that I don’t want to see messages and I don’t want to see images of you doing push‑ups, Andrew Leigh, on social media! But I don’t want to see it! I’m just happy to get my news from ABC Canberra Breakfast.
Leigh:
I’m afraid you’re the exception these days!
Solly:
I know, I know. I am. I’m an old man shouting at clouds. Andrew Leigh, appreciate your time this morning. Thank you.
Leigh:
Terrific to chat Ross, thank you.
Solly:
Bye bye. That’s Andrew Leigh.