Banks ‘prepared for economic challenge’

Last week, Prime Minister Scott Morrison released a “targeted” $17.6 billion stimulus package designed to “keep Australians in jobs, keep businesses in business and support households”, in light of the growing impact of the coronavirus (COVID-19) on the domestic economy. 

According to the government, up to 6.5 million individuals and 3.5 million businesses would be directly supported by the new measures.

The stimulus package has four key elements, which include:

• supporting business investment
• providing cash flow assistance to help small and medium-sized business to stay in business and keep their employees in jobs
• targeted support for the most severely affected sectors, regions and communities
• household stimulus payments to benefit the wider economy

The Australian Banking Association (ABA) has welcomed the government’s stimulus package, with CEO Anna Bligh adding that members are “well prepared for the challenges” presented by the outbreak.   

“This economic stimulus package will be a welcome shot in the arm for businesses and individuals,” Ms Bligh said.  

“Australia’s banks are strong, stable and open for business, including for any company wanting to take advantage of initiatives in the government’s stimulus package such as the increase to the threshold of the instant asset write-off from $30,000 to $150,000.”

Ms Bligh urged consumers and businesses affected by the economic impact of COVID-19 to take advantage of the banks’ support measures, which said include:

• a deferral of scheduled loan repayments 
• waiving fees and charges 
• interest free periods or no interest rate increases 
• debt consolidation to help make repayments more manageable.  

NAB has also welcomed the government’s stimulus, with CEO Ross McEwan also encouraging impacted bank customers to reach out for support.

“We welcome the government’s economic response. In particular, these targeted measures will help small businesses and vulnerable Australians at a critical time,” he said.

“Banks are well placed to support the Australian community through this unprecedented situation. We encourage small businesses doing it tough to contact their banker to discuss what we can do to help them through – including things like deferral, extension or restructuring of loans.”

The NAB CEO also stressed that the bank would remain open for business throughout the crisis.

“NAB kept lending through the GFC and we will do the same now,” he added.

Meanwhile, despite also welcoming the government’s initiative, CEO of the Property Council of Australia Ken Morrison has warned that they would not be enough to reverse a downturn in the market.

“As governments escalate the public health response, these measures will have their own unavoidable impact on the economy,” he said.

“From an economic perspective, the current phase has largely been about our exposure to China. The next phase is likely to be about the impact of an economy that will have gone into partial lockdown.

“While many jobs can be performed from home, you can’t build a construction project from your lounge room.

“Many of these economic impacts are simply unavoidable given how this health challenge is likely to evolve and business needs to prepare for this.”

Treasury has estimated the government’s stimulus package would add 1.5 per cent to GDP growth over the June quarter.

However, Treasurer Josh Frydenberg acknowledged that the full economic impact of the coronavirus remains “unknown”.  

Prime Minister Morrison said the government would continue to monitor the economic impact of COVID-19, adding that “if more is required, more will be done”.

[Related: PM unveils $17.6bn battle plan to fight off recession]