ANDY PARK:
Well, the Reserve Bank has just released its Financial Stability Review. It says a small but rising share of mortgage borrowers are, quote: "on the cusp or in the early stages of financial stress." It's pretty grim reading if you're already in housing stress on the back of interest rate rises. Stephen Jones is the Federal Assistant Treasurer. He's not a dangerous politician, he's a friend of the show, you might say. Welcome back.
STEPHEN JONES:
Andy, good to be with you, I can guarantee I don't bite.
PARK:
Well, we'll find out at the end of this interview. On those risks identified by the RBA what is most keeping you up at night? Because this is quite real. These are the sort of conversations that are happening in Australian households across the country, and this news is not what they want to hear.
JONES:
Two or three things. Firstly, obviously, households, particularly those with a mortgage, are doing it tough at the moment. We know that. And they sweat beads every time the Reserve Bank gets up and announces its interest rate decision because they know that makes a difference to what money they have left over at the end of a fortnight. So, households with a mortgage definitely doing it tough. Renters. If you sort of read between the lines of the Financial Stability Review's six-monthly report, you'll see that renters are bearing the brunt of interest rate increases. For those who are living in properties owned by investment owners who have got a mortgage, they're just passing those interest rate increases onto their tenants. They're doing it tough as well. And if you live in Sydney or a lot of parts of regional Australia, you'll be feeling that directly. The stuff that hasn't got so much attention today as well, but does bother me a lot, is the continued focus on cyber risk and what's going on in the international economy and the impact that that can have on Australia. Their assessment of the Australian banking system is that it's unquestionably strong, good capital holdings. But we're not immune to what might be coming at us from around the world, and if I were to identify the three things that bother me: households with a mortgage, renters, and what's likely to come or potentially going to come at us from around the world, particularly cyber risks.
PARK:
You say the banks aren't a worry, they've got good capital holdings. We also know they've got pretty decent profits recently. The Review says Australian banks, as you said, well positioned. But what about vulnerable borrowers? I mean, how soon could they be in mortgage stress if they're not already?
JONES:
Yeah, every time I meet with one of the banks, I ask them this question: what's your non-performing loans? That's what they describe as the people who have a loan with them but are unable to pay or who've defaulted on payments. You'd expect at a time like this that those levels will be going up, and yeah, they are ticking up a bit, but they're still below where they were pre-COVID, and that's a factor of a couple of things. Labour market is strong, so unemployment low, more people in work, people earning more money, that's good. People drawing down on their savings, and that's just rational behaviour as well. But that doesn't mean there's any room for complacency because, as I said at the top, people are doing it tough, and they're making some decisions, and you'll see that discretionary spending starting to fall. We're already seeing that from the figures we saw released by the ABS yesterday. People are putting their money where they've got to on those things that they haven't got a choice about. Mortgage, electricity bills and the like and pulling back on the discretionary spending. All very rational behaviour.
PARK:
Just on a few other matters. It's been confirmed that the Home Affairs website has been unavailable today due to a cyber attack. Are other government websites secure at this point, as far as you know?
JONES:
Over the course of the last twelve months, we've put a lot of effort into uplifting our cyber capacity. We were critical that our predecessors didn't do nearly enough in this area, so we have uplifted our capacity. To put what you've just reported into some context. We are fending off hundreds and hundreds and hundreds of attacks every day. And if you put that together with what's going on in the private sector, the commercial sector. Australia is literally fending off hundreds of thousands of attacks on an hourly basis.
PARK:
From where are these attacks coming from?
JONES:
From all around the world. Most of them emanating from offshore Andy.
PARK:
State actors, we're talking state actors here.
JONES:
Look, I've got to be careful about what I say in response to that question. But, you know, whether it's state actors or people operating from jurisdictions with either the knowledge or tacit knowledge of those, there's a mixture of actors in all of this. And we've got to ensure that we're uplifting our defences to ensure that both our commercial, our government, and our national security infrastructure are up to it.
PARK:
Just on another issue. Today, you've announced the details of a new mandatory safety standard for infant children because 48 children under the age of three end up in emergency departments across Australia each week, and these are due to injuries from unsuitable or dangerous toys. What does unsuitable or dangerous mean? Is there a design flaw? And what injuries are we talking about?
JONES:
Yes, in short, there is a design flaw. And the overwhelming majority of these injuries are choking and asphyxiation. Child takes a toy, they got magical powers, you think it's safe, and all of a sudden the bells come out of the rattle or the batteries come out of the toy, and anyone with kids will know, the first thing they do is they stick it in their mouth, and that leads too often to a tragic end. So, we're following what has gone on around in many countries around the world where they're focusing on this demographic, seeing far too many deaths, far too many injuries, and saying, we got to ensure that if a parent gives a child a toy, that it's fit for purpose and safe to use, particularly in that nought to three-year-old age range. So covers with locks and screws on battery casings. Absolutely critical. Bits that can't be easily broken off, a rattle or a child's toy. Absolutely critical. Because that's where the injuries are occurring.
PARK:
We'll have to leave it there. Stephen Jones, Assistant Treasurer and Minister for Financial Services. Have a great weekend.
JONES:
Always good to talk to you Andy.