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NAB CEO warns of ‘crushing’ hit to confidence if state borders stay shut

Mr McEwan pointed to the economic potential for domestic tourism – highlighting that in pre-COVID times there were more Australians holidaying overseas than there were foreign tourists in Australia.

“If we could find a way of getting our borders open and let people have their holidays in Australia, that makes up a lot of tourist dollars that are not in this country today,” he said.

NAB is forecasting unemployment will peak at 10 per cent in the March quarter next year and remain at 8 per cent until the end of 2021. These forecasts were premised on borders opening by the end of this year and more stimulus from the government. If borders stayed closed, the modelling’s results would be “significantly lower,” he said.

Mr McEwan appeared after Westpac chief executive Peter King also told the committee the economy was facing the challenge of weaker household consumption and business investment.


“That’s the big thing about the outlook … How do we get consumers positive, how do we get them spending?” Mr King said.

Mr King said Westpac expected house prices would fall by slightly less than 10 per cent from their peak, and about 3 per cent of those falls had already happened. The market would be supported by low interest rates, well-capitalised and funded banks and lenders giving customers more time, he said.

Mr McEwan said NAB’s latest forecasts for the housing market pointed to house price falls of between 10 and 15 per cent, mainly in the biggest cities.

He highlighted the risks in Melbourne, saying the city’s real estate agents had effectively closed because of COVID-19 restrictions, which raised the risk of a rush of people trying to sell properties when the market re-opened.

“The danger of that is when it does open up, and you’ve got a number of customers who are wanting to get out, what happens to the pricing? And if we’re not careful, we’ll have a lot of people try to get out of the market place in a very short period of time when it does open up.”

Both banks made it clear they were preparing to deal with more struggling business and home loan customers next year as government support is unwound.

Mr King said the number of staff in areas that deal with mortgage or small business customers who need extra help had increased from 1000 to 2500 this year. Mr McEwan said NAB had doubled the number of staff that deal with businesses in difficulties, in anticipation of higher insolvencies next year.

It also emerged on Friday that Suncorp was cutting up to 550 jobs nationally as part of a previously announced restructure. The Finance Sector Union slammed the cuts, which the bank said were part of changes to its operating model announced in July.

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