"I think it's not even a matter for Joe Hockey apologising, he is what he is, he's out of touch," Mr Shorten told reporters in Hobart. Prime Minister Tony Abbott has defended Treasurer Joe Hockey over criticisms he is "insensitive" to first home buyers priced out of the housing market. Credit:Alex Ellinghausen "The test now is does Tony Abbott agree with Joe Hockey or does he agree with the outrage of Australian families who legitimately want to enter the housing market or indeed want to see their kids be able to afford to have a house in the future," Mr Shorten said. On Wednesday, Mr Abbott, who noted he still has a mortgage on his Forestville home, said he did not underestimate how hard it is for people trying to afford a home in the big cities. "I'm someone who has, over the years, felt a bit of mortgage stress. Even as a cabinet minister, sometimes it's hard to pay a Sydney mortgage and I know over the years I've earnt a lot more than the average person," he said.

Earlier on Wednesday, Mr Hockey refused to apologise for his comments, which the Greens have likened to Marie Antoinette's "let them eat cake" line. He accused his critics of "playing the man," instead of focusing on the policy but said he "totally understood" the depth of feeling surrounding his comments. Mr Abbott dismissed suggestions his Treasurer had made another "gaffe," when he denied on Tuesday that housing in Sydney was unaffordable because people are still buying. "I don't think anyone listening to Joe on the radio today would be in any doubt this is a Treasurer who is striving every day to do the right thing by the people of Australia," he said in Penrith. Mr Abbott praised Mr Hockey's second budget handed down in May, which included cuts to paid parental leave, a tax cut for small business and the ability to write off assets worth up to $20,000 in one year.

Speaking in Brisbane, Reserve Bank Governor Glenn Stevens backed the government's decision not to savagely cut spending in the budget. "I think the government is on the right track in not seeking to compensate for lower revenue growth by cutting spending in the short run," he said. But he said politicians would eventually have to confront the deficit question with voters. "Of course, some resolution of long-run budget trends is still going to be needed to sustain confidence and that will not be an easy conversation," he said. Mr Stevens joked about the Australian media's obsession with the iron ore price and that of housing.

"A few months ago, it almost seemed as though the price of iron ore might, in terms of attention given, eclipse that other price on which Australians focus with a passion, namely the price of a house," he said. "But of late, house prices have regained their pre-eminent place in our psyche, certainly in the city where I live," he noted. In question time last week, Mr Abbott responded to a question raising concerns about a housing bubble, saying he welcomed rising house prices in Sydney. "As someone who, along with the bank, owns a house in Sydney I do hope our housing prices are increasing," Mr Abbott said. He also attacked the Labor Party over the line of questioning, saying Labor "wants your house to be worth less".