Prime Minister John Key says he talked about high and rapidly increasing house prices in parts of Australia when he met with the heads of the Australian, UK and New Zealand Treasury Secretaries last week.
The three Treasury Secretaries - New Zealand's John Whitehead, Australia's Ken Henry and the UK's Nicholas Macpherson - met in the Hawkes Bay from Wednesday to Friday to discuss a range of issues including the global growth outlook and the European debt crisis.
Key met the Secretaries over lunch on Friday, and talked about how to “make the boat go faster and what they were seeing in Australia and the UK”.
Asked whether they talked about a possible Australian house price bubble, or an asset price bubble in China, Key said they “recognised that they are issues that are there”.
“One of the reasons why it’s very important you don’t get housing bubbles is you end up, if you do, in the situation Ireland’s finding itself in now,” Key told media at his weekly Monday afternoon press conference in Wellington.
Key said he wouldn’t want to comment on how dangerous an Australian house price bubble could be because he was “not the expert in it”.
“But I certainly asked them whether they thought that was an issue, and how they thought that might play out,” he said.
“It’s probably not for me to comment verbatim, but we all acknowledged that there’s been very high and rapidly increasing house prices in Australia - in parts of Australia,” Key said.
Asked whether the Australian Treasury Secretary was worried about that, Key replied, “Well I wouldn’t want to put words in his mouth.”
Meanwhile, on the issue of a possible asset price bubble in China, and authorities’ moves there to restrain bank lending, Key noted the Chinese government had been taking steps “to address what they perceive as a problem”.
Asked whether a slowdown could affect New Zealand’s growth prospects, especially as the New Zealand government was so keen on jumping on the 'Australia-China growth train,' Key said from the government’s point of view, New Zealand was facing different issues.
“Our issue, I think, is how we can grow the productive sector and the tradable sector of New Zealand – that’s the sector that’s been in recession for a long period of time, it’s a sector that’s shed jobs,” Key said.
“We know that we should be doing a lot better there. We know that commodity prices are supporting New Zealand growing its export volume and value, and that’s what the government’s focussed on,” he said.
Key said further that a slowdown in Australia and China would make it more difficult to grow New Zealand’s tradable sector because the two were this country’s biggest export markets.
“Number one is Australia, number two is China. So, as I’ve noted in my speeches before, there are some externalities which are beyond our control, but we’d obviously hope that there is a strong Australian economy and a strong Chinese economy to support our economy,” Key said.
Here is a video of Key talking about asset sales on Monday afternoon:
(Updates with second video of Key)