By economics correspondent Stephen Long
The big banks have come under fire from small business at the Senate inquiry into competition in the sector.
The Council of Australian Small Business Organisations accused the banks of deliberately delaying EFTPOS payments and investing the funds in the short-term money market.
“We asked them the question, well, where does it go, where does the money go?” executive director Peter Strong said.
“That’s billions of dollars, and they said it just goes.
“We believe they’re using it to sure up their own liquidity – they’re using it in the short-term money market.
“Whatever they’re doing with it, it is billions of dollars of small business money that they are using elsewhere.”
Mr Strong wants to make the banks repay the interest they charge on overdrafts for small businesses who have had their payments delayed.
The Australian Chamber of Commerce and Industry (ACCI) also criticised the big banks for denying loans to small business.
It says small businesses have been forced to resort to extremely expensive means of obtaining finance and the Government should intervene.
“Some 63 per cent of small and medium business owners are now using their credit card facility as a form of business finance,” chief executive Peter Anderson said.
“That is prima facie an indication that there is some market failure.”
Swan hits back
Meanwhile, Treasurer Wayne Swan has dismissed Aussie Home Loans founder John Symond’s criticisms of his plan to improve competition.
On Tuesday, Mr Symond criticised the ban on exit fees and called on the Government to support non-bank lenders like his company.
He also said the plan to make credit unions and building societies a fifth banking pillar was a joke.
But Mr Swan accused Mr Symond of being in league with the Commonwealth Bank, which owns a third of Aussie Home Loans.
“I made it very clear from the beginning, publicly, that our support should go to the smaller lenders,” he said.
“Mr Symond has clearly joined up with the biggest bank in the country.
“He’s not clearly a smaller lender and he’s not out there putting the case for the battler.
“That’s what the package is all about and that’s what Mr Symond doesn’t understand.”
At a press conference in Sydney yesterday, Mr Swan also revealed he had personally contacted the chief executives of NAB and the Commonwealth Bank about interest rate rises.
He said he asked them not to put their mortgage rates up by more than the increase in the Reserve Bank’s official cash rate.
ANZ chief executive Mike Smith confirmed he too had that same conversation with Mr Swan.
“I think the comment is we agree to differ,” he said.