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Inflation in rental prices expected to increase: Treasury
You may have noticed he mentioned rental increases there.
It is not great news for that already tight market, according to Treasury:
Rising housing costs remain a source of cost-of-living pressures for many households.
Inflation in newly advertised rental prices has been rising sharply for around a year, reaching 10 per cent nationally in January.
The national vacancy rate has reached a near-record low of around 1%. Despite the slowdown in population growth during the pandemic, underlying demand for housing picked up owing to a fall in the average size of households. This reflects changes in household formation as the community adjusted to rapidly changing circumstances through the pandemic.
More recently strong underlying demand for housing has been driven by a recovery in population growth amid constraints in new housing supply.
We expect inflation in CPI rental prices to pick up considerably as the stock of rental agreements turns over, peaking in June of this year.
The ABS’ latest Selected Living Cost Indexes, which measure the price change of goods and services and its effect on living expenses for different household types, show increasing interest rates are flowing through living costs.
Key events
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After what sounded like the economics committee hold music had borrowed from Dracula’s Sunday sesh playlist, the RBA Governor has sat down and it about to start answering the committee’s questions.
Dr Philip Lowe does not have an opening statement – he is just here to answer quesitons.
There are no government ministers in here – that’s because the RBA is a statutory body, so there is no government involvement here.
Let’s get into it.
Luke Henriques-Gomes
Returning to the increase Centrelink call waiting times, Labor is emphasising the impact of large cuts to Services Australia staff numbers under the Coalition.
Don Farrell, representing the government services minister Bill Shorten, told estimates the Coalition had reduced the average staffing level by 3,515 between 2016-17 and 2019-20 – equivalent to 13% of the workforce. The former government had a heavy focus on the use of labour hire staff, which it claimed had brought down call waiting times.
Farrell also noted demand has been higher than usual in recent times, with the agency taking 2.3 million disaster related calls, and a significant increase in claims for child care subsidy (49%), PBS (35%) and Commonwealth Seniors Health Card (127%).
Farrell said:
It is little surprise, when you reduce the workforce as the former government chose to do, and requirements increase at the same time, extreme pressure on telephony will occur.
Daniel Hurst
Celia Perkins, a Department of Defence deputy security, has told Senate estimates about the removal of equipment – such as CCTV devices – manufactured by Chinese companies Hikvision and Dahua across Defence properties. Defence first looked at the issue in 2018, when it responded to questions from the ABC. Perkins said:
Back in 2018 we were made aware of some issues around the cameras and equipment you referred to and some advice was issued across government on proceeding with caution when considering use of those of those cameras and equipment…
As we understand at the time there was advice provided through the intelligence community around devices with certain capabilities manufactured from certain companies, that in use across government we should – we would have to go back to the specific 2018 advice but we should proceed with caution.
Perkins said that led Defence to review its systems and remove systems where a security risk may be identified. She said that in 2018 Defence “removed a number of systems”. Perkins said she did not have a precise number.
Perkins went on to reveal the following about a flurry of activity in the past few months:
Following some updating advice and guidance in the US and the UK and media reporting on that late last year, we undertook a refresh of our review of our estate through November and December and we identified 41 systems on 17 sites. About half of those had been decommissioned in the work we commenced in 2018 – they were no longer operational – and we’ve been working through December and January to make sure that we have decommissioned and removed those remaining systems.
Perkins said those had since been removed.
Treasury boss says government spending is ‘neutral’ for interest rates
Peter Hannam
Coalition MPs are using senate estimates to prod treasury officials, in particular secretary Steven Kennedy.
One line of questions, from Victoria’s Jane Hume and Queensland’s Matt Cannavan and others, is whether the federal government’s spending is making it harder for the Reserve Bank to contain inflation. In other words, giving the RBA more work to do by lifting interest rates.
Kennedy sticks to his line that “fiscal policy is neutral across the forward estimates”, in other words over the next four years. In other words, the budget is neither adding demand to the economy nor taking it away, compared with previous budgets.
Finance minister Katy Gallagher chips in to say that the government had banked 99% of the extra revenue from higher-than-forecast commodity prices. Last Sunday treasurer Jim Chalmers said the government would bank “most” of the trailing revenue spike in the May budget.
“Most”, of course, will be worth watching because that ratio might be well less than 99%, and depending on what happens to the sum of those extra commodity royalties, there may be some extra demand coming from the economy. We’ll know by 9 May when the budget lands.
We’ll have RBA governor Philip Lowe up shortly. In the meantime, here’s the outlook for the cash rate according to investors. They’re betting on three more rate rise to come, assuming each is 25 basis points in size, by about the middle of 2023.
Ahead of RBA Governor Philip Lowe’s appearance before senate estimates today, investors were predicting the cash rate to peak at about 4.1%. They are also pencilling in a 75% chance of another 25bp rise on March 7th to 3.6%. pic.twitter.com/6W9NHdMcDW
— @phannam@mastodon.green (@p_hannam) February 14, 2023
Chris Bowen says Labor will stick to its election mandate
Katharine Murphy
Good morning everyone. If you were up early you will have seen our news report that the Greens want Labor to stop new coal and gas projects as part of the negotiations around the safeguard mechanism. The safeguard mechanism is the regulation the Albanese government will use to drive down pollution from heavy emitters. If you missed the story, catch up here.
The climate change minister Chris Bowen has responded to that positioning this morning. He says the government will engage in “good faith” negotiations. He pointed to a constructive dialogue with the Greens, unlike the Coalition in this instance, because Peter Dutton has declared opposition to Labor’s legislation.
You can sense the “but” coming though. Here it is.
Chris Bowen:
But I make this point equally clear. What we do will be consistent with our election mandate. We went to the people with a clear policy, we will implement that policy. Nothing more, nothing less.”
A journalist asked whether Bowen feared this would be 2009 all over again (a reference to the Greens voting with the Liberals back then to sink a carbon trading scheme).
Chris Bowen:
Look, that’s a matter for the parliament. Ultimately, I’ll be putting a package before the parliament entirely in keeping with this government’s values, the Labor Party values. And in keeping with our election mandate, just as we did with the climate bill, just as we’ve done with everything else we’ve got through.”
Are interest rates driving rent increases too?
Treasury head Dr Steven Kennedy says that indirectly, yes they do.
So the interest rating increases have the number of channels through which they work. In this country, they do work strongly through the housing channel because of the predominance of variable interest rates.
The really sort of getting into Phil’s [Lowe’s] country, but the central bank has an instrument that it uses to control aggregate demand and it will flow through various channels.
That’s its job – the distributional implications of how the central bank is working is a job for the fiscal authorities or the government to consider.
The central bank does its job by thinking about what is the balance between aggregate demand and supply, ensuring inflation remains low and stable at the lowest possible unemployment rate.
And I’ll leave it with Phil to talk further but that’s what the board is firmly focused on.
So is it right or not that interest rate rises are a significant driver in the rent increases?
“They are certainly one of the drivers,” Dr Kennedy says, saying he will leave it to Phil Lowe to distinguish more carefully.
Daniel Hurst
Defence pressed on how transparent strategic review report will be
Back in defence estimates, the Coalition’s Simon Birmingham has been unable to get a clear commitment from the government about the level of detail that will be released publicly about the defence strategic review (DSR). The Coalition’s Senate leader is particularly keen for the recommendations around the required funding for defence to be released publicly in the interests of transparency.
Penny Wong, representing the defence minister at the table, says the government will consider all aspects of the DSR. She says the government’s commitment is “to make the best decisions possible” and to explain the decisions to the Australian people.
The head of the Department of Defence, Greg Moriarty, says:
We will provide, should the government require, a version of the report that can be made public. I’m sure the government may wish to further involve the co-leads in that process. That’s a matter for government.
The hearing goes around in circles:
Wong:
I would again say that the test of, I think, a government on national security is whether it makes the best decisions possible to deliver the capability needs in order to keep Australians safe. Now we intend to do that. We are applying ourselves diligently to that task. It is frankly, made more difficult – and I don’t want to play a lot of politics with this – by a period in defence where frankly the previous government was very focused on announcement and politics but not capability. But we are determined to deal with that. The DSR is a key part of ensuring that we meet that task.
Birmingham:
I don’t want to play politics either but the recommendations of the DSR would be impossible to consider if it weren’t for the restoration of the defence budget undertaken by the previous government.
And for the record, Treasury thinks that the chances of a wage price spiral (wages increasing so much that inflation becomes impossible to control, meaning wages go up to meet inflation, thereby increasing inflation etc) is “low”.
Labor pressed on stage-three tax cuts
Back in Senate estimates, Nick McKim wants to know if Katy Gallagher is “seriously saying” the stage-three tax cuts are a cost-of-living measure.
Gallagher says the tax cuts was a package and she was referring to the package as a whole and her comments need to be seen in that light.
The pair then get into a back and forth over McKim’s question “do billionaires need cost-of-living relief”.
Gallagher says she has answered. McKim says she has not.
McKim:
What is your answer to the question that billionaires need cost-of-living relief?
Gallagher:
The government has not changed its position on stage three, that is my answer.
McKim says it is not an answer.
“You can not control my answers, you can control your questions, you can’t control my answers,” Gallagher says.
McKim tries again:
Do you agree that your statement that the government supports the stage-three tax cuts is not a response to my question, which is do billionaires need cost-of-living relief? My question is do billionaires need cost-of-living relief?
Gallagher:
The government’s position on stage three hasn’t changed.
Luke Henriques-Gomes
Centrelink staff shortages responsible for increase in call wait times
The Greens senator Janet Rice has responded to those Centrelink call times revealed at Senate estimates.
She said:
There’s been a huge increase in demand for Centrelink services over the last couple of years, but there’s been no action by the government to assist people on income support navigate the system. The department told me they’re 500 staff short to help people on Centrelink phone lines, and I’ve now secured new data showing just how inadequate the telephone system has become.
Congestion messages on Centrelink calls have gone from 1.2m in 2020 to a whopping 5.8m this year, and I’ve heard from so many of my constituents that they can’t get through to speak to someone at all. People are reporting being hung up on after spending hours on the phone, and the new data shows the proportion of people being able to get another human on the phone has gone down 10% in the last couple of years.
Labor’s Don Farrell blamed the increase call waiting times on reductions to staff that occurred under the previous government, while Services Australia said it was also facing staff shortages due to the tight labour market.
Economics estimates update
Over in economics estimates, Liberal senator Jane Hume is very exercised over whether or not the “three Rs” – relief, repair and restraint – appeared in the budget, were worked on with Treasury, or went to cabinet.
Finance minister Katy Gallagher says all of the measures which sit under those subheads were in the budget, and did go through consultation and the cabinet.
But Hume wants to know about those three words in particular and after a pointless back and forth, asks if those three words will be in the May budget.
Gallagher says if she wants them in the budget, then Gallagher will do her best to see that they are. Hume says that until five days ago, no one had heard them.
“It is good you are listening to us, we appreciate it,” Gallagher says.
“Well, it’s a shame the rest of the world isn’t,” Hume returns, which I don’t think is the burn she thinks it is?
Daniel Hurst
Report on China’s attempt to recruit ex-ADF personnel given to deputy PM in December
Defence officials have confirmed that they provided a report to the deputy prime minister, Richard Marles, on 14 December about managing the issue of China’s attempted recruitment of former Australian defence force personnel.
Guardian Australia asked about this on 28 December and 9 January but the government declined, at that time, to say whether it was going to update legislation or any other policies to clarify post-employment obligations. Marles revealed in an interview with 2GB early this morning that the government was working on legislative changes “to remove any doubt around the full breadth of the secrets that need to be maintained”.
Celia Perkins, from the Department of Defence, told Senate estimates the report was delivered on 14 December but it was classified.
Perkins said the review looked at issues such as internal defence training, how to expand outreach to veterans, how to establish channels for former personnel to seek support about employment arrangements, and work with other arms of government about whether further strengthening of legislation might be necessary. She said all recommendations were accepted.
The Labor chair of the committee, Raff Ciccone, then asked a series of questions about the revelation that Australian government officials were first warned a year and a half ago. This warning took the form of a security report to Defence on 29 June 2021.
Perkins said:
Whenever we receive security reports they are of concern …
We work very closely with our colleagues who run the countering foreign interference taskforce and the officers of agencies like Asio and AFP and take direction from them on how we deal and respond with particular cases.
That initial security report in 2021 I would characterise as being an intelligence report that we worked closely with them on to contextualise within our departmental response.
Asked about action taken in response, Perkins said she “couldn’t speak to that in this hearing” but agreed when asked if she believed the response was proportionate to the risk identified.
Pressed on whether advice provided was provided to the then-minister’s office at that time, Perkins said:
I’m not in a position to respond to that, but we could take that on notice. I was not in a responsible role in this part of the portfolio in 2021.
Ciccone:
Just remind me: who was that minister at that time?
Perkins:
I would assume that was minister Dutton.
Ciccone:
Did the then-minister direct defence to take any actions to address the problem?
Perkins:
I couldn’t answer that question but I’ll take that on notice.
Christopher Knaus
Australian government spent $7.6m prosecuting Witness K case
The government has spent $7.6m prosecuting whistleblowers David McBride, Richard Boyle, Witness K and Bernard Collaery, new figures show.
The Guardian revealed in November that the legal bill for the prosecution of Collaery and Witness K had reached $5.148m by 7 July last year, the date the Collaery prosecution ended. Legal costs have continued to increase in the months since, partly due to an ongoing push to suppress a key judgement in the Collaery proceedings.
Senate estimates heard on Tuesday that the cost rose to $5.5m by the end of January.
The attorney general’s department also told estimates that the prosecution of McBride, a military lawyer facing prosecution for the leaking of confidential material to the ABC, has now cost taxpayers $1.8m.
The prosecution of Boyle, who blew the whistle on the Australian Taxation Office’s aggressive pursuit of debts, has cost taxpayers $233,171.
Greens senator David Shoebridge described the expenditure as “lavish”, a description rejected by department secretary Katherine Jones.
She said:
I’m not sure I would agree with your characterisation of lavish, it’s a significant amount of money.
Luke Henriques-Gomes
‘Huge’ increase in Centrelink call waiting times
Senate estimates has been told of a “huge” increase in Centrelink call waiting times as Services Australia warns it is facing staff shortages.
Data tabled in estimates on Wednesday showed the average waiting time between July 2022 and 31 January 2023 across all Centrelink phone lines was 18.04 minutes, up from 14.14 minutes in 2021-22 and 4.06 minutes in 2020-21, when agency staff numbers were boosted for the pandemic.
There were 25m calls handled up to 31 January 2023. Of those, 8.3m were answered, 2.1m were terminated by the customer, and callers received a “congestion message” on 5.8m occasions. By comparison, there were 5.6m congestion messages across the entire 2021-22 financial year.
Average waiting times were longest on the families and parenting line (27.18 minutes) and the employment services line (24.48 minutes).
Under questioning from the Greens senator, Janet Rice, the Services Australia chief executive, Rebecca Skinner, said the call times were “less than … optimal”.
Skinner said the agency was currently 500 staff below the average staffing level within the customer service delivery.
She said the agency was facing similar labour shortages to “other large businesses” and it had been a challenge to maintain its workforce.
We currently find ourselves in our service delivery space several hundred people short of where we could be … We have had larger demand partially coming out of changed economic circumstances.
Rice said the call wait figures showed a “huge increase”.
Don Farrell, representing government services minister Bill Shorten at estimates, said the waiting times were an “unfortunate reality of the former government’s carving out of staff numbers” at Services Australia.
The agency is currently embarking on a recruitment drive.
Paul Karp
Judgement given in Unions NSW’s challenge against third-party campaigner spending caps
The high court has given judgment in Unions NSW’s challenge against NSW’s third party campaigner spending caps.
The main part of the case concerned a provision making it an offence for third party campaigners to act in concert and exceed the spending cap. The NSW government repealed this section before the case was heard. As a result the court decided it had no jurisdiction to rule on its legality.
In the second part of the case, Unions NSW argued that the cap of $20,000 of spending for third party campaigners in byelections breached the implied freedom of political communication.
After a joint standing committee on electoral matters report recommended the cap be raised to $198,750 the NSW government conceded this part of the case.
A majority of the high court (chief justice Susan Kiefel, justices Stephen Gageler, Michelle Gordon, Jacqueline Gleeson, and Jayne Jagot) ruled that the $20,000 spending cap was invalid, because NSW had not justified the burden on political communication.
All in all, it seems like a bit of a waste of the court’s time: one section was repealed and one ruled invalid, but is going to be amended anyway.
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