Otherwise more people, especially women in part-time jobs, would be laid off, he said.
Sources familiar with the bank meeting said Dr Lowe said while the economy was recovering well and liquidity was strong, he was a worried about a second-round effect in which demand could dry up. As well, he flagged concerns of a second wave in unemployment as companies restructured their operations, similar to the decision by Qantas on Thursday to shed 6000 jobs.
Sources familiar with the meeting also reported that Dr Lowe, while expressing no concerns about a credit squeeze, encouraged the banks to keep lending and reminded them of the $90 billion special funding facility the central bank set up at the start of the crisis.
The facility, which offered banks funding at a concessional rate of 0.25 per cent to assist small businesses and help with their own margin pressures, has hardly been accessed.
Also participating in the meeting were the chief executives of the big four banks, as well as Bendigo Bank’s Marnie Baker, Treasury secretary Steven Kennedy and APRA chairman Wayne Byres.
Mr Morrison sought details from the banks as to the take-up of some of the support measures already announced, including any loan data related to the $688 million residential construction package, and the turbocharged instant asset write-off scheme for business.
As of a week ago, the banks had deferred loan repayments on 779,458 individual loans worth $236 billion. This includes 216,000 business loans.
The banks have already indicated they are willing to extend loan deferrals beyond the original six-month period offered to customers in need of ongoing support, but only on a case-by-case basis after a detailed analysis of particular customers’ circumstances.
APRA is considering whether to extend leniency to banks on loans deferred beyond September, which would provide comfort that repayment holidays can be extended without triggering capital penalties.
As Finance Department figures released on Friday showed the budget deficit to be $65 billion for the 11 months to the end of May, Mr Morrison pointed out the government’s ability to keep spending in the “next phase” was limited.
“We had this phase of six months,” he said of the period from March to October in which the emergency measures applied.
“There will be another one beyond that. We also have to be mindful of the resources available to do this task.”
Speaking after a meeting of the national cabinet, Mr Morrison said he had enlisted the support of the states for an extension of the industrial relations exemptions. The government hopes the states will help lobby federal Labor to extend the provisions.
