Record low interest rate cut is not enough to boost business confidence especially if the banks will not lend to printers with insignificant debt overhangs, the PIAA says. The Reserve Bank of Australia (RBA) made the decision to cut the interest rate by 25 basis points from 2.25 to 2.00 per cent, a historic low for Australia, effective from May 6. Speaking with Australian Printer, Printing Industries CEO Bill Healey welcomed the rate cut saying it will decrease cost to business, but he says it will not be enough to boost business confidence, and the government needs to look at its fiscal policy, and encourage lenders to lend to small businesses for there to be a significant boost in consumer confidence and investment.
Bill Healey, CEO of the PIAA
Healey says, “The cut on its own does not lead to the achievement of boost in confidence; we really need to see the budget next week to see if there is a package that instils confidence in the consumers and the economy, because that is ultimately what’s going to assist operators. “We have seen situations with people with quite modest overhangs on their debt who have been screwed by a bank, we feel quite unfairly, because of their lack of confidence in our sector. “Now unless that changes, it wouldn’t matter if the interest rate went down to zero.” Chris Segaert, managing director of Permanent Press Printers, told Australian Printer that the government needs to give the lenders an incentive to lend money to printers. “That is what we need. We don’t need incentives for us to spend money; we need incentives for our lenders to lend money. The question for us is that there is no point investing in this industry when we are trying to rationalise,” Segaert says. He says the government needs to understand that supporting the sector will support jobs and grow the Australian economy. “Keeping businesses open, keeps people employed. If a business closes, then the people that work there don’t have a job. But if the owner has an incentive to stay open then there is business that is being done, taxes are being paid, and employees are employed,” Segaert adds. Healey says the government needs to show some ‘true courage’ and release a budget that will go beyond the RBA’s rate cut and encourage banks to lend to printers.
MBE Parramatta owner Charles Batt
“It would be better, and this will come next week, for printers to get an investment concession, where they get an investment allowance, where they can go and get a rebate on an investment. I think something tangible because if you don’t have a loan there is no benefit, whereas if you give business an interest depreciation allowance than they will be encouragement to spend,” Healey says. “The critical point is that we need a package of reforms that ensures that this economy gets back on track and that requires some sort of fiscal discipline and fiscal change and we can’t rely any further on monetary policy to change the way.” Charles Batt, owner of Mail Boxes Etc Parramatta, says while the government is making some inroads with their reduction of red tape it is failing to address the taxation system, which is a major issue facing small business. Batt says, “For a small business owner there is so much red tape, and so many unanswered questions about how to run your business, if they [government] could address a lot of those issues themselves it would make life a lot easier for small business. “The government is so gun shy after the debacle of last year’s budget that they probably are not going to go out on a limb that they should go on. “I think politics will win over the right move, there are a lot of things they could do but I think they will not do them because they can’t afford to have another year of hiding from the opposition,” he says.
Australian Chamber of Commerce and Industry chief executive Kate Carnell
“I think small business from a lot of perspectives is hurting. I know my competitors are finding it tough. The banks need to be more entrepreneurial and I think after the GFC there was a backlash but I think that will slowly step through again.” Concurring with these sentiments the chief executive of the Australian Chamber of Commerce and Industry, Kate Carnell told ABC that record low interest rate is not enough to restore business confidence. Carnell says, “We welcome the cut but the problem is that on its own it is not enough. Treasure Joe Hockey needs to release a budget that will bring it back into balance. “Business confidence is not about rate cuts, it’s about understanding that the country really has a plan for the future.”
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