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Urban Taskforce | Media Releases
Parliament must approve business partnership for the economys sake
12 March 2009
Federal parliament should urgently pass legislation designed to protect Australia from a sudden withdrawal of credit by foreign banks, according to the Urban Taskforce.Today the government introduced legislation authorising the creation of the Australian Business Investment Partnership.
The Taskforces chief executive, Aaron Gadiel, said that the scheme would allow up to $30 billion in loans to be extended to the commercial property sector, where financiers, particularly foreign banks, attempt to reduce their exposure to viable Australian businesses.
Foreign banks account for a quarter of the commercial property exposures in Australia, Mr Gadiel said.
Many of these banks are now owned by foreign governments. Theres a risk that the banks new owners will force them to walk away from their Australian loan portfolios and concentrate on their home markets.
The Australian Business Investment Partnership is crucial insurance policy to safeguard the economy.
The absence of alternative credit may force distressed asset sales.
This could artificially depress commercial property prices."
Mr Gadiel said the economy will pay a heavy price if this legislation is blocked.
Without this legislation we may see a further reduction in confidence, a deeper economic downturn and a postponed economic recovery.
Mr Gadiel said that Australia will need the property development and construction sector to lead it out of the current economic slowdown.
For every $1 million in construction expenditure, 27 jobs are created throughout the broader economy, he said.
The construction activity made possible by property developers contributes $69 billion to the national economy each year and creates 709,000 direct jobs. The construction industry is Australias third largest source of employment.
Mr Gadiel said the Federal Government will need to consider widening the Australian Business Investment Partnership to embrace new private sector residential development.
The new social housing program will not be enough to revive residential construction, he said.
The Federal Government needs to step in and offer debt finance to support residential property development.
The Urban Taskforce is a property development industry group, representing Australias most prominent property developers and equity financiers.
