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Exclusive interview: Federal treasurer Josh Frydenberg

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Annie Kane 13 minute read

In October, federal Treasurer Josh Frydenberg sat down for an exclusive interview with Momentum Media director Alex Whitlock. We unpack what the Treasurer had to say about the role brokers play in providing competition in the home loan market, the future of the housing market, and what lies ahead for Australia’s economy as NSW and Victoria emerge from lockdowns

Alex Whitlock (AW): It’s sometimes hard to comprehend, even as we stand here now, exactly what we’ve been through for the last 18 months.

Treasurer Josh Frydenberg (Treasurer): Yes, [it’s the] biggest economic shock since the Great Depression and a once in a century pandemic, certainly not the economic environment I thought I would be involved in as the Treasurer. In fact, I was pleased to deliver the first balanced budget in 11 years, was looking forward to delivering the first surplus budget in 12 years, and even after the terrible bushfires and the ongoing drought, we were on track for that.

And then the pandemic hit and it turned the world on its head, there was no rule book. And we saw Treasury fear that the unemployment could reach as high as 15 per cent. As you know, it’s at 4.5 per cent today, a 12-year low.


We saw GDP fall in the June quarter last year by its greatest number on record. And we have also seen across the rest of the economy a dislocation as the health restrictions took effect.

But at the same time, the economy has shown remarkable resilience, and it has come back strongly. But obviously the Delta variant was another game changer that we encountered midway through this year. But overall, Alex, I’m pretty optimistic about where the economy is going.

There’s more than $200 billion on household balance sheets that was not there this time last year, as well as business balance sheets. There [are] obviously strong pipelines of investment in both the housing sector of the backup programmes like HomeBuilder, but also, more broadly, in machinery and equipment off the back of the expanded instant asset write-off that we had in the last budget in the budget even before that.

And I’m also very confident that as restrictions ease, we will see people back in work, and we’ll see businesses reopen and monetary policy will stay accommodative. According to the governor of the Reserve Bank for some time, he’s already indicated his position with respect to the cash rate, and then fiscal policy will continue to provide support, whether it’s through tax relief, infrastructure spending, or other particular programmes. So overall, I’m optimistic and upbeat about the future prospects of the Australian economy.

AW: As Treasurer of Australia, how have you been able to navigate it? If you cast your mind back, what have been some of the guiding lights for you?


Treasurer: Well, if I take my mind back to March of last year, that’s really when we feared the worst, and that’s when you saw hundreds of thousands of our fellow Australians lining up outside Centrelink, with many having lost their jobs. People were fearful of losing their homes, and their lifetime savings. And for some, those images were reminiscent of what we saw in the Great Depression.

We responded with JobKeeper and, immediately, it boosted both consumer and business confidence, and it suddenly saw employers, rather than sacking workers, hold on to them.

I think that was a very important intervention, obviously a major economic support programme, a combination of a wage subsidy and economic stimulus. And it had the desired impact in that it kept the formal connection between employers and employees. But it also laid the foundation for what was a very strong recovery, saving according to the RBA, at least 700,000 jobs, and the fact, Alex, that day our economy is larger than it was going into the pandemic, and that our employment levels are higher than they were going into the pandemic, does give people confidence that we have got through this crisis in a position that is stronger than that of many other comparable jurisdictions.

And that’s not a cause for complacency. Far from it. You know, I’m expecting to see contraction in the September quarter, off the back of the lockdowns in NSW and Victoria. But at the same time, once restrictions ease, I’m confident that going forward the economy will continue to strengthen and grow.

AW: What are your thoughts on how the housing market is going to relate with the economy moving forwards as we move into 2022?

Treasurer: Well, we have seen a very strong property market, and that’s been reflected in price movements, and it’s a $10 trillion housing sector, and for many people, indeed, for most people, it’s the biggest asset that they own.

We have obviously supported the construction industry and the housing sector with the HomeBuilder programme. We’ve committed over $2.5 billion, Alex, to that particular programme. We saw over 130,000 applications, and it was expected to support more than $30 billion in residential construction. So, it’s supported new homes as well as substantial renovations. I think it’s been a very successful programme.

We’ve also had other initiatives like the First Home Super Saver Scheme, which I increased in the budget from $30,000 to $50,000, which are the voluntary contributions that can be released towards a deposit for a first-time buyer.

And then we’ve also got the Home Guarantee schemes where we’ve seen more than 50,000 people, home buyers, being able to enter the market under that scheme. While, for example, the Family Home Guarantee, Alex, can see home buyers, single parents, purchase a home with a deposit as little as 2 per cent.

So, the combination of historically low interest rates, as well as programmes like our HomeBuilder, First Home Super Saver Scheme, and Home Guarantee schemes, I think, [has] been very important in driving economic activity, and driving greater home ownership.

And one of the key indicators, a key feature of this cycle, which is the first home buyers and more owner-occupiers in the market, is the fact that in the year to July, Alex, there [have] been more than 170,000 first home buyers.

Now, the 10-year average across the country has been around 100,000. So this is a big jump in first home buyers, and we welcome that, we encourage it. And the fact that people get a... foothold in the market, then that is I think, a good thing, because it helps set them up for greater economic security into the future.

AW: I think negative gearing is a valuable tool, which is open to all Australians [but]... I think it’s sometimes misunderstood that it’s just the bastion of the very wealthy.

Treasurer: Well, it’s an important feature of the housing market. And as you know, Alex, it was a real battle in the last election, with Labor’s plans for a new housing tax, with their changes to negative gearing and also capital gains. And this would have punished not just the 1.3 million people who had negatively geared properties, but also everyone who had equity in their home, because when they eventually sell their home, they will be doing so in a market with potentially fewer buyers.

And what we did see, back at the time [when] we were fighting this campaign with the Labor Party, about two-thirds of those with negative geared properties had a taxable income of less than $80,000. And among those were 58,000 teachers and more than 40,000 nurses and plenty of police and emergency service workers, as well.

And it was seen as an opportunity for people to get into the housing market to get access to an asset, which would help them, over the course of their lifetimes, and build their economic security. So it was something that the Labor Party was seeking to stamp out in their war on aspiration. And we fought it very hard at the last election. But they’ve always got secret plans, despite what they say today, and no doubt you’ll see at the next election another battleline between us and the Labor Party on taxes because they revealed what they really think, and will do, at the last election.

AW: Over the years that I’ve been here, I’ve seen the impact of some of the pioneers of the mortgage industry. Going back to the 90s, you’ve got the Wizards and the Aussies, the non-bank lenders. The effect of the[se] on the market, essentially helped bring down the real interest rate for borrowers...

How important, do you think, was the competition initially sparked in those early days in the mortgage market? And how important do you think it is, in terms of keeping rates low; above and beyond, the historically low cash rate?

Treasurer: Well, the mortgage brokers have played a fundamentally important role in providing more competition and choice in the housing market. And, there [are] more than 16,000 mortgage brokers employing more than 25,000 people and they’re behind more than 57 per cent, Alex, of new residential mortgages.

So, they do provide a boost to competition because, particularly the small lenders who don’t have the national footprint, this gives them the ability to promote their products. And it was something that was recognised by the Productivity Commission, [it] was something that was recognised by the royal commission, indeed, recently into the banking sector, that mortgage brokers do perform a particularly important role, and as you know, we’ve been very supportive of them in what they do.

So, we’ll continue to encourage competition, we will continue to encourage choice, and in some of those pioneers that you’ve indicated, I think they’ve been a net positive for the market.

“We obviously support strongly the mortgage broking industry, the role that it plays as a source of competition and encouraging choice” 

– Treasurer Josh Frydenberg

AW: So Treasurer, looking ahead, I’d be interested in your thoughts on the future of mortgage broking.

I recently did a podcast with James Symond, one of the founders of Aussie, and – up until recently – the CEO. He said he believes that the best years for mortgage broking lie ahead. Would you agree with that?

Treasurer: Absolutely. And we made some changes around the best interests duty, as you know. And there’ll be further reviews, that we have previously announced, in the back half of next year. But we obviously support strongly the mortgage broking industry, the role that it plays as a source of competition and encouraging choice.

And as I said, they’re big employers across the community. And they’re able to give smaller lenders the ability to sell their products more broadly. Because if they don’t have the mortgage brokers (given they don’t have that national footprint necessarily like the big banks), then they’re hindered in their ability.

AW: Treasurer, it has been a real pleasure catching up with you. I’m very, very grateful for your time. I do wish you all the very best in your current situation down in Victoria. Hopefully, you’ll be out of isolation fairly soon. Thank you very much for your time, it’s good to catch up.

Treasurer: Alex, thanks for the opportunity and all the very best to your listeners and to all those mortgage brokers out there all the very best to them. And to all the people who are looking to get into the housing market, best of luck, too.   

Listen here

This Q&A is an abridged version of the full interview with Treasurer Josh Frydenberg.

You can listen to the full interview via The Adviser Podcast Network on your preferred podcast provider, or by tuning in to the interview online, below: 

Exclusive interview: Federal treasurer Josh Frydenberg
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Annie Kane

Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Email Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.



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