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Neil Mitchell: So you’re now saying, having been pretty pessimistic about the housing market. You’re now saying that it will in fact go up?

Shayne Elliott: Yes, I mean, things change really fast, right? And, this is such a volatile situation. It’s only a few months ago, virus, small businesses struggling, government hadn’t really started the support packages. People were thinking, ‘wow, this could end up really badly’. And now we’re sitting here six months later, massive amounts of government support, literally hundreds of billions of dollars thrown at the economy. A lot of it stuck. A lot of it’s had an impact. People have increased their deposits. There’s money everywhere. Guess what? A whole bunch of it ends up in housing and people are rethinking Neil, a lot of people sitting at home going: ‘I can’t go on holiday, not going skiing, not going anyway. I’ll tell you what, we’re going to renovate, trade up, get a bigger house’, whatever. And it’s having an impact.

Neil Mitchell: What sort of turnaround you predicting?

Shayne Elliott: We think in the capital cities, possibly up to 10 per cent over the next year. So pretty big, pretty healthy clip. We look across the Tasman, that’s what’s happening in New Zealand. So, they’re a little bit further ahead, same basic issues. So a lot of money piling into it.

Neil Mitchell: I don’t get it, though. I noticed the Reserve Bank saying, well no it was ABS saying one in two mortgage holders had trouble paying to mid-October.

Shayne Elliott: Look, like all these things you can always get data to prove your point, I guess. The reality is, though for most people today, look, the average mortgage in Australia is $350,000. You can get a mortgage today, two per cent fixed for a couple of years. Maybe two-and-a-quarter variable. Maybe people paying a little higher because they haven’t got the greatest, the latest deals. But, you worked that out. The servicing cost on that is really, really low. And that’s what people are doing, saying ‘look, I can afford it. I’ve got a job. I can afford it. Maybe I’ll try it up a little bit. Maybe I’ll, renovate the house’.

Neil Mitchell: When the GFC hit housing prices, was it immediate or delayed? Do you remember?

Shayne Elliott: That’s a really good question, I’d have to go back and refresh my memory. I think from memory it was a slow decline. But it’s a good question. This is definitely much faster. Sorry?

Neil Mitchell: Could the same thing apply?

Shayne Elliott: It could. You’ve got to go back to basics here. What are the ingredients in housing? Well, good old-fashioned supply and demand. The demand thing is what’s really difficult to understand at the moment. A big part of demand for Australia, and particularly here in Melbourne, it was new Australians. Immigration. Well that’s gone pretty much to zero. But what we didn’t really count on, I think when we were doing the numbers, was the massive surge in returning Australians. So there’s been literally tens of thousands of Australians who are living overseas who have decided to come home, for good. And guess what? They want a home. And most of them are reasonably well-heeled, they’ve been working in good jobs. They’ve got a bit of money. They’ve come home. And so that’s been a bit of a boost to the market that we probably didn’t see. And then we didn’t really factor in the sort of massive wall of money the government and the Reserve Bank has thrown at the system. And as I said, it has to go somewhere. A little bit’s going into equities, but most, as we see people, Australians love housing and a lot of it’s ending up in the housing market.

Neil Mitchell: So you don’t believe it’ll be a situation, ‘I can’t afford the mortgage anymore. I’ve got to pay the catch up on the mortgage. I can’t afford it, I’m going to put the house on the market’. You don’t think that’ll happen?

Shayne Elliott: That will happen for some, sadly. But en masse, no I don’t think so. I mean, as I said, if you work it out, if you’ve got a $350,000 mortgage today. If you were paying interest only – and I know that’s not everybody – at 2 per cent that’s $200 a week. It’s cheaper than rent. So I think a lot of people will be … the affordability numbers are pretty strong, actually.

Neil Mitchell: OK, have you signed up to this pledge, the chief executive pledge to get workers back into the city?

Shayne Elliott: Not that I’m aware of.

Neil Mitchell: Do you want to get your workers back?

Shayne Elliott: Yes, we do actually. We do want to get workers back into the city. We actually believe in the value of having people together. I think it’s an important part of the culture of an organisation and a way you coach young people and set norms. And it’s more creative, so we think it’s a good thing. I think we’re going to struggle, personally before Christmas. I think in reality we’re going to have a big push, all else being equal and assuming the health thing stays good, we’ll make a big push to get people back in the office in February, March. I think it’ll be hard before then for people to take it seriously.

Neil Mitchell: Would you expect to return to 100 per cent, eventually?

Shayne Elliott: No, no. Our big building down at Docklands, many people might know it, that’s usually home to about 7000 people. At the moment it’s home to 100. We think that will probably go back to 4500 to 5000. The reason is this, we expect people to come back to the office, but not necessarily five days a week. So we would expect most people to be sort of three days, four days a week. And when you average that out, it probably won’t reach capacity. I don’t imagine that it will reach capacity for the next year or two. But we’ll have to wait and see obviously. People change behaviours really quickly.

Neil Mitchell: The city’s going to have some struggles then. What about the rest of Victoria, have you got new ideas on kick-starting, what do we need to do? I read somebody saying, it was the Reserve Bank maybe. Somebody was saying, ‘oh, you’ve got to take more risks, have more confidence’. That’s all very well, it’s not him risking his house.

Shayne Elliott: That is true, right? The reality is today, the economy works on this idea of risk, it’s true. People getting out, taking a risk, being bold, employing people, having an idea. What are the barriers to that? Well, sometimes it’s the good ideas. But the other one has usually been access to money. How do I get capital? Maybe I have to scrounge up from family, savings, borrow it from the bank or whatever. There’s no shortage of money Neil. There is so much money around today, sitting in bank accounts. The banks are willing to lend. We still approve the same rate of applications as we always have, there just aren’t any applications. People, I think, are acting prudently and saying, ‘well look, surely I’m just going to wait and see what happens. I want to wait and see what happens with the vaccine, I want to wait and see what happens with the virus. I want to wait and see what happens with government support and all those other things’. I think people are just sitting on the hands. I don’t know what the trigger would be to see that change. I have a suspicion people want to get through Christmas. Christmas trading’s a huge part, for many of our customers, it’s 40 or 50 percent of their sales are over the summer. I think people want to see how that goes before they really start to commit, to say ‘I’m going to expand, build something new, double my factory’, whatever it might be.

Neil Mitchell: You mentioned immigration a moment ago, the RBA says I think it’s 0.2 percent growth. Its’ the lowest since 1916, the immigration growth. Problem or not? Is it time to reassess the level of migration?

Shayne Elliott: Well, I think it is such a big driver of growth for Australia over the last, literally 100 years and particularly recently. And we’ve known that, we’ve talked about that on your program. You sort of look at GDP numbers, but a lot of that GDP growth and success of Australia has been built on the back of immigration. People coming with money and work ethic and getting out and starting businesses and taking jobs. Look I don’t know, I don’t know when that’s going to go back to normal, if it ever can. So that’s a big gap to plug in the system. So I think there does have to be a conversation about it. Putting the health thing aside, just for a second, what is the right level of immigration in an economy of this size? I personally think Australia would struggle if it wasn’t open to migration. I don’t know if it goes back to the old numbers, I’m not the expert on that. But there needs to be a conversation about it. It’s a big, big part of the economy. Now, the good news, interestingly, is if you look at things like students, the universities are reporting massive bookings for next year. Now, that’s all subject to the ability to travel. But if you look around the world, if you are interested in moving country or studying or starting a new life. I reckon if you got out the map, Australia looks pretty good in terms of the health outcomes.

Neil Mitchell: Well, true. I was reading also in the papers at the weeked, a proposal to use bank data, like credit card transactions, to help with the contact tracing. Has there been discussion about that?

Shayne Elliott: There was a very loose discussion. It wasn’t anything formal. I know we had some contact from some government agencies, I couldn’t even tell you who they were I can’t remember, basically just testing would that be possible? We obviously had concerns about, privacy, customer privacy, all that other stuff. I mean, the reality is today we do have data. We know if you use your card or your mobile wallet, we know where you buy a coffee, where you do your grocery shopping, all that other stuff. There’s all sorts of ethical and consumer privacy questions there. So I know the intention was good, but it didn’t go anywhere. I haven’t heard any, that was some, probably even a couple of months ago when that was first raised.

Neil Mitchell: You wouldn’t be overly keen on it?

Shayne Elliott: No, I don’t think it’s our role. I mean, obviously that’s a decision above my pay grade, that’s for governments to decide how to do that. But no, I’d have some discomfort about it just because, as I said, it’s our customers’ data. We’d have to really think hard about how we used it.

Neil Mitchell: And do you think cash will make a comeback after the, as the pandemic eases?

Shayne Elliott: My personal view is no. I think, look, it’s still out there, but I think people have learnt, particularly here in Melbourne actually, six months living without it, using cards and I think people just built a whole bunch of new habits. I think it will be pretty hard to go back.

Neil Mitchell: Thanks so much for your time. How’s Luca the Labradoodle?

Shayne Elliott: Growing up very fast. I forgot how quickly they grow. He’s in great shape. He’s been a great addition to the family.

Neil Mitchell: OK. Thanks for your time, I appreciate it. Chief Executive of the ANZ Bank Shayne Elliott.