The interest rate cut by the Reserve Bank of Australia (RBA) provides significant opportunities for Australian small business. I urge all banks to pass on the cut in full for these benefits to be realised.
It is in the interests of all Australians for small business and family enterprises to succeed. As the engine room of our economy, thriving small enterprises are the key to building a strong, more prosperous economy and creating jobs. This is why creating the very best environment for small business formation and growth is a critical component of the Commonwealth Government’s Economic Action Strategy.
The decision by the RBA to reduce the cash rate by 25 base points to 2.25% is reflective of the Government keeping inflation low. It increases the opportunity for small businesses to start and to grow by providing access to more affordable credit.
Small business owners with a $200,000 residentially-secured small business variable loan at a typical rate of 7.10%, for example, would save around $500 a year. Small business owners with a $50,000 small business unsecured overdraft loan at a typical rate of 9.3% would save $125 a year.
For some entrepreneurs, this could contribute to them realising their dream of starting their own business. For existing small businesses, the pass through of the rate cut will free up funds so they can focus on growing.
A 0.25% interest rate reduction is also good news for families, putting an extra $750 a year into the pockets of a typical Australian family with a mortgage of $300,000. The interest rate cut, a fall in petrol prices and the removal of the carbon tax are reducing the cost of living for Australians.
While there are always competing household budget priorities, we encourage citizens to consider using some of these savings to support their local businesses by shopping small and shopping locally.
There really is no substitute for customers. By spending a small amount of money at local business on a weekly basis, all Australians can support the success of small businesses and family enterprises.
I look forward to continuing to work with my colleagues on repairing the budget, building a strong, stable economy and creating jobs for ours and future generations.