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Monday, 10 November 2008
Page: 10285

Mr CIOBO (3:35 PM) —My question is to the Prime Minister. I refer the Prime Minister to his comments on 7 October when he said, ‘The government welcomes the relief that the Reserve Bank of Australia’s decision will provide to working families and to Australian small businesses.’ Prime Minister, how many of the banks have passed on the Reserve Bank’s now 1.75 per cent rate cut to their small business customers? If banks have not passed on the rate cut, how will small businesses be relieved by the Reserve Bank’s decision?

Mr RUDD (Prime Minister) —First and foremost, in terms of the government’s commitment to the interests of small business, one of the challenges that we sought to address in the $10.4 billion Economic Security Strategy was to provide stimulus to the economy, particularly in the household consumption sector where so many small businesses depend on a flow-through of activity. We are very mindful of that.

The second concern with regard to small business was the drying up of loan finance to small business in the future. That is why we provided the banks with a guarantee in terms of their term wholesale funding. One of the galvanising arguments put to us at that time was the need to provide that guarantee to ensure that there would be a continuing line of credit to small business.

The third point is the cost of that credit. That goes to the interest rates point which the honourable gentleman raised in his question. As I have said before—and as has the Treasurer as well—we would expect the banks to pass through interest rate cuts as rapidly as possible to all their customers. That includes small business customers as well as those taking out home loans.