Urban Taskforce CEO, Tom Forrest, today highlighted the negative impact of banks tightening the flow of money to construction projects?
The Federal Government reacted fast and sensibly with the Cash-boost, JobKeeper and JobSeeker stimulus packages. State Government have fast tracked planning approvals and extended hours of operations on construction sites to limit the impact on the property construction sector.
The settings that APRA placed on the banks greatly assisted us come through the GFC. However, the Banks have been smashed through the Royal Commission process and, as result, have lost confidence, and have become highly risk averse.
The Federal Government need to work with APRA to change the settings and encourage banks to take a little more risk, or together, they could end-up compounding the result of the economic down-turn.
All the planning approvals in the world are useless if there is no money available to fund construction.
Urban Taskforce is concerned about the pursuit of a self-filling prophecy of economic decline. By putting a hand brake on economic activity through restrictions on the flow of finance, we risk creating the very crisis we are all seeking to avoid.
The economic recovery will be slow, but must involve:
• Taking strict and aggressive measures to stop the spread of COVID-19 and prevent a second wave (done)
• Stimulate the economy through deficit funded stimulus measures (done)
• Fast track public and private sector investment in job-creating projects (schools, hospitals, houses, apartments, commercial offices and retail construction are highly labour intensive and thus have a high economic multiplier effect, stimulating economic growth)
• Ensure banks remain prudent in their lending, while easing current restrictions to lubricate the wheels of recovery
• Re-opening our international borders with quarantine measures in place
• Opening-up the higher education sector to international students
• Re-starting the immigration program to boost demand and stimulate economic growth
• Opening up the domestic tourism market, then international market, as health advice permits.
Government leaders have served Australia well in dealing with COVID-19. Treasurers around the nation are nervous about the deficits they are racking up – but only a private sector recovery will turn this around. It is time, therefore, to ensure that funding is available to companies to create the jobs that will turn our economy around.