Tony Zappia (Makin, Australian Labor Party) Share this | Hansard source

I rise to speak in support of the Australian Business Investment Partnership Bill 2009 and the Australian Business Investment Partnership (Consequential Amendment) Bill 2009, and I have a great deal of pleasure in doing so because these bills are very important, very essential and very worthy to be brought into this place. This legislation establishes a partnership between the federal government and the four major Australian banks—that is, the ANZ, the NAB, the Commonwealth Bank of Australia and Westpac—for the purposes of creating a $4 billion Australian business loans facility. Under the partnership, the Australian government will commit $2 billion and each of the banks will commit half a billion dollars towards the $4 billion that is being raised. The intent is for the Australian Business Investment Partnership to be a temporary contingency measure to provide finance to viable commercial property assets and therefore support Australian jobs. This bill is about supporting Australian jobs, but it is more than that—and I will get to that in just a moment. The $4 billion raised by this partnership could be extended to up to $30 billion by the issuance of a government guarantee debt of up to $26 billion.

The commercial property sector in Australia employs around 150,000 people. The commercial property sector is heavily reliant on finance made available by both domestic and overseas financial institutions. Even finance made available by Australian financial institutions is dependent on local banks securing funds from overseas. It is my understanding that around 50 per cent of Australian bank loans originate from overseas funding sources. The global credit conditions have tightened and are likely to remain tight in 2009. Under a weakening global economic outlook, foreign based lenders are likely to withdraw funds presently available to viable Australian businesses, in turn placing creditworthy, viable Australian businesses at risk. If there is a withdrawal of finance presently available to the commercial property market, the Rudd government understands the consequences of that on the Australian economy and on Australian jobs. The Rudd government will not sit by, as the opposition would have us do, and watch the sector be wiped out by global credit markets that are beyond the sector’s control. Many of those employed in the commercial property sector are small- and medium-sized business operators—people who generate employment for others and who are, as some would refer to them, the backbone of the economies of so many local communities around Australia. They are decent, hardworking Australians who are not asking for a handout but simply some temporary assistance during tough times.

Commercial property finance is finance that is required for completed commercial constructions for which refinancing is required; for completion of partly constructed projects; and for approved projects where, in many cases, part—or, in some cases, all—of the occupancy has been presold but commencement of construction has not begun. If those projects that are partly constructed or partly presold are not completed, not only will small or medium-sized businesses lose work but they are unlikely to be paid for work that has already been carried out. These small and medium sized businesses simply cannot carry those kinds of losses, so what we are likely to see is a domino effect right through the business sector. But there is an additional risk in such projects not being completed or not being commenced. Private investors in those properties are at risk of losing the money they have already outlaid. These are generally small investors or young couples who have placed their life savings into a commercial property investment or into their future home or future apartment. The crash of Australia’s commercial property sector would hit very hard and cause severe hardship to many of Australia’s small businesses, to many mum and dad Australian investors and to many prospective homeowners.

In recent weeks in my home state of South Australia more than $1 billion of major city developments have been put on hold or have been indefinitely suspended as a direct result of the global credit squeeze. These developments include commercial properties, residential apartment blocks and a whole range of residential estates. We are not talking about one single house here; we are talking about areas where a property developer goes in and develops an entire estate. These are projects that, under normal circumstances, would most likely have been funded by the banks, but they are now simply unable to secure the funding that is required for them. The projects stack up in every other sense of the word. The collective work and jobs that would flow through the South Australian economy if these projects proceeded would be huge—and much needed right now in the middle of the hard times many people in the building industry are going through. What is equally significant about these projects is that they create long-lasting assets for the state. Therefore, the government’s involvement can be justified in terms of the minimal risks associated with them and the extensive benefit to the community that flows from the establishment of this fund.

I heard speakers from the opposition talk about the risks associated with these investments and I want to highlight three things. Firstly, this legislation has been framed to minimise any risks associated with funds put up by the Australian taxpayers, and that has been done quite deliberately. The risks are minimal. Of course, you can never absolutely guarantee that there are no risks with any financial outlay, but in this particular case the risks are being minimised through the structuring of the loan arrangements that have been put in place. Secondly, if the risks were huge, why would 50 per cent of this fund be funded by the commercial bankers? These are people who you would expect to understand financial risks as well as anybody, yet they are prepared to put money into this fund and be represented in the decision-making process—again, minimising the risk to Australian taxpayers’ dollars that are also in the fund.

Thirdly, these funds will be used to build infrastructure. Whether it is commercial buildings or houses, it is infrastructure—infrastructure that will be there for decades and that will serve generation after generation. There would be few people in this House who would disagree with the general statement that when you put money into houses it is as safe as houses. Essentially, this money is going into properties. Property is probably one of the most secure forms of investment that anyone could ever make. Yes, it might have ups and downs, but in the long term it would be very difficult to argue that by investing in property and real estate you are putting yourself at any real risk.

This proposal complements a previous decision of the government to secure financing arrangements of around $2 billion for the automotive retail sector. It is the same kind of proposal with the same purpose and the same objective. The arrangements for that have been in place for some time and have proven to be a godsend for that industry. Had we not made those arrangements, the retail automotive sector would be in absolute strife today. But, again, this government understood that. This government was not prepared to sit back and do nothing; it was prepared to take whatever action was necessary to ensure that sector remained viable and that the jobs that go with it were sustained.

Just as that proposal has stabilised and brought certainty to the automotive sector, so this proposal will bring certainty and stability to the construction industry in Australia. I understand the commercial property sector currently has bank debts totalling around $165 billion, of which $30 billion is provided by foreign banks, according to figures provided by the Australian Prudential Regulation Authority. It is obvious that, given the tight monetary conditions around the world, those foreign banks are not likely to refinance or to continue to provide the finance that is required to sustain those loans. Yet those developments are already in place or proposed to be put in place. If nothing is done, those developments will obviously have to be sold in a fire sale, which in turn means that the people who invested money in them will lose their money, bringing down property prices across the board. Consider the domino effect that that would have for the property market and industry right across Australia should it start to occur.

These are serious matters; the government understands that and this is a serious proposal. It is an essential proposal and a sensible proposal and, quite frankly, I am absolutely dumbfounded and cannot understand why coalition members would oppose it. I say that quite sincerely. I do not understand why coalition members would oppose this proposal, given the security arrangements that have been put in place to minimise the risk, the importance of what the money is going to be used for and the current state of the global financial markets. Industry leaders across Australia have supported this proposal. They are not fools—they understand the industry as well as anybody and they support and appreciate what the government is doing for that particular industry. They know that Australians across the nation will benefit from this investment.

I conclude that coalition members are opposed to this measure because, in reality—I can only assume this is the case, but I would like to think it is not—they want the Australian economy to fail, they want the people in that sector to lose their jobs, they want to see small investors lose their money and they want to see construction firms collapse. The reason they want to see all those things happen is because they believe, wrongly, that it will help them in the polls. They believe that, if the economy of this country collapses, at the next election the Rudd government will be blamed and it will be beneficial to them in the polls. That is the only logic I can put to why coalition members would be opposed to this measure. If that is the case then it is clear that they are not concerned with the wellbeing of the Australian people. They are only concerned with the wellbeing of their own jobs. I commend these bills to the House.

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