Coronavirus Australia: PM roasts banks over pandemic fail

PM reads riot act to banks as they drag heels on approving bridging finance for wages before JobKeeper payments kick in.

Scott Morrison publicly revealed his frustration after declaring the banks needed to lift their game. Picture: AAP

Australia’s biggest banks have been stymieing business attempts to gain bridging finance for wages before the $130bn JobKeeper payments begin next month, prompting Scott Morrison to order them to be read the riot act.

The Australian understands the banks buckled to demands to lift their game after a furious Prime Minister vented his anger about the big four during a phone hook-up with tax commissioner Chris Jordan and Treasurer Josh Frydenberg early on Thursday.

Business groups had reported staff had been laid off because they couldn’t afford to wait for the JobKeeper payments, despite the banks pledging to temporarily underwrite the wages bill.

Mr Jordan is believed to have delivered Mr Morrison’s blunt message to the chief executives of ANZ, Commonwealth Bank, Westpac and NAB in a later phone conference that included Mr Frydenberg and Assistant Treasurer Michael Sukkar.

The banks immediately agreed to fast-track applications.

One chief executive is believed to have tried to make excuses for the delays on getting cash through to businesses, earning a rebuke from Mr Jordan, who said the banks would have a hard time convincing the Prime Minister of that.

The flurry of phone calls led to the banks agreeing to set up hotlines to triage claims by struggling firms and putting them at the “front of the queue”.

“It would be an understatement to say that the PM wasn’t happy,” said a source close to the Prime Minister.

Mr Morrison publicly revealed his frustration after declaring the banks needed to lift their game.

“It is important that the banks stay up to the mark here,” he said.

“I am concerned at the increasing number of stories we are getting and those issues I am sure are being raised directly with the banks, but we need those turnaround times to improve.

“The Treasurer has been working closely with the banks, meeting with them (on Wednesday night) and also again today (Thursday) and I am aware that there has been some frustration among businesses, in particular, in accessing bridging finance with banks. We are aware of that. I have no doubt the banks are aware of that as well and we need to be addressing that.”

NAB chief executive Ross McEwan on Thursday night acknowledged the government’s frustrations and said his bank was “working overtime” to provide assistance. “We’ll (today) launch a dedicated hotline for customers needing support with JobKeeper bridging finance and we’ll also expedite any requests we’ve already received from customers so far,” Mr McEwan said.

“We recognise this funding is critical to keeping businesses afloat, people in jobs, and food on the table for the many people who are doing it tough right now.

“We’re working as quickly as we can, with more than 350 people retrained to support customer facing roles so far, so we can support as many customers as we can over this hurdle.”

The small business lobby said some business owners were at breaking point. Australian Retailers Association chief executive Paul Zahra said some of his ¬members had to let staff go because they could not pay their wages while they waited for the JobKeeper payments to come in.

He said some businesses faced wages bills 60 per cent above their usual amount. “Fast-tracking access to bridging finance is vital for retailers facing cashflow pressures and this finance will ease the burden while they wait to be reimbursed,” he said.

Peter Strong, chief executive of the Council of Small Business Organisations Australia, said fast-tracking of bridging finance was “really necessary” because a growing number of businesses had -become distressed during the coronavirus pandemic, with some employers in tears when relaying their hardship.

Mr Strong said some small businesses were paying their casual staff the minimum $1500 ¬fortnightly payments required under the JobKeeper program, which was often much more than they ordinarily received, so the cost of wages had exponentially increased.

“The issue is they’ve got to find the money from somewhere,” Mr Strong said. “Some of the banks have just done it (approved the bridging finance).

“But the local bank branches haven’t changed in a lot of situations. In one case I know of, the branch manager said ‘this looks good, come back in 10 days’.’’

While the government believes banks have restored some goodwill in their responses to the bushfires and the virus, having been condemned for their behaviour during last year’s royal commission, a senior government source said that they needed to redouble their efforts during the crisis.

The Australian Banking Association acknowledged the need for an accelerated process and issued a statement saying the big four banks would “bolster their efforts” and work with the ATO to accelerate claims processing.

The ABA conceded that while the banks had worked “tirelessly to process applications as quickly as possible”, more needed to be done to keep businesses afloat until they could access the $1500 JobKeeper payments

Mr Frydenberg said his phone calls with the bank chief executives had been “productive”.

“They have agreed to set up, each of these four major banks, a dedicated hotline for their customers to call to receive the bridging finance necessary to pay their staff ahead of receiving that money under the JobKeeper program,” the Treasurer said

“Importantly, they have also agreed to expedite the processing of all those applications to the front of the queue.”

Restaurant and Catering Australia chief executive Wes Lambert said many of the association’s members had been asked to prove their acceptance under the JobKeeper program before receiving their bridging finance. That had not been possible because formal applications for JobKeeper only opened this week.

“There are many examples around the country of restaurants, cafes and caterers who are either closed or have diminished trade and are struggling to make the first JobKeeper payments in order to be eligible,” Mr Lambert said.