Federal Treasurer Wayne Swan has encouraged business owners to contact the government if they believe their bank is treating them unfairly. Because of the government guarantee, banks should ensure a sufficient flow of credit, he believes.
“If there are viable businesses that have an adequate income and are profitable into the future, then they should be being supported by the banking system, which has received, after all, the support of the Australian Government,” says Swan.
The government is concerned that while banks pass on rate cuts to mortgagors, they are less generous with business loans, which could lead to further business slowdown and unemployment.
Business commentator Robert Gottliebsen says the government has left banks with no other choice but to earn money from business loans. “The simple fact is that bank costs do not magically fall by the amount of the Reserve Bank rate cut. They have term deposits carrying much higher rates. They must borrow overseas where the rates are higher even with the government guarantee,” he says. “They therefore have two choices available to cover the Swan/Bishop housing rate subsidy – slug small-to-medium business and credit card holders or reduce bank profits.”
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