Australia’s Property Bubble: Joe Hockey Responds
Many, including UBS’s global chief economist Larry Hatheway believe that the Reserve Bank may soon need to bring new tools to the table in regards to the bubble-like conditions in the property market. Joe Hockey, Federal Treasurer, disagrees with the bubble assessment of real estate in Australia.
Hatheway believes that the country must rebalance its economy following the dependence on the mining goods sector towards consumption and investment in other exports. He also added that macro prudential tools, which may include the setting of limits on loans that banks can issue with small deposits as used by New Zealand's central bank, should be considered by the RBA.
"The Reserve Bank has never really been a big fan of macro prudential tools, however if they're unable to see some depreciation of the currency, which is necessary for the rebalancing of the Australian dollar, and also continue to see house prices moving higher, they may have little choice but to reconsider."
The Reserve Bank’s historically low cash rate (2.5 percent) has benefitted the housing and construction markets in a number of ways, with house prices surging in many populated areas in Australia.
Private sector economists and bankers, along with Hockey, disagree with the notion of the formation of the property bubble in their country. He believes, instead, that rising prices are a reaction to the lack of supply.
"I'm not so sure it's credit fuelled," Hockey said during a seminar in Sydney. "There's a lot of cash going into property now."
"Australia fundamentally doesn't produce enough houses to meet demand. It is just an infinite mantra for international commentators, for analysts based overseas to say 'well, you know, there's a bit of a housing bubble emerging in Australia.’ That is rather a lazy analysis, because fundamentally we don't have enough supply to meet demand. That doesn't suggest there's a bubble; there might be a price increase of some substance, but you'd expect the market to react and produce some more housing."
Business Chief Legend: Ho Ching, CEO of Temasek
Ask Singaporeans who Ho Ching is, and the majority will answer the ‘wife of Prime Minister Lee Hsien Loong’. And that’s certainly true. However, she’s also the CEO of Temasek Holdings, Singapore’s sovereign wealth fund, and one of the world’s largest investment companies.
Well, she is until October 1, 2021, as she recently announced she would be retiring following 16 years as CEO of the investment giant.
Since taking the reins in 2004, two years after joining Temasek as Executive Director, Ho has gradually transformed what was an investment firm wholly owned by Singapore’s Government into an active investor worldwide, splashing out on sectors like life sciences and tech, expanding its physical footprint with 11 offices worldwide (from London to Mumbai to San Francisco) and delivering growth of US$120 billion between 2010-2020.
Described by Temasek chairman Lim Boon Heng as having taken “bold steps to open new pathways in finding the character of the organisations”, Ho is credited with building Temasek’s international portfolio, with China recently surpassing Singapore for the first time.
As global a footprint as Ho may have however, she has her feet firmly planted on Singapore soil and is committed to this tiny city-state where she was not only educated (excluding a year at Stanford) but has remained throughout her long and illustrious career – first as an engineer at the Ministry of Defence in 1976, where she met her husband, and most notably as CEO of Singapore Technologies, where she spent a decade, and where she is credited with repositioning and growing the group into the largest listed defence engineering company in Asia.
It’s little wonder Ho has featured on Forbes’ annual World’s Most Powerful Women list for the past 16 years, in 2007 as the third most powerful woman in business outside the US, and in 2020 at #30 worldwide.
But it’s not all business. Ho has a strong track record in Singapore public service, serving as chairman of the Singapore Institute of Standards and Industrial Research and as deputy chairman of the Economic Development Board; and is a committed philanthropist with a focus on learning difficulties and healthcare.
As the pandemic kicked off, she not only led active investments in technology and life sciences, with German COVID-19 vaccine developer BioNTech among the most recent additions to Temasek’s portfolio, but through the Temasek Foundation – the firm’s philanthropic arm which supports vulnerable groups close to Ho’s heart, handed out hand sanitiser and face masks.
So, you would be forgiven for thinking that at age 68, Ho might simply relax. But in March 2021, just as she announced her retirement from Temasek, Ho joined the Board of Directors of Wellcome Leap, a US-based non-profit organisation that’s dedicated to accelerating innovations in global health. Not ready to put her firmly grounded feet up yet it seems.