Sydney - Middle East Times Int’l: THE Australian Lebanese Chamber of Commerce held its sponsors’ luncheon recently in Sydney. The luncheon was a celebration by the ALCC of their sponsors’ ongoing support and commitment. Guest speakers included ALCC President Salim Nicolas and Russell Sinclair, a partner and national head of debt and capital advisory for PWC. 

Since its inception in 1985, the chamber focused on the partnership between Australia and Lebanon, and with the Middle East, to exchange culture and business practices, encourage education and training, and network for business opportunities. We have had some part to play in promoting some or all of these objectives. A partnership could be defined as two or more groups coming together to achieve a common purpose. We will continue to fulfill our objectives required in collaboration between chamber members and our many valued sponsors. In any partnership, there’s always a different skill set or quality that each member can bring to the table. 

We are extremely fortunate, in our diverse group, that we have many skills and qualities that we can share for the benefit of communities here and overseas. Without the generosity of our sponsors, we would not have successfully achieved the outcomes that we have. I would like to thank and welcome our valued sponsors and supporters. I recognise the extraordinary contribution that they made to the continual success of the ALCC.  I would also like to give thanks to our media for coverage of all ALCC events without fail. 

Money has been really plentiful, it’s been really cheap, really easy to get access to, so, the last 25 years that I’ve been working in banking it has been relatively easy for people to borrow money to service their home loan debts, to service their business debts.  So, it’s set along a strong road, also as a result of that.  We’ve seen disruptions, we’ve seen things like the global financial crisis which happened in ’06, ’07 and that made life really difficult for people, it was hard for banks to get money to lend out to other businesses.

And that was unlike a normal recession that followed that, it was more of an ability to access that money. We saved a lot of the economy by really strong commodity proces.  So, remember the handouts given by the government, iron ore prices going up, budget surplus, we had Peter Costello and John Howard being really, really, generous with the handouts that we all received. We spent that and that kept the economy going for a long period of time.  Now we’re in this current phase where there’s been a lot of things sort of hit us.  When I go back to think about when covid first hit there was a real concern about what we thought the banks would do and we were concerned that they wouldn’t help people in trouble. And they did, they set it up, they did the right thing. The banking community, at that point in time, became concerned about people’s ability to repay their debt, they stepped in, and they did the right thing. And government encouraged that as they sat down and talked to the major lenders. They also helped by lending money and giving access to cash.  So, the banks have borrowed roughly $275 billion from the government in something called the Term Funding Facility.  So, banks got access to free cash and they’re putting it into the economy to help us all get through what was a tough period. 

The government put lots of money into people’s accounts, lots of handouts, if you can have a look at today and see what the net position of people across Australia is, they have more savings today than they’ve ever had before. And now we’re starting to see, when you put too much money into the system and people have access to cash, eventually prices go up, so, we will start to see the impact now. Now the response to that from the RBA was an increase in interest rates and they’ve done that really, really quickly. That starts to put real, real pressure on people. Most people, when they’re buying their houses, have been borrowing up to 7-8 times their income on their mortgage. So when interest rates rise more than 3 percent, the cost of serving that debt to people is higher than it has ever been in the history of Australia. People are still spending money today. Why is that?  I think a lot of it has to do with, at the moment, fixed-rate mortgages.  People have been borrowing money, sub 2 percent, for home loans.  That may start to come off next year, and that’s when I think that’s when we’ll start to see the interest rates dive.

You will see that the reserve bank will, quite quickly, decide to drop rates back down again.  We’re starting to see a little bit more positivity come back in, into the economy.  So, for me, it doesn’t feel like we’re going to have like a recession, a lot of negativity around the economy, about where it’s going.  We’re actually really positive about what people are doing and how they’re spending money, but I do think an opportunity will come in a little while.  When I think about it, the business, what I do at the moment and where our activity comes from, it’s historically comes from two things which is, you know one business buying another one or a business investing significantly in its payments.  Like a new factory or something. That is still active, and that is a big part of what we do, the third part which I’ve not seen for a long period of time is they think about what could be happening in their business and about the interest rates going up. I’m saying that you know the ratio of your debt and your interest cover isn’t strong enough. So they’re the things that we’re struggling with now, looking down the track to take advantage or make sure that their business is safe.