LAURA JAYES: Jane, thanks so much for your time. We're going to talk about the RBAs decision yesterday. But first, let's talk about this housing issue. This is a small announcement today, you'd expect governments to do this. But do you have a housing policy? Does the opposition have a housing policy at the moment? Because this is seriously the number one issue for people.
JANE HUME: Laura, I can assure you that when we go to the next election in around 18 months time, the Coalition will have a comprehensive housing policy. I'm not going to announce it though on a Wednesday morning on Sky without any fanfare. However, what I will say is that we did bring over from the previous parliament a policy to allow people to access the superannuation to help with their first home deposit. This is a very fair and reasonable policy. It allows people to take a small amount, a limited amount of their superannuation, when they sell that first home. They then put the money back into superannuation, including the returns that they've made on a pro rata basis on that first time that allows people to not rob their retirement savings but also get their first rung on the property ladder. And we know that the best indicator of economic security in retirement is owning your own home. This was a very popular policy and one that we'll be continuing on with. We've also announced that we will expand that to older women who find themselves, often find themselves single for the first time later in life. With and potentially the ones most likely to find themselves without a home. So that's a really important policy that we've already announced just in the last 18 months of opposition.
LAURA JAYES: I mean, I know before the next election, you'll have a housing policy. But can you give us some indication that you know this, this is a top priority? Because it seems you know, that's a great policy if and everything but something drastic needs to be done here, doesn't it? Because we talked about supply as the number one issue. But in the short term, young people just can't afford to buy a home if you're a good wage, it's just not going to happen for you in your lifetime.
JANE HUME: That's right, supply is the number one issue. It's the only way to sustainably bring house prices down and to make sure that that home ownership is accessible to all people. The government so far has only been talking about social housing that's not home ownership. Social Housing is a very different beast. And the policy that they got through the Housing Australia Future Fund is in fact borrowed money. $10 billion of borrowed money on behalf of the taxpayer. That gets invested in the Future Fund and it's only the returns on that Future Fund. investment that get invested into social housing. Moreover, that you had to pay interest on that and a management fee. It probably costs around half a billion dollars a year just to maintain that fund before it ever makes a return that gets invested in social housing, which was the reason why the coalition wouldn't pass that legislation, oppose that legislation in the parliament. We've also seen an additional three billion magically appear for social housing since the May budget. Already this Labor government was spending around $185 billion more announced in that May Budget than the Coalition would have as at the last election, add another three billion to that that wasn't even included in the Budget. You can see why that spending, that urge to spend is driving aggregate demand and keeping inflation too high. And that's really the topic of the day today, isn't it because the RBA has made that decision.
LAURA JAYES: You say it's spending but that's not what the RBA said. I mean, in the last data drop we had which for the month of August, said essentially it was mostly down to fuel. Shane Oliver says well, that might actually act like a tax on spending anyway.
JANE HUME: It certainly does. And what you're talking about there is headline inflation and that has been driven up by the cost of fuel. The real problem though, is core inflation, which takes out those seasonal effects and takes out fuel that's still way too high. It's around, I think it's 5.5% now, that's well above the Reserve Bank's band of two to three per cent. That's driven by aggregate demand. Aggregate Demand has two parts. It has public sector spending and private sector spending. We know that private sector spending has come right back in fact the economy is shuttering to a halt. But public sector spending is still way too high and that's driving up aggregate demand. That's what we mean when we say the Government has to do some of the heavy lifting-
LAURA JAYES: That's yeah, I mean, there's competing interest here. Isn't there though?
JANE HUME: That's what we mean when we say that the government has to do some of the heavy lifting.
LAURA JAYES: Yeah, sure. But first surplus in, you know, 15 years, essentially. And there's a cost of living crisis.
JANE HUME: We've had this discussion before Laura.
LAURA JAYES: You want them to spend, you do want them to spend on the people that most need it, right?
JANE HUME: We want to make sure that essential services are delivered, there's absolutely no doubt about that. But it's this natural urge that governments have to spend, particularly a Labor government that's been in exile for nine years, it's got this magic wish list of things that it wants to spend money on. It has to rein in that urge because that's what drives the public sector component of aggregate demand. We've seen things like 10,000 new additional public servants, of course, that puts pressure on the public purse. That adds to aggregate demand. So if the government can rein in its spending ambitions while the private sector is doing the same, that's the only thing that's going to bring down inflation to that two to three per cent band. What the RBA said yesterday is that it now sees that inflation is going to last higher for longer. In fact, it's going to last until around the end of 2025. Now for anybody that's got a mortgage that knows how bad it feels to have interest rates this high right now, the thought of an additional two years of pain. I think that that should be really, people would find that very overwhelming. That's why we're trying to urge the government to have an economic plan specifically to bring down inflation because it's the only way you can tackle the cost of living.
LAURA JAYES: Jane Hume, good to see you. Thanks so much.