Trudy McIntosh, Host: Get used to it. That was the message from Beijing after the missile test in the Pacific yesterday. Joining me live now is the Assistant Foreign Affairs and Trade Minister, Matt Thistlethwaite. Matt, is this the new reality? Are we effectively powerless to stop China, no matter what we were to say to them, from conducting tests like this?
Matt Thistlethwaite, Assistant Minister for Foreign Affairs and Trade: G’day Trudy, I don't think that we're powerless. It's certainly disappointing, this launch. We've expressed that disappointment to the Chinese government both here in Canberra and in Beijing, because it has the potential to really destabilise what is a very peaceful region and you know the Prime Minister –
McIntosh: [interjecting] Will it be raised directly by the Foreign Minister, Matt, to her counterpart? Should that be done now via a phone call rather than waiting for a face to face meeting?
Assistant Minister: Well, the Foreign Minister is obviously with the Prime Minister in the Pacific and they're travelling from Honiara back to Australia. But the Foreign Minister stated that as soon as she meets with her Chinese counterpart, this will be the first topic of conversation we'll raise that –
McIntosh: [interjecting] It's not urgent enough for a phone call?
Assistant Minister: Well, we've expressed our disappointment to the embassy and that's the appropriate way to do it. We've said that they should have followed the Hague Protocol, which requires more notice and it requires information around when and where the test will take place. We were given two hours notice, as were other Pacific nations. It travelled very close to Nauru, and we believe that those nations, and indeed Australia and New Zealand should have been given more notice.
McIntosh: Do you believe, though, that is effectively counterproductive from China, that even a country like the Solomon Islands, which describes China as a friend, condemned this sort of test? That it means these countries are looking more to Australia as a partner of choice?
Assistant Minister: Yeah when you're trying to have an outcome of peace and stability in our region, these sort of tests aren't helpful. And that's been expressed to China and I think that they were very strong words from Matthew Wale, the Solomon Islands Prime Minister, and they reflect the concern that Pacific nations have regarding this test and of course, the concerns that Australia has. Last year, the Pacific Island Forum nations, all 18 of them, signed the Pacific Ocean of Peace Declaration. This week we've seen the treaty with Fiji give voice to that and we want to make sure that we have a peaceful region, a stable region, and launches such as this don't provide that.
McIntosh: Australia has now got two new alliances in the region, PNG last year and now Fiji. As of yesterday, we've stepped up alliances in the region. Do we have to step up Australia's defence spending?
Assistant Minister: Well, we already are. We're spending an additional $50 billion dollars over the course of the next decade compared to expenditure when we came to office. And that involves AUKUS. In the Pacific, it involves the Pacific patrol boat program. We run that with our Pacific island neighbours. And of course it means the development of new missile capacity, being able to build those missiles in Australia, as well as new drone capabilities. So, we're stepping up our engagement with the Pacific. We're now also allowing members of the PNG citizenry to become members of the Australian Defence Force. There's a lot more training that's going on and embedding of Pacific military leaders with Australians and vice versa. So, we really are stepping up that defence engagement with our, our friends in the Pacific.
McIntosh: On domestic matters, housing prices are ever present at the moment in the wake of the interest rate hikes and Labor's housing tax changes, this morning HSBC's chief economist warned that we could see prices drop by 8% in Australian houses by the end of next year. At what point is this a confidence crisis? I wanted to show you some of the comments we've seen from Aussies on the Gold coast on this.
[Excerpt]
Vox pop: I wouldn't want to be someone who's just taken out a loan and got no equity in the house. We're a bit lucky, but there’d be a lot of people who are in bit of strife if it goes down that much.
Vox pop: Now the market's fallen, so their equity is gone. This Labor government's gotta go.
Vox pop: People will not put their properties back into the market, so the first home buyers will struggle to get into the market.
Vox pop: It's not an easy solution. It's a lot things to take into consideration. Immigration for sure.
[End of Excerpt]
McIntosh: How far would house prices need to fall, Matt, before Labor would rethink the tax changes?
Assistant Minister: Well, Treasury is forecasting house prices to grow, but they won't grow to the same extent that they would have had we not bought in these changes, had we not had interest rate increases and the uncertainty in the world at the moment related to the war in the Middle East.
McIntosh: But is there a chance Treasury's got this wrong?
Assistant Minister: I don't think so. I mean, they're pretty good at forecasting what's going on in markets. And if you look at what's been going on, certainly nationwide, there's still growth, House prices are still growing, certainly not growing by as much as was forecast a year ago. But I think a lot of that, Trudy, is to do with the fact that many Australians don't really know what the Reserve Bank of Australia's next move is going to be. There's still uncertainty around whether it's going to be a rate hike or it's going to be a rate reduction. And I think that that's creating a lot of uncertainty and people are saying, well, we'll wait until we find out –
McIntosh: [interjecting] Well exactly. They're not putting properties on the market. So, if the whole point is to help first home buyers get in, if, if people are sitting on their hands and saying, look, we're not gonna put our property on the market, there's not as many homes for those aspirational first home buyers to actually buy.
Assistant Minister: Well, there are homes that are being sold. I talk to real estate agents in my area quite regularly. The houses are being sold and all it means at the moment is that for existing properties, first home buyers don't have to compete with investors, so they're being able to buy a roof over their head rather than being outbid by an investor. And that's the system that I think Australians want to see. I think that there's a bit of uncertainty in markets at the moment that will, that will, will die down over time. I think you're going to see a much more consistent focus and still a market where there's growth but not exorbitant growth, so that prices people out of buying their first home.
McIntosh: Matt Thistlethwaite, Assistant Foreign Minister, appreciate your time this afternoon as always. Thanks.
Assistant Minister: Thanks, Trudy.