NAB Group CEO, Ross McEwan – 2GB, The Ben Fordham Show
BEN FORDHAM: Our economy is copping a beating. We're in recession, household debt is massive and government spending is through the roof. One of the best ways to get business out of all of this is for all of us to start spending again, including business. That's what the Treasurer wants, that's what business leaders want. So how do we get businesses opening their wallets? Private investment has fallen to a 20-year low. It's down by 15 percent this year. Well the boss of the NAB, Ross McEwan has come up with an eight-point plan to save small and medium business. It includes eight areas of reform to get business spending, including making sure that small businesses get paid faster, making it easier to hire new workers and slashing regulation and red tape. The chief executive of the National Australia Bank Ross McEwan joins us live. Ross McEwan, good morning to you.
ROSS McEWAN: Good morning Ben, Good Morning.
BEN FORDHAM: We need to give it a bit of a jolt at some stage, don't we?
ROSS McEWAN: We certainly do. When you have a look at the facts 99 percent of all Australian businesses are small medium sized businesses. Two out of three of us work in a small medium sized business. 56 percent of all production in Australia comes from the small medium sized businesses. We need to make it easier for them.
BEN FORDHAM: I'm guessing the sad news is a lot of them won't make it.
ROSS McEWAN: Look, we've get about 10 percent of our businesses that are on deferral at the moment. I'm not saying they won't make it because a large number of them will but it is a sad state when you go through towns, cities today at the moment when you're seeing things boarded up. They're taking a hit at the moment. It's really tough for particularly some of those high street retailing operations, yet others are doing very, very well if they've changed their model.
BEN FORDHAM: Once these businesses are off life support they're going to need help to grow again and you point out that if we could make sure small businesses get paid faster this would be a good start. I want you to talk about that because this is something that has been shared with me time and time again from people running small businesses. If they could get paid faster that would make a big difference.
ROSS McEWAN: Absolutely. Look, we've run a policy of making sure our small businesses get paid within 20 days, not the 30 days that the report recommends because they need cash flow. If they've got that cash flow in their businesses they can put it back to work rather than it being an overdraft or having to pay some sort of line of credit. They can get it back into work and get going again with their businesses and grow them.
BEN FORDHAM: Others are waiting a lot longer than 30 days.
ROSS McEWAN: They are.
BEN FORDHAM: What could we do to legislate this to make sure that people get the money in the bank sooner?
ROSS McEWAN: Look, that is it. It's got to be legislated that people have to be paid, small businesses within the 30 days, that's the requirements and we should get on with it. Larger businesses should make it their policy, just as we have, and even cut it down to the 20 days wherever they possibly can. The lifeline of small businesses is their cash flow.
BEN FORDHAM: We're speaking to Ross McEwan the chief executive of the NAB. You found that small companies are wasting time and money on compliance instead of getting on with the job. It would make a big difference if we could do something about all the regulation and all the red tape.
ROSS McEWAN: Can I just give you one little example that came out of our case study. It was an IGA store and they're all over the place. They're lovely stores that look after the community. They had a worker in there who was a part-time worker working 14 hours a week yet they were on five different pay rates within that 14 hours. That's just got to be ridiculous. This is the complexity that our SME, small businesses are having to deal with. Setting up a new employee can take them up to 18 hours to go through all the legislation, occupational health and safety activity. All there for a very good reason but it's been compounded year after year, decade after decade and now the poor old small business owner taking 18 hours, up to 18 hours to get somebody on board and do it properly. It's too complicated for them. They want to get on and run their businesses.
BEN FORDHAM: That's another one of your suggestions, make it easier to hire new workers. If you slashed the 18 hours that'd be a start.
ROSS McEWAN: Absolutely. I mean it's fine for big businesses, we're used to it, we've got people who are doing it all day. But if you're a one-person owner of a business and you want to take somebody on, spending 18 hours trying to get that sort of thing sorted out, you've just lost a lot of your income in that week, or you're doing it on your Sunday when you want to be with your family.
BEN FORDHAM: All right. Let's focus on something positive because we need a light at the end of the tunnel. The NAB home loan customers who deferred, how many of them have now come back? How many of them have now said, "Okay, we're ready to start paying our home loans again"?
ROSS McEWAN: We're doing check ins and about 16 percent of them have already started getting back on their payments, which is a great thing. We want customers getting their debts down. That's great interest to them as well. It's about 16 percent already have started. You've starting to see the economies where the virus is under control, you know, coming back into life again. It'll take some time, it's fragile, but I think you're just starting to see some of these economies getting going again.
BEN FORDHAM: The Commonwealth Bank boss Matt Comyn is upbeat about our economic recovery. Do you share that optimism?
ROSS McEWAN: I'm probably more cautiously optimistic because I think the economy is taking a beating at the moment. You've seen the issues in Victoria and across in New Zealand who thought they'd beaten it, and all of a sudden, they're back into a stage 3 lockdown and Victoria's stage 4. I think this will be a patchy recovery but we'll get there, and we're thinking 2022 is when the real recovery will start.
BEN FORDHAM: Okay, so you're kind of leapfrogging 2021, that's a worry.
ROSS McEWAN: Well, it's 15 months of what we're seeing at the moment. This virus, we've got to find a vaccine for it and that's the real pass through at the end of the day, and until then unfortunately it will be a sort of a bit of a stop and start until we get it under control.
BEN FORDHAM: Ross, thanks for coming on this morning.
ROSS McEWAN: You're welcome Ben, thank you.
BEN FORDHAM: Ross McEwan, Chief Executive of the National Australia Bank.