Australia’s endeavor to relieve commercial property sector is admirable

Even if any country has free market or laissez-faire capitalist economy, the State plays a crucial role at times and has to come to the fore to save the sinking businesses during urgent situations. The same is also happening in Australia, which is known as the emblem of laissez-faire capitalist economy, according to indices of economic freedom. What is the role of the State therefore? It has been learnt from the annunciation of Australian Prime Minister Kevin Rudd that a A$4 billion (US$2.6 billion) together with country’s four major banks will be there to help commercial property investors to avert the ongoing crisis and refinance foreign bank loans they are unable to roll over as well.

There is no doubt that Australia is also facing the brunt of the global meltdown, especially the commercial property investors and this latest approach of the State is indeed notable. However, it ought to be mentioned, that the international credit markets have come to a halt almost and the Australian Prime Minister had already stated, in this regard, that the foreign banks might be disinclined to lend into smaller markets like Australia, which would make it hard for an assortment of companies even to exist, not to speak of the struggle in refinancing their loans.

Speaking on this Rudd said in a joint statement with Treasurer Wayne Swan, “This $4 billion partnership is a temporary contingency measure to provide liquidity support to viable major commercial property projects in Australia.” “The partnership will support the commercial property assets of viable Australian businesses which, without financing, would be forced to retrench thousands of employees.”

What would have happened had there been no introduction of 4 billion partnership? There would have a been a devastating effect of the financial downfall, resulting into weak demand and the tight availability of credit, on the job sector, in particular in the commercial property sector, which employs about 150,000 people.