In trying to help a colleague out of a hole, there’s always the danger of slipping into one yourself.
Shoring up Joe Hockey after the treasurer’s advice to young homebuyers to get a good job, Tony Abbott recounted his own mortgage experience.
“I’m someone who has over the years felt a bit of mortgage stress,” Abbott said. “Even as a Cabinet minister sometimes it’s hard to pay a Sydney mortgage and I know over the years I’ve earnt a lot more than the average person … We still have a mortgage, like so many Australians.”
A financial adviser might tell Tony to get that mortgage paid off while he’s on his prime ministerial salary and living at Kirribilli. A political adviser might wonder how the anecdote will wash with Tony’s tradies.
However, the substantive point is that Abbott was forced to defend his treasurer, once again.
And this after he himself had attracted criticism last week when, in the wake of Treasury secretary John Fraser’s acknowledging the “bubble” in Sydney and parts of Melbourne and expressing concern about the social impact for young and low-income people, Abbott just wanted to paint Bill Shorten as desiring to drive prices down.
This week’s furore started when Hockey was asked on Tuesday about the problems first home buyers face getting onto the Sydney property ladder.
Hockey said in part: “The starting point for a first home buyer is to get a good job that pays good money. If you’ve got a good job and it pays good money and you have security in relation to that job, then you can go to the bank and you can borrow money and that’s readily affordable. More affordable than ever to borrow money for a first home now than it has ever been.”
And Hockey said: “If housing were unaffordable in Sydney no-one would be buying it.”
Hockey also talked about the importance of adequate supply. But his get-a-good-job advice exploded in the media, and by the time he sought to inject more understanding on Wednesday, he’d been badly burned.
If Hockey had greater credibility, if he’d not talked last year about the car-less poor, if he’d cast his remarks in a context of appreciating young people’s struggle, his job line might have attracted little attention. But Hockey is not nuanced or subtle, and often he’s not careful. His detractors have for years nicknamed him sloppy Joe.
The government was called out again on Wednesday when Reserve Bank Governor Glenn Stevens said some of what was happening in Sydney was “crazy”. Sydney prices were “acutely concerning for a host of reasons”, he said, describing it as a social problem. This echoed Fraser’s line.
Housing affordability is good ground for Labor – and Hockey’s bumbling has certainly made it so this week. But there will be complications when the ALP has to produce a policy. The opposition is leaving the option open to put some curbs on negative gearing, grandfathering investors’ current arrangements. If it goes down this path, it would risk alienating many small investors, who could distrust the grandfathering guarantees or find their future plans dashed or limited.
Hockey’s proneness to mistakes matters well beyond issues around the housing bubble. It’s not just that he has been a serial creator of problems for the government. It’s also that this is a particularly challenging time for the economy, which requires a treasurer who’s seen both as competent and as in touch with ordinary people’s situations.
Surveys released on Wednesday carry mixed messages as the government waits to assess the real impact of its budget – which got a largely positive initial reception.
The bad news was that the Westpac–Melbourne Institute Index of Consumer Sentiment fell 6.9% in June. Westpac senior economist Matthew Hassan described it as a surprisingly weak result, seeing the May surge of optimism as a “brief relief rally” after the interest rate cut and the budget, and warning the fall showed renewed concerns about the economy.
The good news came in the NAB monthly business survey for May: it found that after the budget and rate cut business confidence “moved up significantly” to “the highest level of confidence since August 2014”.
Stevens, speaking to the Economic Society of Australia, highlighted the importance in these uncertain times of a broad “confidence-enhancing narrative”.
Obviously there are many challenges in shaping and projecting such a narrative, which Stevens said should extend to a range of areas. But having an accident-prone treasurer surely is a drag on the government’s effort to get across a “narrative for growth”.