Credit issue lingers

WHILE it is generally assumed that Australia sailed through the GFC unscathed, a lasting after-effect is the contraction in credit, particularly in the business and property development sectors.

According to a Midwood Report, credit growth was less than 1 per cent per annum in 2009, compared to 15 per cent per annum before the GFC.

Private investment is being severely constrained, and while public investment has taken up part of the pie, job growth, particularly in the housing sector, has been negligible.

The Midwood Report’s Bill Morris says the solution is not easy, because the credit contraction has been caused by the general shortage of credit around the world, hence the higher cost of credit.

Morris says a solution is to lower the required capital adequacy ratios of the top four banks (currently 8 per cent capital to assets) to 6 per cent for a limited period, in order to free up more capital for lending to specific economic sectors.

This would need to be assessed by the Reserve Bank in terms of liquidity and risk, but there is a desperate need for more liquidity in the private investment market.

Help us deliver quality journalism to you.
As a free and independent news site providing daily updates
during a period of unprecedented challenges for businesses everywhere
we call on your support

How communications technology can raise the bar on customer service, employee experience
Partner Content
From capturing feedback early to providing messages with a higher rate of cut-through, ...
Advertisement

Related Stories

Brisbane Broncos player Ryan James and Gold Coast’s BSKT launch new native food range

Brisbane Broncos player Ryan James and Gold Coast’s BSKT launch new native food range

Indigenous entrepreneur and Brisbane Broncos prop Ryan James will d...

Lewis Land steps up plans for $1.5b Harbour Shores amid Gold Coast housing crunch

Lewis Land steps up plans for $1.5b Harbour Shores amid Gold Coast housing crunch

Sovereign Islands developer Lewis Land Group has stepped up the pac...

The co-founder question: Do you need one, and how do you find someone?

The co-founder question: Do you need one, and how do you find someone?

I’ve played beach volleyball for Australia for the last decad...

G'day space: Australia is "go" for launch

G'day space: Australia is "go" for launch

Just after midnight on Monday 27 June, above the vast wilderness of...