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Now for the good news: Telstra, banks open wallets to stave off recession

Business

Australia’s biggest companies have today jumped into the COVID-19 fray by opening their wallets to help stimulate the national economy.

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Telstra has announced it scrap its job shedding and instead hire 1000 contractors for its call centres. It will also bring forward about $500 million in capital expenditure, mostly on 5G, and suspend late payment fees and disconnections until April.

BHP said it would hire 1500 additional people to support its workforce operating across Australia, operating on six-month contracts and cover a range of skills needed by BHP operations in the short term. These jobs will support and bolster our existing workforce during this difficult time.

The roles will include machinery and production operators, truck and ancillary equipment drivers, excavator operators, diesel mechanics boilermakers, trades assistants, electricians, cleaners and warehousing roles across our coal, iron ore and copper operations in WA, QLD, NSW and SA. The jobs will be offered through existing labour hire partners and BHP contracts in each state.

Banks have also announced they will defer loan repayments for six months for small businesses that need need assistance because of the impacts of COVID-19.

The NAB has also announced home loan borrowers can defer payments on home loans for up to six months.

It will also cut 200 basis points from the rate of all new loans and overdrafts for its digital business product, Quickbiz and reduce rates on small business loans by 100 basis points.

Fixed rate home loans will fall by up to 60 basis points.

Westpac has announced a similar move and added a $10 billion home lending fund and a three month deferral on home loan repayments for those affected by the virus.

BHP also announced an accelerated payment program which was expected to deliver approximately $100 million more quickly into
the hands of small business partners.

Australian Banking Association chief executive Anna Bligh said the it was a multi-billion dollar lifeline for small business.

“This assistance package will apply to more than $100 billion of existing small business loans and depending on customer uptake, could put as much as $8 billion back into the pockets of small business as they battle through these difficult times,” Bligh said.

“Small business can rest assured that if they need help, they will get it.

“Banks are already reaching out to their customers to offer assistance and packages will start rolling out in full on Monday.”

The move follows a decision by the Reserve Bank to provide a line of credit to banks specifically so they can help small to medium business.BHP will also reduce payment terms to seven days (from 30 days) for more than 1100 small Australian businesses.

The announcements came as rare good news for the market which was also boosted by a jump in shares on the ASX which was up more more 2 per cent in early morning trade.

Brisbane’s Corporate Travel Management jumped 16 per cent after it announced it would not need to raise further capital.

Telstra chief executive Andrew Penn also said the ultimate impact from COVID-19 on its business was difficult to assess at this time.

“Like many businesses it is expected to be material and will depend on how the situation and its impact on the economy and our customers evolves,” Penn said.

He said based on the information available today Telstra’s current outlook remains within the range of its full year 2020 guidance but that outlook is at the bottom end of the range for both free cash flow and underlying EBITDA.

He said it was in the nation’s interest for every company, organisation and individual to play a part in ensuring Australia emerged from the COVID-19 downturn as strongly as possible.

“We are looking at every aspect of our business to see what we can do for our employees, customers, suppliers and the economy more broadly, while we maintain a focus on long term value creation,” Penn said.

“The most important thing is that as many businesses as possible are still here when we get through this crisis.

The said the $500 million of capex would be brought forward from the second half of F2021 into calendar year 2020. It will be deployed to increase capacity in Telstra’s network, including further accelerating the roll out of 5G and injecting much needed investment into the economy at this time.

It would also provide relief to small business and consumer customers unable to pay their bills by suspending late payment fees and disconnections until at least the end of April, at which point it will review further.

It previously announced the provision of unlimited data allowances on fixed broadband and extra mobile data for Telstra’s consumer and small business customers, and extra paid leave for Telstra employees and casuals.

“COVID-19 is having a profound impact on business across the country,” Penn said.

BHP chief executive Mike Henry said the company’s local and small business partners played a critical role in supporting its operations and people.

“We must look out for each other as we manage through this together,”  Henry said.
“BHP has also created a $6 million fund to support its labour hire companies and their employees.

“The fund will be used for one-off payments for people quarantined after entering Australia and pay for labour hire employees not entitled to sick leave but
affected by COVID-19.
“BHP spends around $1.5 billion annually with local Australian suppliers.
“The revised payment terms arrangements will take effect next week. BHP will contact eligible small business partners with more information in coming days.”

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