Article from: Australian Associated Press THE federal Government has introduced draft laws in Parliament to set up a $4 billion contingency fund with the four major banks to refinance commercial properties if money from foreign lenders dries up.
The commonwealth will hold a 50 per cent share in the $4 billion Australian Business Investment Partnership, while the four major banks - ANZ, Commonwealth Bank of Australia, Westpac and NAB - each will take a 12.5 per cent share.
The Government would provide $2 billion, while each of the banks would supply $500 million.
The partnership would be able to issue up to $26 billion in debt if additional financing beyond the $4 billion was needed.
But it would only be able to issue debt with the unanimous agreement of all shareholders.
The debt would be government-guaranteed and would attract a fee on a sliding scale of up to 150 basis points.
Finance Minister Lindsay Tanner said the partnership would only fund commercial property where the underlying assets, and income streams from those assets, were financially viable.
He said the partnership may consider financing projects such as retail shopping centres, commercial office buildings and industrial property.
Property outside Australia, land banks, speculative development assets and rural property would not be financed.
“It is not the intention of the four major banks that have put their funding into ABIP, nor is it the intention of the Government, that ABIP will support problem assets,” Mr Tanner told Parliament.
The Government would wind up the partnership if credit markets improved, he said.
“The establishment of ABIP is another government initiative to insulate the Australian economy and protect Australian jobs from the impacts of the global recession.
“This initiative is a contingency measure that the Government is putting in place to address liquidity problems in the commercial property sector should they arise.”
Debate on the Australian Business Investment Partnership Bill 2009 and related bill was adjourned.
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