Bruce Billson (Dunkley, Liberal Party, Shadow Minister for Small Business, Deregulation, Competition Policy and Sustainable Cities) Share this | Hansard source

The only thing that matches the concern the small business community have about rising interest rates is their concern about the lack of Rudd government interest in their plight. The Rudd government has created a perfect storm. It has produced higher interest rate costs for small business, made it harder for small businesses to access finance, caused small business borrowers to face harsher terms and conditions, and is causing hardship for small business employees and employers alike.

The Rudd government’s action and inaction spell out a menu of what you would not do if you were at all interested in supporting the small business community. The Rudd government’s insatiable spending and the unprecedented growth in Commonwealth debt is crowding out opportunities for finance for the small business community. The Rudd government’s bungled handling of the bank guarantee has killed off competition—those second-tier and non-bank lenders that the small business community turned to for competition and for competitive prices. Where that competition improved affordability and services, that has been killed off dead by the Rudd government’s bungled bank guarantee. The Rudd government has killed off the competition, it has nobbled those second-tier banks, and it has made no national interest reciprocity contingent on the enormous taxpayer support for the bank guarantee. It has not said to the banks, ‘If the Australian taxpayer is going to provide you guarantees worth tens and hundreds of millions of dollars, in some cases, we expect the banks to make a contribution to recognise a reciprocal obligation to support the growth and the recovery of the economy.’

The Rudd government has stood by while banks have increased their margins, while their profits have grown and while they look to the small business community as a source of great revenue stream and great profit growth—but have not quite taken the responsibility small businesses are looking for from the banks. The Rudd government has turned its back on these concerns. The Rudd government has heard over and over and over again that the small business community is concerned about the cost of its finance, the difficulty in accessing finance, and the impact that rising interest rates are having on their business viability, their success and their opportunities to employ.

What has the Rudd government done? It has just stood back and done nothing. When the coalition proposed a Senate inquiry to examine these very important issues, what did we hear from the Rudd Labor government? Absolutely nothing: not a word of support, not an acknowledgement that this is an important set of issues that need to be addressed, not a recognition that this inquiry is what the small business community wants. We have heard nothing. We cannot even be confident that the Rudd Labor government and government agencies will cooperate with the Senate inquiry into small business financing. We have not even been given a reassurance that the Rudd Labor government will participate and that the agencies that report to the government will be able to freely contribute in a positive and constructive way. The coalition has made that call and the small business community has, as one, said, ‘This is what is needed.’ And what has the Rudd government done? Absolutely nothing.

If the Prime Minister does not want to listen to the coalition, he could have, as an acolyte of President Obama, listened to the President’s State of the Union address. President Obama said:

Financing remains difficult for small business owners across the country, even those that are making a profit.

President Obama went on to propose a number of measures to address what was described as ‘an obstacle to economic recovery and employment growth in the United States’. If the Rudd Labor government will not listen to the small business community, if the Rudd Labor government will not listen to the industry organisations representing their view, if the Rudd Labor government will not listen to the overwhelmingly positive response to the coalition’s proposal for the Senate inquiry, who will they listen to?

We are not sure who the Rudd government are listening to because they are certainly not listening to the small business community. The recent COSBOA Telstra business survey recognised the cost and availability of funding as the biggest issue of concern for the small business community. But there was still no response from the Rudd Labor government. There was still no response from the Marcel Marceau of small business ministers, Dr Emerson, who is sitting opposite me. Have you heard a word about these issues? It is the most reductionist approach to the small business portfolio we have seen for a long time. If it is anything that is not precisely funded or overseen by his department, the Minister for Small Business, Independent Contractors and the Service Economy says nothing. He says nothing about finance because that is a Treasury issue. He says nothing about workplace relations because that is in Ms Gillard’s portfolio. He says nothing about the compelling issues that the small business community raise over and over again and get nothing but a wall of stony indifference and silence from the small business minister.

You can understand why the small business community are frustrated. They are frustrated by the fact that the banks have obviously seen small business as a way of accelerating improvement in their bottom line. If you look at the figures, there is a very stark and simple comparison of the cost of borrowing for a home owner for a loan secured by a house compared to the cost of borrowing for a small business owner for a loan secured by a house—the security is the same, the currency is the same, even the lender is the same and in many cases the borrower is the same, but what do you see? You see on average a two per cent or greater price penalty paid by small businesses for residential property backed lending. It may be the same property, the same security and the same borrower but they are charged two per cent more. These examples appear right across the country, are raised with this government but still there is no response.

The COSBOA survey recognised that 81 per cent of businesses are worried about the cost of servicing their debt. This was closely followed by financing availability and access, which nearly three-quarters of the small business community were worried about. The COSBOA chief executive, Jaye Radisich, said:

The cost and availability of credit and finance has been a top issue for COSBOA and small businesses in recent times—it is patently clear that more has to be done to support small businesses in this area … Politicians, regulators and banks need to hear this loud and clear message from small business and develop innovative solutions.

The coalition parties have heard this loud and clear. We did not need the COSBOA Telstra survey, as confirming and reassuring as it is, to know this requires attention. I think that is a message for the Rudd Labor government where these concerns are being raised over and over again, but simply hit a wall of indifference from the Rudd Labor government and the small business minister. What is going on out there? We are seeing small business, the engine room of the economy and a key driver of economic growth and employment recovery in Australia, being starved of the oxygen it needs to trade, to grow and to prosper. Why on earth would any government want to have one arm tied behind its back as it seeks to pursue economic recovery? In this case that arm is the small business financing challenge that these 2½ million entrepreneurs, employers and family members face in trying to access affordable and available funding on reasonable terms, and yet the Rudd Labor government does absolutely nothing about it.

There is example after example of the tightening of credit that is available, such as unilateral risk re-rating of profitable businesses trading well in a difficult economic climate getting a phone call from the bank saying, ‘We have had a look at the financing services we offer you and you need to come in for a chat.’ Coming in for a chat usually means, ‘Where is the mortgage over your house to secure this lending?’ This means, ‘We are going to cut off that overdraft we threw at you a couple of years ago on very attractive terms because we don’t really want to let you to have that now.’ This is the bank saying, ‘We want to bump up your fees a little bit too because you know things are difficult and we have to raise money and the government is out there crowding out any cash available to be borrowed. It is tough for us to get resources so we will bump up your fees as well. And then we will come and revisit it.’ Then the banks say, ‘Look at what we have loaned. Aren’t we doing great by small business?’ They do not tell you how many of those small businesses have been obliged to refinance on a more expensive basis involving greater costs, higher interest rates and greater personal security to get access to their funding.

The opposition have heard that concern and that is why we proposed the Senate inquiry. I say to all those small businesses that have been sharing stories that have moved me that I understand how difficult it can be in a difficult trading environment when your costs are going up through interest rate rises. They should share those stories with the Senate economics committee. They should share those stories with their industry association and be heard. They should be heard through the parliament if they do not feel they are being heard through the Prime Minister’s office or the small business minister’s office. I can understand why they feel that way, because that is exactly what is happening. These concerns are being raised over and over again and all they generate from those opposite is inactivity and indifference. The concerns of the small business community are rising interest rates, increasing costs and difficulties accessing credit. But they are also concerned about the impact of the interest rate on their customers and on consumers. The small business community are feeling the slight hesitation that is in so many households around Australia as people coping with increasing costs of living are having to tighten their belts a little bit. Small businesses are also feeling that pain as their customers think twice and are anxious about their economic future. As the mums and dads running their household budgets work out how they are going to cope with this exorbitant increase in the cost of living everywhere they turn under this Rudd Labor government, they wonder what they can do and how they can be more modest in their expenditure. That is impacting on the small business community.

The issue is clear—rising interest rates are causing harm and hardship for the small business community directly and for the customers and consumers that they depend upon. Small business are saying loud and clear that accessing affordable financing on reasonable terms is becoming more and more difficult and they are paying more and more for financing services and lending that the banks are offering them however reluctantly. As we work to help the Australian economy recover, why are the small business community being starved of the oxygen, the finance, they need to carry out their business and to expand?

That is why we were proposing the Senate inquiry. That is why you see examples of the small business community unfortunately experiencing this finance and credit squeeze. This is why they are viewed, as the small business minister would say, as not having enjoyed quite the glee and benefits of the stimulus package and in fact feeling the pain of a bungled bank guarantee. That is the situation for the small business community. What we need to do as a nation is to recognise that the small business community drives our economy. It is an enormous employer and its health and vitality goes right to the heart of the health and vitality of our nation, our economy and the communities that they represent. This is why we are talking about options and opportunities.

This is why we are recognising that in other countries that are so much followed by the Rudd Labor government they are doing things that the Rudd Labor government here simply is not. There are examples that President Obama highlighted. There are examples in the UK from Prime Minister Brown. They handled the bank guarantee differently. They actually offered the bank guarantee to the borrower, so the small business could go to the bank and say: ‘Look, I’m backed by a bank guarantee. Please don’t hurt me with punitive interest rates and costs because you think I’m a credit risk.’ That might be an opportunity. We do not know whether that is the best solution for our nation, but what it shows is that governments in developed economies around the world have understood clearly what the small business community is saying, what the opposition parties know and what the Rudd Labor government has ignored—and that is, vitality in the small business community is inextricably linked to the availability of affordable finance that they can access on reasonable terms.

No-one is talking about reckless lending. No-one is talking about lending to uncreditworthy borrowers. That is not the issue here. This is about profitable, successful, creditworthy, positive cash flow businesses finding it hard to get the finance oxygen that they need. So I say to the minister opposite: you had a bit of a love-in a while back and nothing came of it. There were lots of discussions where the banks and the small business community sat around a table, but nothing came of it. What we have seen is that, when interest rates were going down, not all of that benefit was passed on to the small business community. When they are going up, more than the amount they go up gets passed on to the small business community.

We have seen a spread of interest rates for lending, in many cases to the same person with the same security for the same amount of money but incurring a two per cent plus price penalty. We are seeing available finance being competed for by a government on an insatiable spending spree with an unstoppable thirst for finance in the marketplace. It is squeezing out small businesses. We have seen a bank guarantee that has nobbled competition and has limited options for small business and we have seen a government completely indifferent to how its actions have actually made a difficult economic climate for the small business community worse.

We need access to finance on affordable, reasonable terms and a chance for small business to do what it does best, and that is drive the growth in this economy and provide jobs and opportunities for Australians. That is what is needed. That is why we welcome the endorsement from VECCI, we welcome the endorsement from the Australian Chamber of Commerce and Industry, we welcome the New South Wales Business Chamber’s support and we welcome the Australian Bankers Association saying they would happily participate in the Senate inquiry. What we would welcome is a commitment from the Rudd Labor government to play a positive and constructive role. I say to everybody who is as concerned, as passionate and as understanding of the difficulties the small business community faces: make a contribution. Make a submission to the Senate inquiry. Let’s drive home to this government that this matters and it needs to take action. (Time expired)

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