A transcript of an interview between NAB CEO Ross McEwan and ABC Senior Business Correspondent Peter Ryan is below. The package aired on Thursday 17 August and included comments on the housing supply crisis, rising cost of living and labour shortage. You can also listen to the broadcast here.
Introduction: Ross McEwan says the housing shortage is the biggest issue facing the country. Right now he’s in Tamworth in regional NSW on a listening road trip. Mr McEwan’s hearing businesses can’t attract workers because housing and rentals are too hard to find. But the bank boss says mortgage stress from 12 interest rate rises since May last year is an issue. He’s speaking here with our senior business correspondent Peter Ryan.
Ross McEwan: When you come out to places like Tamworth and you see the facilities out here, with the sporting facilities, the council facilities, you realise it’s well served. But it’s getting people into these communities and finding the housing. And again that is the biggest issue, whether they’re coming from other parts of Australia or from overseas, it’s housing, housing and housing.
Peter Ryan: There is a very big political debate underway at the moment about finding ways to address the lack of housing, how critical is that in places like Tamworth where there are jobs but nowhere for people to live or to rent?
RM: I’d say it’s the biggest issue that we’ve got across Australia. So the government spending time on it – and it should be I think on simplification of the planning process. That’s not to say we want houses built in the wrong places – but simplification. Taking 5, 10 years to get a development up and running is just far too long in this environment and we need action pretty quickly.
PR: So getting development applications across the line, but what about proposals to cap rents, to make things a bit easier for people looking for rental accommodation?
RM: I personally think that that is just the wrong place to go. You cap rents and you get people coming out of actually owning that housing stock, which is not what we want at this point in time either. So it all comes back to a streamlined planning process that’s consistent across all states.
PR: So what are businesses in regional Australia having to do to get that right type of worker?
RM: Well, they’re having to run around to find accommodation. People are having to find mobile accommodation; they’re having to use motels and hotel rooms, but that’s a short term fix. The big term fix is getting more buildings for people to live in.
PR: But is the political appetite there to deliver that broad economic reform that is needed?
RM: It’s certainly one of the biggest issues on the Government’s list. And we can’t also then pull back on immigration because one of the biggest issues that our employers are finding, there is still a very significant lack of labour to fulfil the number of jobs available.
PR: And just on the broader issue of the impact of those interest rate rises, how are people in regional Australia feeling the pressures differently from those who might live in the major metropolitan centres?
RM: Well, I think it’s exactly the same issue. They’ve seen quite a jump in interest rates over the last 12 months – it’s been very sudden for many. But look people are absorbing them, they’re making adjustments to their household budgets. But it’s not just the interest rates – remembering that 35% of Australians live in a house that’s got a mortgage on it – 100% of households are being impacted by inflation.
PR: What sort of explaining do you have to do to customers who are feeling the pressure from rate rises and don’t understand why they have to be delivered while banks continue to make very big profits?
RM: That is a conversation that our bankers are having with customers. They’re feeling inflation, they’re feeling interest rate rises. Most understand why, it’s just hard when you’ve got to rebalance the household budget.
PR: And in terms of mortgage stress. Have you seen more of that? Have you had to have difficult conversations with some borrowers who have to accept that they can’t hold onto the property?
RM: There has been a slight uptick, and it is slight, in those customers we’re having to help out and make adjustments with them and for them. And it’s not even back to the levels of 2019 at this point in time. But we’ve got to also remember there’s probably 50% of our fixed rate borrowers who haven’t actually seen an increase yet, because they had a two- or a three-year fixed rate loan. So some of those customers still have to experience it.
PR: What concerns do you have about China, given that there are really growing worries about the health of the economy there?
RM: The impact will be on us in Australia if they really pull back on taking commodities from Australia up into China. But like all economies, it’s slowing down. Just as Australia’s slowing down, the UK, US, Europe. So let’s see where they go, but they’re a pretty resilient group up in China with control around their economy.