It was a small relief when in late October, the Deputy Governor of the Reserve Bank (RBA) told the Senate Estimates Committee that Australia was officially out of recession. The welcome announcement was based on the figures from the September quarter, which showed that following a six month contraction due to the pandemic, our economy grew in the last quarter. You may have noticed the headlines.
While the AICR always celebrates good economic news, no matter how small, we are also mindful that there is still a way to go before we can relax. Interest rates have been cut, and some banks are even passing savings on to mortgage holders. But, the RBA also cautioned that nervousness remains about likely business failures next year and rising mortgage defaulters as the Government’s stimulus payments wind down.
As we know, those payments as well as grants, allowances and fee holidays have meant the difference between survival and going under for many. But governments can only do so much to keep the wheels of the economy turning. A strong economy relies on the positivity of consumers. We all need to feel confident enough to dip our hands into our wallets and spend rather than save. The glimmer of hope that a Covid-19 vaccine is on its way (and may even be made in Australia) could be the extra good news that will embolden consumers to spend.
"But governments can only do so much to keep the wheels of the economy turning. A strong economy relies on the positivity of consumers."
In the meantime, Treasurer Josh Frydenberg has announced a loosening of the responsible lending laws to make obtaining loans from banks and financial institutions easier. There has been considerable debate about this plan including warning to be careful of debt traps as we head into the new year.
As debt recovery practitioners, we certainly are aware how families and small businesses have struggled in this pandemic. Our message has always been to seek guidance and not be swamped by mounting requests for payment. We remain firm in our commitment that no one should be harassed to pay a debt and that litigation is always a last resort. There are options, like repayment agreements and financial counselling, to avoid matters spiralling out of control.
Hopefully, the RBA’s figures are right and our first recession in thirty years is coming to an end. Households and small businesses can emerge from the pandemic into the Festive and New Year season more confident that good times will return.
Yours sincerely,
Brian Carter
Chairman