Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee's report entitled Access for small and medium business to finance, together with the evidence received by the committee.

On 25 November last year, the House referred to the Parliamentary Joint Committee on Corporations and Financial Services an inquiry into access for small and medium business to finance. While we understood that there had been a number of inquiries by other committees both in this House and in the other place, the committee felt it was necessary to examine the impact that access to finance has on small to medium enterprises, in particular a number of circumstances coming out of the global financial crisis and also anecdotal evidence from a range of areas with regard to small business being able to carry out its activities. The committee's report for the inquiry was presented to the Speaker out of session on 28 April this year. As Chair of the Parliamentary Joint Committee on Corporations and Financial Services, I am now pleased to table that report.

The committee was asked to consider the availability of finance for small and medium enterprises throughout Australia and the terms and conditions on which finance may be obtained. The OECD has praised Australia's economy as one of the more resilient economies throughout the global financial crisis but, nevertheless, the GFC has left its mark on the availability of finance for small and medium business in Australia and, for that matter, around the world. No review of the financial market for small and medium business would be complete without taking that particular financial crisis into account. The committee heard evidence that the GFC caused competition to decrease, with a number of lenders withdrawing from the Australian market. At the same time that that occurred, the global financial crisis resulted in the cost of providing finance also increasing. It was the evidence before the committee that small and medium business can continue to access finance but on terms less favourable than those prior to the crisis. The committee also heard evidence that the GFC prompted lenders to change lending conditions, and at times this was at short notice.

Evidence before the committee also highlighted multiple inconsistent definitions of small and medium business ranging from the way it is applied in terms of banks, policy development, data collection and other areas. A lack of standard definitions means a lack of standardised data. Inconsistency can also lead to misunderstandings when interpreting that data, hindering the development solutions tailored to the challenges faced by the various kinds of small and medium businesses. The committee considers that consistent definitions would assist an analysis of the health of the small and medium business sector and promote more informed policy and practice and, for that matter, would lead to better decision making, a more consistent approach across lenders and a better mechanism to better understand the way that lending, data and definitional issues impact on small and medium enterprises. In a unanimous report the committee has made four key recommendations. These are as follows: (1) that the government assess the value of developing uniform definitions of micro, small and medium business to be applied for data gathering, policy development and analysis by Commonwealth and state agencies; (2) that the Reserve Bank of Australia specifically track the impact of the introduction of the Basel III reforms on the cost of small and medium business finance and residential mortgages in Australia; (3) that the code of banking practice and the mutual banking code of practice be amended to include a standardised notice period for notifying business borrowers of changes to loan terms and conditions that may be materially adverse for borrowers; and (4) that the government undertake further work to explore policy measures which may strengthen the mutual sector as a fifth pillar of the banking system and thereby promote further competition.

Finally, I would also like to express my sincere thanks to all those who provided submissions to the inquiry evidence at the public hearings. The committee received 19 submissions and held three public hearings. I also want to thank the committee secretariat for their assistance with the inquiry. As always they did good work. I also take this opportunity to thank Dr Ian Holland, who has now moved to another committee but was an instrumental part of the good work of this inquiry. The committee hopes that the implementation of the recommendations will help improve the financial environment for Australia's small and medium business. I also want to thank the committee members for their hard work.

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