Bank rethink story flawed: Guild

Pharmacy Guild executive director David Quilty has written to the editor of The Weekend Australian, following claims banks could change pharmacy lending behaviour as a result of the long-awaited King Review.

The article quoted Ferrier Hodgson pharmacy sector Luci Palaghia, who told reporter Sarah-Jane Tasker that banks had an exposure to the pharmacy sector of over $3 billion.

In the event community pharmacy was deregulated, Palaghia told The Weekend Australian, banks might “think twice about the level of their exposure,” potentially putting some pharmacies under significant pressure.

Banks are currently lending up to 75% of the valuation of a business, she said; a change from five or six years ago when they would lend up to 100% based on perceived security in the sector.

But the article intimated that ownership rules were currently under review alongside the location rules and those governing remuneration, opening with the sentence, “The deregulation of the pharmacy sector that the government is considering could prompt banks to review their $3 billion-plus exposure to the sector, putting the future of small operators in doubt”.

A Guild spokesperson told the AJP that Tasker’s article contained a significant problem.

“The weekend story in The Australian incorrectly implies that the Pharmacy Remuneration and Regulation Review  is empowered to review and make changes to regulation around pharmacy ownership,” he says.

“In fact, pharmacy ownership is covered by State and Territory legislation and is outside the ambit of recommendations to be made by the Commonwealth Review Panel.”

Quilty highlighted this in his letter.

“Inaccurate claims in ‘Chemists face bank rethink’ (Weekend Australian, 7/5) must be refuted,” he wrote.

“The Government is not considering deregulating pharmacy. Both the Prime Minister and his Deputy recently reaffirmed in writing the Coalition’s commitment to the pharmacy ownership model.

“The Leader of the Opposition did likewise in a recent meeting with pharmacy leaders.

“Pharmacy remuneration and location rules are locked in until mid-2020 and the Pharmacy Review cannot make changes, only recommendations confined to areas of Commonwealth responsibility.

“Given these facts, it is both baseless and irresponsible to claim that pharmacy deregulation is almost inevitable resulting in banks revisiting their lending practices.”

“Ownership rules are not the subject of this Review,” Palaghia told the AJP. “Only location rules and pharmacy remuneration will be looked at as part of the Review.”

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