Many economists and finance commentators were concerned that the recommendations of the Hayne Royal Commission into banking would lead to further restrictions on credit availability with adverse consequences for the economy. Thankfully the recommendations seem pretty benign, nothing that the industry can’t adapt to, although many mortgage brokers may suffer a significant drop in earnings owning to the recommended removal of trailing commissions. I noticed that Shane Oliver from AMP is being quoted in the AFR that he doesn’t expect the Royal Commission recommendations would lead to any further restrictions on credit availability. We can be thankful for that given the continuing decline in residential building approvals in December 2018 (e.g. see plots below based on the latest ABS estimates released today), which has alarmed at least one highly regarded commentator, Pete Wargent, who in his post today Building approvals point to recession? astutely observed:

No way to dress this up, with the leading indicators of both money growth and building approvals pointing towards weaker or even recessionary conditions over the period ahead (Australia can often dodge technical recessions due to its population growth, but let’s face it, these are quite dire indicators).

Regarding the Royal Commission, you may be interested in my colleague Nick Behrens’s observations on its relevance to small businesses:

QEAS response to the Financial Services Royal Commission

I’d also recommend you listen to CCIQ spokesman Dan Petrie’s insightful and entertaining remarks to Steve Austin on his 612 ABC Brisbane Drive program this afternoon (from around 1:10:35). Dan notes how hard it is for small businesses to get finance from banks unless business owners mortgage their own properties. He suggests, with his tongue only partly in his cheek, that it may be easier and cheaper for many small businesses to get finance from Hong Kong than in Australia. Excellent commentary Dan.