NAB’s Ross McEwan in call to open borders ‘and keep them open’

NAB chief Ross McEwan pleads with customers to answer the bank’s calls, while arguing for a national plan for living with COVID-19.

NAB CEO Ross McEwan suggested five measures to help the economy recover from the pandemic. Picture: AAP

National Australia Bank chief executive Ross McEwan has taken up the cudgels against states enforcing strict border controls, saying Australia needs a national plan for living with COVID-19 which includes a reopening of borders “and keeping them open”.

Mr McEwan also issued a personal plea to customers to be open and honest in their dealings with NAB, as various hardship packages wind down.

About 20 per cent of customers, he said, did not respond at all to recent check-ins by NAB about deferred loans.

“As soon as you think you’re in difficulty, pick up the phone, please, so it’s a two-way conversation,” the NAB chief said.

“The thing that distresses me right now when we’re making these calls to customers is that 20 per cent don’t get in contact, if you text, email or phone.”

In his opening statement to the House economics committee on Friday, Mr McEwan said certainty was required for a sustainable recovery from the pandemic-induced recession.

“Without this certainty we risk wasting the support provided so far and further crushing business confidence,” he said.

NAB presented weaker, updated economic forecasts to the committee, which took into account the disastrous 7 per cent contraction in GDP for the June quarter.

The economy was now expected to shrink by 7.8 per cent in 2020 after a flat second-half performance.

While a stronger rebound was forecast through 2021 with 4.5 per cent growth, unemployment would be higher than previously thought, peaking at 10 per cent in the first quarter of next year.

It would then fall to 6.8 per cent at the end of 2022.

While the impact of the virus on the economy was devastating, Mr McEwan said Australia overall was handling it better than most other developed countries, both in economic and health terms.

Still, there were five further measures which could be implemented to strengthen the economy, some of which the Morrison government had on its agenda.

In making a gradual shift from support to stimulus, Mr McEwan called for the Morrison government’s legislated tax cuts to be brought forward to get cash back into the hands of businesses and households.

Spending on infrastructure in both construction and digital projects could be accelerated to create jobs, and streamlining approvals for residential construction and providing consistent rules and regulations across states would speed up growth.

Mr McEwan also advocated cutting complexity for small businesses to make it easier for them to employ and pay people.

Finally, he said plans should be made for the return of skilled migration and international students, which was also critical for growth.

“While we focus on what we must do now, this crisis presents the opportunity to rebuild a stronger, more competitive Australia through practical reform,” the NAB chief said.

“This means greater investment in our digital economy.

“It means energising manufacturing across the country, particularly in high-potential sectors like medical technology, defence, agriculture and clean energy.

“And it means targeting our investment in skills, education and research.”

Responsibility for this, he said, fell not just to the government but business as well.

“Businesses like NAB must step up, and we will,” Mr McEwan said.

The NAB chief said the bank continued to lend through the crisis, providing about $2.4bn per month to small and large businesses.

Many customers, however, had seen their incomes disappear overnight, and this had been confirmed on his nightly, pre-curfew walks in suburban Melbourne.

NAB had deferred repayments on 77,000 home loans and 37,000 business loan accounts.

Check-in conversations with almost 40,000 homeowners on deferrals since June had resulted in 15 per cent starting to pay down their loans again.

“For those continuing to need assistance we are helping in many ways, from further deferral to going interest only,” Mr McEwan said.

“At the same time, we will sometimes need to make the hard but right decisions. Lending more money to customers who have little chance of repaying it will cause more harm in the long term.

“I saw this in the UK and it was an important lesson from other customer cases this committee is aware of.”

In other developments, NAB said it planned to close its office in Beijing and consolidate its presence in China in Shanghai.

The Shanghai office helps customers trade with China.

Mr McEwan was also questioned by Greens leader Adam Bandt about the bank’s participation in a $1bn refinancing of pure-play coal miner Whitehaven earlier this year.

One of Whitehaven’s planned development projects is the Vickery mine, which is mainly metallurgical coal but also has a thermal coal component.

NAB has pledged not to fund any new thermal coal project.

Mr McEwan said his understanding was that Whitehaven was a “straight out refinancing of an existing customer” and there was no inconsistency with the bank’s pledge on thermal coal.

However, he took the question on notice and said he would respond to Mr Bandt.