Small business bank deposits surge, taking lessons from Great Depression: ANZ CEO Shane Elliott

Small businesses have been spending less and saving more money to combat ongoing lockdowns, ANZ chief executive Shayne Elliott says.

With shopping restricted during lockdowns, consumers and SMEs have hoarded their cash. Picture: AFP

Businesses are “socking away” cash at “unprecedented levels” as they become more cautious over ongoing Covid-19 lockdowns, ANZ chief executive Shayne Elliott says, drawing parallels to how the Great Depression “scarred people for life”.

As more than 11 million Australians are yet again locked down to limit the spread of the highly ­infectious Delta variant in the country’s two biggest cities, Mr Elliott said increased savings would have a “slightly negative” impact on the national economy.

While he called for more Australians to be vaccinated, he did not support the idea of enticing people with free beers and lottery tickets – saying ensuring health and wellbeing and a return to some kind of normality should be incentive enough.

His comments come as the big four banks step up financial support for customers, particularly in the harder-hit lockdown areas such as greater western Sydney, and Victoria’s shutdown is expected to last longer than its initial five days.

“Over the last year, on average, small businesses and consumer customers have been socking away huge amounts of cash into bank deposits – bank deposits have surged over the last year,” Mr Elliott said.

“What’s interesting is a big chunk of that has been from small business, partly out of fear and just being prepared for the future – they’ve been saving a lot of money. It’s a cliche but it’s a bit like our grandparents and great grandparents who grew up in the Depression – that sort of scarred them for life.

“There will be a lot of small businesses who will be the same. They will always be a bit cautious and always want to have a bit more money in the bank, and be more careful about the way they run the business. In the long run, it may well have a slight negative impact on the overall economy.”

In the year to March 31, ANZ’s small business deposits surged 25 per cent to $54.6bn compared with the previous 12 months.

Mr Elliott said small businesses saving at an “unprecedented rate” had put them in a stronger position than during last year’s lockdowns, particularly Melbourne’s 140-day stoppage.

“People start to eat into those savings to survive through this period and so mentally people are in a better position in the sense of being prepared,” he said.

“They would have been … building their savings buffers in case something like this happens. So I’m a little bit more optimistic.

“What we’ve seen now time and time again both here in Australia and globally is once these lockdowns finish the economy bounces back really fast.

“And so if you look through it all, the impact on the economy is not quite as bad as people fear. It bounces back really quickly.”

ANZ chief executive Shayne Elliott: ‘Over the last year, on average, small businesses and consumer customers have been socking away huge amounts of cash into bank deposits.’ Picture: AAP

But NAB chief executive Ross McEwan said while increased saving provided businesses with a “robust base”, lockdowns were still economically damaging, so the bank had stepped up its support to customers.

“We’re seeing very strong deposits of businesses and in individual deposits as well. That’s come through in the past 12 months as people have been restricted on what they can spend their money on,” Mr McEwan said.

“For quite a period of time in areas like Victoria there has been no travel to work, no Thursday night drinks or meals on Friday. There’s been a lot of savings built up and it’s the same in business accounts.

“But there is damage being done when we lock down these major cities to CBD businesses, and you do notice that as you go through cities nowadays. A lot of sites are up for lease … there is damage being done.”

NAB and ANZ have joined other big businesses in exploring ways to get more of their employees vaccinated after Treasurer Josh Frydenberg launched a call to action at a roundtable earlier this month.

This includes tapping into ­seasonal flu vaccine providers to cover Covid-19 jabs. But Mr Elliott said there was a “reasonable amount of bureaucracy” to work through, given different vaccines were recommended for different ages and stored at different temperatures.

With companies such as Tabcorp offering to run a national Covid-19 vaccination lottery to entice more Australians to get the jab, Mr Elliott did not support the idea of offering incentives.

But he backed the idea of vaccine passports to allow people to return to major events like football and the theatre. One of the reasons the Delta variant spread across Melbourne and as far as Barwon Heads in regional Victoria was that an infected person attended the Geelong versus Carlton match at the MCG.

“In France they are putting into place vaccination certificates on your phone – so if you want to go to the football, theatre or wherever, you’ll have to register – sort of like checking in – that you are actually vaccinated,” Mr Elliott said.

“Things like that actually give a very material benefit. I think most people would understand that.

“And if you don‘t, for whatever reason, choose to be vaccinated – it’s your choice.”

Mr McEwan also backed the idea of vaccine certificates.

“The only way to return to freedoms is vaccination. We are seeing lockdowns because we don’t have the immunity that other countries are starting to build up,” he said.

“It’s interesting looking at a full crowd at Wimbledon the other day. They had restrictions on people that were not vaccinated. They weren’t allowed to go into those areas.

“That’s what we need to get to here in Australia. We need to reward those who are prepared to have the vaccine to get back to normality.”

CBA chief executive Matt Comyn agreed vaccination was the only way to end lockdowns.

“CBA will support this in any way possible … for our people and their families as soon as more supply becomes available,” Mr Comyn said.

“As part of encouraging our own people and their families get vaccinated, we had an infectious disease expert answer questions live last week. We will continue to co-operate with governments to provide assistance in any way that is helpful.”