Commercial property sector leaders have welcome a Rudd Government plan to establish a $4 billion commercial property assistance fund in conjunction with Australia’s big four banks.
The banks and the Government are worried about the potential for mass dumping of commercial property assets if owners are not able to secure alternative funding for about $80 billion of debt that falls due over the next two years.
The newly-created Australian Business Investment Partnership between the banks and the government would provide funding for commercial projects in the event that lenders – and particularly foreign finance groups – withdraw from the Australian market.
The banks will put in $500 million each while the Government will stump up $2 billion.
But while industry leaders such as Westfield founder Frank Lowy have praised the plan, former banker and Future Fund chief David Murray has questioned the effectiveness of the fund and wants conditions put on the property to ensure the Commonwealth is not caught out by big costs.
Opposition leader Malcolm Turnbull says the commercial property market should be “allowed to take its course”.
But Finance Minister Lindsay Tanner says the fund will help protect jobs in the construction sector, one of Australia’s biggest employers.
Tanner has also told the Australian Financial Review that tight controls will ensure only worthwhile projects receive support.
“This funding will only be available for completed or partly completed projects, and can only be provided if all four major banks and the government agree the project remains creditworthy.”