Well, today both the Reserve Bank and the Australian Government combined together to put another extra $100 billion into our financial system which basically means more money will be available to lend to small and medium sized businesses, and the interest rate will also come down. And we’ve already seen since that announcement that the Commonwealth Bank has reduced the rate charged to small and medium sized business by a full percentage point. So that’s good news, because that means smaller interest payments.
Speaking of banks, because we know that one of the problems that a lot of people are going to face is difficulty in paying a home loan because, either they’re a casual worker or self-employed. I know you get this question a lot but I need people watching us to be able to hear this answer. Are the banks coming good with maybe holding off for a month on people paying back their mortgage? Are you encouraging people who are the investors in the property market to be able to give a bit of a rent holiday? You’ll get your money eventually; you’re just not knocking on the door for the next 30 or 60 days.
Well, Paul, this is a Team Australia moment. Whether you’re an energy company, a bank, a landlord, you have to understand the predicament in which your customers are in through no fault of their own. And we need to build that bridge to recovery and we need to get to the other side no matter how long it takes, and we need to get the businesses to remain in business, and we want the Australians to remain in a job.
So, I do call upon the banks, and I have been talking to them day and night to show that generosity of spirit, to work with their customers, to provide that relief, because I know that their interests, the banks’ interests, are actually aligned with the customers’ interests. The bank only survives when it’s got lots of customers, and likewise, the customer needs a bank to get through to the other side.
Now, as it was a few months ago when it came to the bushfires, here we are in another situation where people are going to hear that there’s ‘x’ hundred dollars that will be coming their way, or loans will be available of ‘y’ thousand dollars, or whatever it is. But a lot of people are either intimidated or not particularly familiar with the process to actually apply for all of this stuff.
Can I just focus in on the small business and the $25,000 number that is there? How hard is that to apply for? What do you need to apply for it? And how long before you have to pay it back?
Well, the good news for your viewers is you don’t need to apply for it. It happens automatically through the tax system using the Business Activity Statement, building on the wages bill that that small business, or medium sized business, currently has, and all that money will flow automatically. And it’s a cash payment; nothing needs to be paid back.
Likewise, with the $750 payments that are going to 6.5 million Australians, that will flow from March 31, and that money doesn’t have to come back, that’s to be spent throughout the economy.
And, as you know, the Prime Minister, the Finance Minister and I are working on a second package of measures which is designed to cushion the blow for some of those who are finding themselves unemployed through this process, but also for those small businesses who need our support.
Normally it’s a Treasurer’s job to turn around and tell Ministers “no” when it comes to spending. I know that it’s sort of a muscle, the muscle memory is in reverse here. But, how are you drawing the line about what is too much? About what is not directed correctly? What is too big a bazooka too early in the fight?
Well, what we did early on, ahead of settling our first stimulus package was to settle the principles that will guide us. Now, those principles are that the money needs to be temporary; we don’t want to bake in long term spending that we’ll never be able to wind back. We’re dealing with a particular challenge right now which is the spread of the coronavirus and its impact on unemployment and the economic activity.
The second is we want it to be targeted. We don’t want to establish new programs like the Pink Batts or the overpriced school halls. We actually want to use the existing tax and transfer system. We want it to be simple, just like I said with the cash payment for small businesses. No applications required, money will just make its way into the bank account of that small business.
And we know, we know that we do need to do things that you wouldn’t normally do. But we need to do it because we want businesses to remain in business, and Australians to remain in jobs.
Now, I want to flag something that I think is going to be potentially an issue 30 days from now. Which is many small businesses that I know which have bricks and mortar establishments, one of the biggest pressures on them is, okay, even if they have to shed a couple of staff here and there, work a little longer, is commercial rent. Again, we talk about that ‘Team Australia’ factor, but there are companies that exist and the whole point of them existing is to own commercial rent.
How much can be negotiated here? What’s the carrot and stick to make that sure, that very big shopping centres aren’t hitting their people up every 30 days. Is these the discussions that’s happening here? Or we’re hoping that’s the discussion that’s happening?
I’ve actually had some of those discussions already. I’ve spoken to the big shopping centre owners in Australia, with tens of thousands of shops. Now, some of those are smaller and medium sized businesses, others are chains, whether they’re clothing chains or food chains, or Telstra, or Apple, whoever the other tenants may be. They have a range of tenants. Some of whom, like Apple, have announced they’re closing the stores but they’re still paying the rent. That is not an option available to some of the smaller and medium sized enterprises. So, I know that the shopping centre owners are working through this issue; I continue to talk to them.
And like I said, whether it’s a landlord, whether it’s an energy company, whether it’s the tax office, whether it’s a bank, all of these parties can do things to help their small and medium sized businesses get to the other side.