Liberal MP Jason Falinski warns government to be careful in design of $2 billion fund for small businesses

Jason Falinski warns the government will have to be “very careful” in the design of its $2 billion fund for small businesses.

Jason Falinski MP in the House of Representatives Chamber, Parliament House in Canberra. Picture Kym Smith

Liberal MP Jason Falinski has warned the government will have to be “very careful” in the design of its $2 billion capital injection into the small business market.

Mr Falinski said the Australian Business Securitisation Fund, announced by Treasurer Josh Frydenberg yesterday, would have to be carefully designed to prevent the market being flooded with bad debt because businesses cannot pay back their loans.

“It is without doubt we are going to have to be very careful in the detail because we are using taxpayer money to do this. It is government guaranteed,” Mr Falinksi told Sky News.

“You don’t want to be in a position where you are writing a blank cheque for financial institutions to be out there selling debt into the small business market without us having the proper checks and balances in place to ensure that we are protecting taxpayer funds when we are doing that.”

“You want to make sure that whatever debt is being provided to small business is being provided to commercial organisations on commercial terms. Now that doesn’t mean some will not fail because that is the nature of business. But we have learnt a lot from the UK example in this area.”

Mr Falinski said the government had to intervene because “market failure” in the lending market had made it difficult for small business owners to secure capital.

The fund will buy bonds packed with small and medium sized business loans that are sold to investors by regional and nonbank lenders.

The government’s intervention is expected to lower the cost of borrowing for small enterprises, which have been stung by high interest rates over the past decade, sapping the economy of much-needed credit for firms to expand.

The Australian has spoken to several Liberal MPs who are dismayed at the proposal, arguing it was too interventionist.