Kelly O'Dwyer (Higgins, Liberal Party) Share this | Hansard source

I am very pleased today to rise in this matter of public importance discussion. First, I would like to direct my comments to the speeches from those opposite. We have heard a lot of talk today about the Liberal Party and the coalition team, but we have not heard much about what the government is doing to assist small business—small business that is struggling at the moment with the impact of rising interest rates.

Small business is critical to the engine room of the Australian economy. There are 2.4 million small businesses in Australia, which employ around 5.1 million Australians and provide them with a livelihood. In Higgins—in Ashburton, Murrumbeena, South Yarra and Prahran—there are around 19,000 small businesses, and they contribute very, very significantly to employment and to the prosperity and growth of this country. They contribute as well to the great culture of our local community.

There are some very significant threats to small business. Only yesterday we heard from the Reserve Bank governor warnings about excessive and poorly targeted stimulus spending putting pressure on interest rates. The Sydney Morning Herald yesterday reported:

Mr Stevens told the governors he suspected they had a moral duty to do more, and to target excessive growth of asset prices and debt and risk taking as they became apparent.

‘‘This amounts to an argument to err on the side - much earlier in the process - of not keeping interest rates unusually low,’’ he said.

This comes after the most recent warnings from the Reserve Bank, in their monetary policy statement:

If economic conditions evolve broadly as expected, the Board considers it likely that monetary policy will, over time, need to be adjusted further in order to ensure that inflation remains consistent with the target over the medium term.

This is very clear. It is very clear that Labor’s reckless spending is putting upward pressure on interest rates through their massive borrowing and debt. My colleagues pointed out earlier some significant issues for small business, in particular issues around access to capital and the fact that capital has been constrained—working capital so that they can pay for stock and pay bills while they are waiting for creditors to pay their bills, and capital for set-up of new small businesses and expansion of small businesses that are already established.

According to Reserve Bank statistics in September 2009, small businesses are paying a 130-basis-point premium for credit. This is the difference between a standard variable housing loan and a residential secured small business term loan. This is significant because this premium is more than six times the difference during the Asian financial crisis, which was 20 basis points, and more than five times the average of the past 10 years, which is 22 basis points.

Small business needs to be able to borrow at reasonable rates to keep going and to expand. COSBOA, the Council of Small Business Organisations of Australia, had something to say on this subject. We should listen to what they say; they represent their members very well. Their 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.

Unlike some of those opposite, I know small businesses are hurting, and I know they are hurting because I have been speaking to them. In the Higgins by-election, I convened a forum in my electorate to talk to small businesses about the challenges that were facing them. I had an overwhelming response, and they were very, very clear. They know that interest rates are hurting their businesses. Interest rates, they say, need to be addressed by the government.

The government made many promises at the last election. They made promises that they would be economic conservatives. They made promises that they would keep interest rates low. Yet today we have not had one word from the government about the action that they will be taking. This is true of the government’s record in a number of areas. They have made significant promises in relation to health and private health insurance, they have had a number of committees and inquiries and yet we see nothing actually being done. We on this side of the House will always be strong advocates—(Time expired)

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