Tony Smith (Casey, Liberal Party, Deputy Chairman , Coalition Policy Development Committee) Share this | Hansard source

I am pleased to speak to the report of the Joint Committee on Corporations and Financial Services on the inquiry into access to finance for small and medium businesses. The chair has just presented the overview of the committee's recommendations in some detail. I would like to draw the attention of the House to a number of related matters highlighted by the inquiry and the committee's report.

Consistent with the terms of reference from the House, the committee considered the types of finance available, lending competition and the impact of prudential regulation on the availability of finance for small and medium businesses. As the chair has outlined, the committee met with small and medium business representatives, members of the banking sector and members of the mutual banking sector in order to assess the strength of small and medium business finance. I would like to join with the chair and other members of the committee who were part of the inquiry to thank all of those who contributed to the inquiry by providing evidence to the committee through written submissions and at the public hearings which we held around Australia.

The evidence before the committee, as the chair outlined, was clearly that access to finance from lending institutions is, as we know, crucial for the ongoing productivity and growth of the small and medium business sector. Finance from the banks and the mutual lenders is an essential source of funding for small and medium businesses. The global financial crisis had a number of effects on the Australian economy. The committee report points out, at page 11 at the beginning of chapter 2, that Australia weathered the global financial crisis far better than most other countries as a result of its fiscal and regulatory strengths. On behalf of the opposition I welcome the unanimous acknowledgement in this report that it was the fiscal strengths and the regulatory strengths in Australia that the current government clearly inherited that saw Australia see its way through the global financial crisis in better shape than other countries.

The global financial crisis also reduced lending competition nonetheless. That is why the committee has made a number of recommendations, including that the government undertake further work to explore policy measures that may strengthen the mutual sector, as the chair outlined in his contribution just a few minutes ago. As he also outlined, the committee heard concerns from business representatives regarding the introduction of the Basel III prudential regulations. There is overall support for the framework. However, the committee also considers it prudent to track the impact of the new requirements on the cost of finance.

The committee also considered the finance options available to small and medium businesses in regional Australia compared with the finance options available to businesses located in metropolitan areas. Lending institutions presented evidence to the committee of finance options tailored to the agribusiness sector. However, it should be noted that some agribusiness products can attract higher interest rates. The committee did not receive evidence that clearly indicated a lack of banking competition in regional areas. The mutual sector appears to have a growing presence in regional Australia. Agribusiness shares the challenges of small and medium businesses. However, agribusiness can also face challenges largely unique to their sector. The recent natural disasters are, of course, one example of this, as I am sure Deputy Speaker Scott would appreciate as he represents an electorate affected by the floods. The committee noted with approval the advice of many lenders that they are providing loan assistance to businesses affected by the recent devastating floods and extreme weather events.

Small and medium businesses are essential for the ongoing productivity of Australia's economy. They comprise a critical share of Australia's economy. There are two million businesses employing more than four million Australians. Recognising the significance of small and medium businesses to employment, innovation and economic growth is absolutely vital and the financing of small and medium businesses is an issue of enduring concern for Australian parliaments. The measures that the committee has recommended will promote some improvements in small and medium business finance and, in turn, strengthen the sector and strengthen the Australian economy. I would like to thank members of the committee and the chair who conducted this inquiry.

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