12 November 2020

SUBJECTS: Consumer credit protections; jobs.
AHRON YOUNG, HOST: We're joined by Stephen Jones the Shadow assistant Treasurer, great to have you here at TickerTV. Thanks for your time.
STEPHEN JONES, SHADOW ASSISTANT TREASURER: Thanks for your time. Good to be back.
YOUNG: Obviously the Federal Government wants to try and get the economy moving. We've just heard from our reporter Holly that in fact consumer confidence at an all-time high since records began. So do you think that we do need these changes when it comes to responsible lending?
JONES: No argument about the need to get the economy moving, obviously, jobs growing again and credit flowing through the economy. But what's clear to us is the problem is not with the supply of credit. money's never been cheaper. It's never been more available. The problem is businesses willingness to go out there and take a punt. And if record low interest rates, they're not going to do that, then it's not going to be made any easier for them to go and take out a loan by removing all these consumer very necessary consumer protections. This is the point that Treasury Department, the Treasurer’s own department made themselves, not two years ago. They said that actually the responsible lending laws were probably providing stability to the finance system overall. They weren't impeding the flow of credit. We just can't see the reason for wanting to remove those protections now of all times.
YOUNG: When we have look back to the GFC, that was the reason why we started to bring in stronger consumer lending laws. We didn't want a Bernie Mae or Freddie Mac type situation that that had in the United States as in giving credit to people who can't afford it. But it has become quite tight. We hear from a lot of small businesses particularly this year saying it's just impossible to be getting any money out of the banks, despite the fact that the Government might be making changes to the consumer lending laws. It's in a sense up to the banks to decide what they do though, right?
JONES: Yeah, sure. An important point to make about this, these consumer credit laws, and the hint is in the name, don't apply to businesses. They only apply to household loans, to personal loans, to consumer loans, not to business loans. So there should be no good reason why they are impeding the flow of credit to small businesses. I have no doubt that with or without these laws lending managers inside banks are having a look at the underlying business case and the underlying trading environment affecting a small business to see whether they're going to punt up the money. But the evidence is pretty clear. The laws themselves aren't impeding the flow of credit. Removing them would create a great risk to consumers. You've pointed to the GFC which is precipitated by a commission-driven sales culture, pushing unaffordable loan products, credit products, onto businesses and consumers are didn't understand them and couldn't afford them. We don't want to return to that situation. Now more than ever we need to ensure that credit is being provided freely, but responsibly only to those who can afford it and who understand the risks that they're taking.
YOUNG: Do you think though the Government is just concerned though about the housing, the property market, give it an essentially is one of our biggest I guess pivots of the economy, pillars of the economy at such a difficult time. We've had obviously hit by coronavirus. We've had a lot of the foreign money coming into the housing sector now probably won’t for quite some time because of coronavirus as well, that they're so concerned about a slowdown in the housing market not just in terms of buying and selling houses building new houses, that this idea from the Government is to try and really stimulate first home buyers to be able to get access to money.
JONES: Look if that was a problem, you would have expected that to have occurred at any time over the last 10 years, but hasn't. We've had seen a boom and a plateauing in the housing market over the last decade. Housing prices in capital cities at record high levels and no shortage of consumers out there wanting to purchase and get credit for new houses and for investment properties. So important point to make, laws have been in place for 10 years. We've seen household to go to the second highest in the world. It hasn't impeded the capacity of people to get a loan. And if you look forward the optimism is there in the housing market. All the forecasts that I'm looking at it, I'm sure available to your to your viewers as well, show pretty optimistic outlook for property. The problem we have in the property market at the moment is not the lack of buyers but the lack of sellers and that's not got anything to do with anything that's going on in the credit market.
YOUNG: Now talk to us, as we mentioned, about the economy. Obviously things bouncing back. Is this quicker than even you had expected that this would happen? Obviously Victoria slowing down the national recovery, but from our offices here in Melbourne, of course, everyone's out and about again and the shops are full.
JONES: And isn't that good news? It's fantastic to see our colleagues out in Melbourne, throughout Victoria, being able to get about get out and about. They've got the health challenge under control. It hasn't gone away, but they've got it under control. And we hope that freeing up of the restrictions flows through to confidence and flows through to business activities. That will be a sensational outcome. We do have some concerns, I've got to say. The pulling back in Government support to both businesses and households, the scaling down of Job Keeper, the scaling down of Job Seeker over the next three to six months. A report out today, which is showing that's already having a negative impact on household demand flowing through to jobs. So we've got a note of caution in that area. We hope that our worst fears aren't realised.
YOUNG: There’s two sides to that though, isn’t there? I mean I speak to business owners who say it’s really hard to get staff at the moment because of Job Seeker but also Job Keeper, where people can get Job Keeper but don’t actually have to go to the workplace if they're concerned about the health safety. So it's actually the cafe below us here at Ticker can't get any staff. A restaurant I was at in Bendigo just yesterday saying they can't get any staff because people are enjoying the comfort of Job Seeker and Job Keeper. So you can kind of understand from the business perspective if they're ready to hire them, people should be taking jobs as opposed to taking a Government stimulus check.
JONES: Yeah I’ve heard these anecdotes. Number one point, absolutely if there are people, if there are jobs available, and people able to be doing those jobs safely, then they should be taking up those employment options. I think re-establishing the activity tests, that is that you've got to apply for jobs and you got to take a job that you're willing and that you're fit for before you can get Job Seeker, 100 percent support that, no argument in that whatsoever. If it’s safe for people to be back at work, absolutely they should be. Good for them, good for the economy. But the macro data just doesn't support some of those anecdotes that I'm seeing. The macro data shows that for every for every job, there's about 13 job seekers. So yeah, I have heard the stories that you've just relayed to me and I don't dismiss them, but the macro data says there's something much bigger going on there in the labour market and that is that the jobs aren't flowing yet.