This would have to be one of the most absurd ideas a government can come up with; especially one which is meant to have at least a modicum of fiscal conservatism. The government is about to use taxpayers money to go where banks fear to tread.
As a business owner, with some business debt, I do speak with some authority. However my strong leanings towards small government, free enterprise and a belief that capitalism has served society well, is likely to bias my thoughts.
The press release from the government has been dutifully copied by most major news organisations, and to date there has been little commentary on the merits of the proposal. Hopefully that will occur over the next few days; and be scornful.
Simply put, banks want to make money. We all know that right? They get criticised for the amount of money they make all the time. So if a bank determines that they don’t want to lend to a business or individual, there is a reason for it. Yet the government is prepared to fill the void with taxpayer dollars; I just can’t see this ending well.
The ironic thing is that banks are suffering from tightening lending policies forced on them by … you guessed it, government. Just two days ago WAToday alerted us to tighter lending rules as a result of the Royal Commission; “Those applying for a mortgage will need to outline what they spend on everything from Netflix to nannies and from cigarettes to chardonnay.”
Other than it becoming harder to get a loan, consumers are also suffering from government intervention and increased capital adequacy requirements from APRA. The changes to interest only loans and loans to SMSF’s are examples.
I am yet to hear of a bank which won’t lend to someone who has sufficient security. And if there is no security offered to the banks, then any lending should rightly be at a higher interest rate. The proposed government intervention will distort the market.
This is politics at its worst and, I believe, an attempt to wedge the opposition. Hopefully Labor and the minor parties/independents will vote against it, but then they risk being accused of not supporting small business. Politics hey, and bugger the taxpayer.
Now, if government really is interested in supporting small business, start cutting the red tape which consumes immeasurable hours and dollars. If however they are just interested in government intervention, please make it law that my business can buy a car at the same price as the cheapest fleet purchase.
