Wednesday, 17 March 2021
Matters of Public Importance
Buried in that load of tripe from Senator Rennick was an admission that we're facing a massive austerity budget coming down the line. As we know, austerity doesn't work and, of course, it is the poorest of Australians who suffer the most under neoliberal austerity budgets.
Reports that the government is planning to extend their small business loans are yet another example of this government looking extremely busy but actually not doing very much. I want to be really clear: there is of course merit in extending the scheme. Many small businesses are likely to continue to struggle, all the more so once JobKeeper finishes at the end of this month. But, if the government—Senator Rennick would be interested in this, I feel—actually wanted to help small businesses, they'd go to one of the root causes of the problem: that Australia's financial system, aided and abetted by the big corporate banks, is rigged in favour of housing.
Over the last 30 years banks have gone from lending twice as much money to businesses as they did for housing to now lending twice as much money for housing as they do to businesses. Under the reign of the neoliberals Australia's financial system has gone from one that served the real economy by providing loans for productive enterprise to one that serves the speculators in the housing market by providing ever-larger loans for those investing in ever-increasing house prices. The Productivity Commission undertook an extensive inquiry into competition in the financial system just three years ago, and it found this: the reform that would most significantly improve small- to medium-enterprise access to finance would be changes to the underlying prudential requirements for SME lending compared with lending for residential mortgages.
So there you have it. You know the words. Fix the financial system so it's not rigged in favour of housing speculators. That's what we should be doing. Make it so that the banks aren't able to lend so much more against their capital holdings for housing as they are for small businesses. That would help put some balance back in the financial system and our economy in favour of people who are actually doing something with the money they're lent rather than betting and speculating on ever-increasing house prices.
It's not surprising that the government's small-business loan scheme has been oversubscribed. But there is no such issue in the housing market, I can assure you. Over the past 12 months, consumer lending for housing grew by 44 per cent, the highest rise over any 12-month period on record. In part, this is thanks to the RBA's ambivalence about the flow of credit. What has happened is this: the RBA has printed hundreds of billions of new dollars, pumped it into the financial system and said to the banks, 'Basically, you can do what you like with it.' Not surprisingly, with spending down and business confidence low, the banks have said, 'Oh, well, we'll stick that money into the housing market.' No wonder an entire generation of young people are being priced out of the great Australian dream of owning their own home.
But even that is not enough for the Liberal and National parties in here and their corporate banking masters, despite the largest increase in consumer lending on record, an increase in risky lending, according to APRA figures released just yesterday. The government has introduced legislation to abolish responsible-lending laws to make it even easier for the banks to lend money. This government and their corporate banking masters want even more money to flow into one of the most overpriced housing markets on the planet. Like just about everything this government have done in response to the pandemic, their plans to rip up responsible-lending laws are, firstly, all about helping their big corporate mates and, secondly, leaving ordinary Australians to fend for themselves—and that of course includes small business. What small business really needs is the same as what everyone else needs, which is for the Liberal and National parties to stop acting as agents of the big corporate banks in this place.
We need the rules in the financial system and the tax system to be rewritten so that we reward and support productive enterprise and the rapid transition to a zero-carbon future, and we stop rewarding and supporting financialised capitalism and all the other corporate rent seekers who will not stop until they have taken control of every corner of our economic system.