Lucky, Lucky, Lucky?
Flying back into Australia this morning after a short sojourn in Europe felt like returning to a fiscal safe haven and a veritable economic oasis.
The southern spring has well and truly sprung, no banks or savings institutions have been nationalised and even the normally nervy Treasurer Wayne Swan is starting to sound like an Iron Chancellor compared to some of his counterparts elsewhere.
Last month, the IMF decided that Australia was well placed to weather the financial storm.
It also commended the Australian authorities on 'their impressive economic management in the fiscal, monetary and structural areas, which has spurred a sustained and long- lasting economic expansion."
What other countries would give right now for a similarly clean bill of financial health.
To quote the great Kylie Minogue - if only to juxtapose her words against those of the big brains at the IMF - is Australia "lucky, lucky, lucky?"
At times like this, it's tempting to fall back on the old Lucky Country argument: that Australia's economic growth is almost preordained because of its rich supply of natural resources, like coal, liquid natural gas, iron ore and uranium.
Certainly, the flourishing mining sector has stimulated a massive investment boom in Australia. That also helps explains why the federal government is flush with cash at a time when other developed nations are mired in debt. The government has forecast a surplus of A$22bn (US$17bn).
Still, there's more to Australia's comparatively strong position than luck. I'm usually one of the first to have a moan about this country's bureaucratic overkill and official petty-mindedness. But the strict regulation of the banking sector is one of the main reasons why Australia has had no Lehman Brothers or Northern Rock.
It is no coincidence that of only 20 banks in the world with a top-line AA credit rating, four are Australian.
This is one of the few OECD countries which does not guarantee bank deposits. But arguably it does not have to, because the regulatory framework is so strong. As a result, the banks are sound.
"The bottom line is this," boasts Kevin Rudd. "Strong regulation, the best regulatory system in the world, strong balance sheets on the part of our banks, as well as a strong budget situation on the part of the Australian Government means that Australia's situation in this period of global financial turbulence is the best that you could have."
It would be wrong to gild the lily. Australia has its fair share of economic problems. The turbulence on the markets is a huge concern for those approaching retirement, whose pensions are bound up in stock portfolios.
Rising fuel and food prices remain a problem. Mortgage payers are struggling still with high interest rates, which the Reserve Bank looks set to drop by 0.5% next week (although the banks will not necessarily pass the full cut on to consumers).
Growth is negligible, at 0.3% in the last quarter, but predicted to be 2.7% for the year overall.
Rather like Gordon Brown, Rudd is positioning himself as a serious man for serious times. As your comments on After the Honeymoon demonstrate (see paulcrossleyiii, BrightonStevie) many of you are happy with a fairly boring leader.
Others clearly hope for an end to what some journalists have taken to calling Rudd's policy constipation.
Many thanks to klldbbydth for providing some rich historical context, and to Carlton Blue for coming up with an enviably deft line: "The honeymoon is definitely over for Kevin 747 and what have we got? Symbolism and jetlag."
Australiana also pre-empted this blog. "Well capitalised financial system, interest rates threatening to go down, unemployment rate low and apparently going nowhere, large budget surplus, summer almost upon us." Australiana, you seem to be channeling Kevin Rudd.
I'm 
© MMIX~RS~q~RS~~RS~z~RS~41~RS~)
CommentsSign in
You need to sign in to contribute to this page. If you're new to BBC Blogs, creating your membership is quick and easy.
yep Australia is economically sound so they should be able to pay for new Athletes for 2012.
PSHINOZ
Complain about this comment
Hey Oz is great place. But it ain't Eden.
No amount of brown nosing OZ will get you removed from the POM list. )))))
Once a pom, always a pom.
Complain about this comment
What I find ironic about the current situation are two things - in the US we have a Congress incapable of passing "socialist" legislation, by which I mean the bailout is structured to essentially give the US Government a slice of the banks in return for saving them (a pound of flesh like the 80% of AIG it now owns), and there is also a perverse reluctance to regulate the free market - born no doubt of ideological fervour that the market is always right.
For a nation which thinks itself the paragon of all democratic capitalist systems, I find it ironic that parochial and humble Australia seems to be proving there IS a better system and a better place than great America - some propaganda doubtless quashed over the Pond.
Secondly I find the irony of complaints re: inflation hilarious. Commodity prices even now are 2x what they used to be, which is inflationary. Our boom causes underlying inflation (whatever that is) because it is predicated upon higher prices; inflation requires higher interest rates to quash, and the previous government fueled it by giving people the money to consume more. Now its up to stodgy Mr Rudd to bunker down and teach a new generation that saving is good, and consumption without cause is crass - all the while we worry that our boom will end, and so will our lucky, lucky, lucky run. Irony.
Complain about this comment
"...veritable economic oasis...Southern Spring..."
That's great, but isn't the country going to be needing some real ones before too long? Or do I need to re-calibrate my irony sensor?!
Complain about this comment
Nick, you made no mention to the fact that Australia is in such good shape due to the 11 years of Howard and Costello and the Liberals. 11 years of growth and stability, no recssions and in doing so the removal of $96 billion of debt left by the previous Labor Party. Rudd will claim that he is responsible but the smart Australians know who really is...
Complain about this comment
arielana, your correct once a pom always a pom, but to me (at least) people like john howard appear a lot more anglophille (queens man in Oz) than Nick, judging by his comments to date.
Complain about this comment
As you correctly state Nick, Australia has been going though a mining boom. We have been going through this boom now for almost six years. With that kind of wealth our nation's highways and buildings should be covered in gold. However for eleven years prior to November last year, we had a conservative government running our country. Being conservatives, they reduced the social services once enjoyed by all Aussies, which meant the average Aussie had to spend more money for basic commodities, which led to a blowout of private debt to the value of almost $1trill. Of course the then Liberal National Government arrogantly bandied about that it was a great fiscal operator. But then we Aussies found out that ports, where the coal had to be loaded onto ships, were seriously undermanned, poor in maintenance and totally inadequate for the amount of coal being exported...it is nothing to see thirty or forty coal ships waiting off ports to get loaded. We also found the rail network was totally inadequate for the mount of coal being brought from the mines to the ports, and our highways and general infrastructure, including health, schools and welfare, were in desperate need of expansion. So what did our then Government do with all this money they made? They spent billions on advertising, telling us how great their new Industrial Relations Legislation scheme was, contrary to what every worker in the country knew first hand. Then, to win votes, they spend further billions to encourage mothers to have more babies. We now have a huge list of single parent mums, many still under 18, who are now joining the single parent benefit list.
There has been a lot of criticism, even in this blog, concerning Rudd's seeming non action. In actual fact, he has done what the Liberal Nationals should have done years ago. He has consolidated all finances, weeded out wasteful, and unproductive Government departments, set about getting professional opinions on all future policy plans, and by the time of the next budget in May, we should see us not only with very healthy finances, but with policies that can be implemented without breaking the bank.
What a lot of conservatives here in this country and in others, don't realise is that the Communist Labor days are over. We are now back to the great days of the Chifley, Curtain Labor days: Proper fiscal management, practical social programs, and equal support for employer and employee.
Good on you Kevin.
Complain about this comment
Re: 1647526. I beg to differ! Howard supervised an unprecedented resources boom yet he still set about selling off the public assets such as the country?s gold reserves etc. Howard heralded the most draconian anti workers workplace reforms.
Johnnie Howard should hang his head in shame; he pranced around pretending to care about the workers yet once elected spent his energy undermining reforms that our illustrious forefathers had put in place decades before.
He brown nosed Bush and Blair and followed the fools into the Iraq quagmire based on a lie. Rudd and Swan has kept their word, no thanks to Turnbull and his party who has practiced economic sabotage since coming to office.
Complain about this comment
Good article and interesting comments (ignoring the tongue in cheek 'Pom' stuff).
One point that often gets ignored in the 'mining boom' argument ...
Australia's success in the resources markets is not simply an accident of global circumstances. This is a MARKET like any other - you have to be a reliable quality supplier. In the 1970's Australia's record as a trading partner was appalling! Lost production due to industrial action was near the top of OECD league tables.
Economic reform - particularly industrial relations reform - by BOTH labour and coalition governments - paved the way for a world class resources sector. The much maligned waterfront reform is just example of what had to be done to improve Australia's economic performance.
Still lots more to be done though.
Complain about this comment
It's great that in Federal terms Australia is doing so well, but wall to wall Labor governments are making an absolute mess in just about all the states save for Victoria. In New South Wales where I live even the Premier basically admits we are in serious economic strife. The ex-Treasure said our economic rating is under threat, and we are in our worst shape ever.
The roads don't work here, they are over loaded, undermaintained and cost a fortune to use thanks to private toll operators.
The hospitals are understaffed in NSW.
The property prices are outrageous!
I could go on...
The boom is great but it really is not helping in some of the most basic 'quality of life' terms...
Complain about this comment
ausxtian doesn't seem to understand our taxing system here in Australia.
The taxes are raised by the Federal Government, then by means of COAG, the collection of State Goverments, which meet with the Federal Governments periodically, it is determined how much each state will get.
The primary reason the hospital system, health generally, roads and infrastructure etc is in such an appauling mess is because of 11 years of conservative Federal Governments who refused to support the States projects as per the accepted protocols.
We have only had a Labor Federal Government in power since last Nov...taking out the silly season....basically we have only had an operational Labor Federal Government for seven months.
As to tolls, they are private enterprise in the main, and are happening primarily because, again, the previous conservative Howard Liberal National Government refused to allow the states the necessary funds...hence why private enterprise lending.
Interestingly enough a COAG meeting is going on right now in South Australia I think it is.
Complain about this comment
For those who are familiar with Rudd's term as the chief public servant in Queensland under the Goss state government would know quite well the man has his limitations. Severe limitations. Lack of economic nous; unable to get the 'ball rolling'; inability to make positive decisions. Already we're seeing committees make recommendations but Rudd and his government unable to take the issues further. Remember the 2020 nonsense?
Rudd and Swan have had it lucky. They've done nothing to the financial regulatory system yet are reaping the benefits of Australia being seen to be economically sound.
Compared to Peter Costello, the man responsible for Australia's strong economic, Rudd and Swan are a pair of Economic Virgins.
And given time it will show.
Complain about this comment
Whilst it's certainly nice to be in a country without wall to wall doom and gloom news coverage. On a realistic level I don't feel any more protected from global credit woes here in Aus than I would in the UK.
I've got both savings and a loan with Northern Rock - the money (and the debt) are both guaranteed so I'm not worried about that. Here on the other hand, my industry leading 'Super' fund (to which I'm legally obliged to contribute) is making a healthy loss and I'm not even entertaining the thought of buying a house.
It seems there is a case for government regulation of the markets, I find it very hard to hand any of the credit(!) for current stability to the banks, given their high charges, poor service and limited opening hours.
Finally to echo some of the comments above - you do have to wonder where the proceeds of the present resources boom have been going. I can't believe Howard wasted it all on advertising, and taxes seem quite high too so it can't have been vote winning tax cuts (can it?). On the other hand, it doesen't seem to have been spent on roads, railways or hospitals, at least not in my neck of the woods. Maybe it all got taken out ofthe country by big business?
Complain about this comment
Aussiened gives a somewhat sanitised version of Federal/State financial matters.
It's easy for the ALP-run State governments to criticise the Federal government for not giving them sufficient funds to carry out their programmes. The answer to that is easy. Let the states raise the money they need themselves. Let them introduce a state income tax - after all they've had this power since Fraser was PM - or else a state GST.
The reason why Howard was careful not to give the states too much was because ALP Premiers are notoriously bad with finances.
Look at QLD. When Goss came to power in the early 90s, his government, acting on the advice of his principal advisers Rudd and Swan cancelled the construction of a much needed dam and saved themselves $200million which was then spent on more 'popular' projects to help him win subsequent elections. Remember Lang Park.
Now in recent years the Bligh government has had to spend $9.2 BILLION ensuring the SEQ has enough drinking water. And she's boasting what a competent premier she is!
QLD labor overspent by $9 BILLION on a project that could have been for $200 million. Economic madness.
And the labor premiers are claiming they still want more money. And the suckers still vote them back in.
Complain about this comment
Brisbaneexpom, I guess you can be excused for not knowing our history, having come from England and all.
Did you know that under the constitution drawn up at Federation, all taxes were to be the responsibility of the Federal Government.
Any taxes raised by the States are limited to specific purposes and needs, and are not known formally as taxes but excise, levies and tolls, though the media, in their ignorance, still calls them taxes.
The GST as you mentioned should have been more than enough revenue for the States, however Howard, in his cleverness, not only gave all GST raised to the States, cancelling out any criticism of how it was spent, he also transferred areas, once the responsibility of the Federal Government, over to the states. Basically giving them a huge sum of money...then imposing twice the burden, leaving the states with a short fall, and the Federal Government with a huge surplus...which they spent on Iraq, prisons for migrants...most of who were found to be genuine refugees...IR advertising, and reductions of taxes for the big end of town.
As to which party is best suited for running States, just look at the history of any State and you will find both parties are as bad as each other. Ever heard of Henry Bolte, Bob Askin, Jo BjelkePeterson, just for starters. They were all Liberal Nationals by the way.
Complain about this comment
Oz sounds like a great place, and you should
hire an army of computer hackers to go around
and removed it from all web sites - just leave
empty ocean where it was.
Then build a big navy so that if anybody stumbles
upon it, you can turn them around and head them
towards another continent.
And, by all means, whatever we Americans do,
do precisely the opposite!
Complain about this comment
Aussiened, I've been in Australia for over 40 years and am aware of Australian history and the way in which taxes are raised.
My point is that Premiers of all political persuasions like pretending to be politicians.
A proper politician accepts his duty to levy tax and then spend it.
The state premiers like spending the public's money but don't have the guts, or the skill, to go out and persuade the public that higher taxes are needed and in the public's interest. So they take the ALP way out - blame someone else for their own shortcomings.
The state premiers are 'want to be politicians' - they are self-seeking glory hunters. And the present lot are as bad as they get.
Still, lets support the federal system, otherwise the incompetent state premiers might be looking for a comfortable sinecure in Canberra.
"As to which party is best suited for running States, just look at the history of any State and you will find both parties are as bad as each other. Ever heard of Henry Bolte, Bob Askin, Jo BjelkePeterson, just for starters. They were all Liberal Nationals by the way."
You conveniently forgot the ALP leaders put away for crimes committed.
Complain about this comment
"Aussiened, I've been in Australia for over 40 years and am aware of Australian history and the way in which taxes are raised."
No generational Aussie would make such a claim.
I am 63 years Aussie, with generations on both sides going back five and six generations, including Aborigine, and I am still learning about the true history of this country.
Only a slanted history is found in what is laughingly called an Australian History Book.
As to my only quoting Liberal National premiers, this was to counter balance your claims against Labor states with no mention of the disasters created by Liberal Nationals.
Had you been more balanced in you comments, I probably wouldn't have responded.
Complain about this comment
Nick,
Like your column, but the picture of you in front of the opera house with the clint eastwood stare is a put off
Complain about this comment
Luck? Luck? I don't believe in luck, Nick. Australian banks gamble at a different table that's all, one that's been consistently paying off, but whose time is destined to come, at least until certain changes are brought about. I'll let others comment more knowledgeably on this, however I will say that it's connected to a larger idea and that is that it's hardly ideal for the Australian economy to be so dependent on mining either, a point that wasn't lost on the pre-Howard governments.
One thing Australian banks, and the services industry there in general, does have going for it, having worked both there and in Europe in banking, is a noticeably higher level of education and in my opinion, competence at the executive level.
And that resonates with the IMF commedation of the Australian authorities.
The point is, the post-war Australian public service was operated to the highest of standards and is itself responsible, more so than any government, for the things Australian society now has to offer, including educational standards.
What the IMF is hinting at is, look at Australia's public sector, in particular its professional strata, that's where you'll find what the rest of the world is looking for.
Complain about this comment
This comment was removed because the moderators found it broke the House Rules.
'The answer to that is easy. Let the states raise the money they need themselves. Let them introduce a state income tax - after all they've had this power since Fraser was PM - or else a state GST.'
I'm happy to contribute some historical context. And if you put State income tax in historical context it's pretty obvious it isn't a viable option for them.
First of all, in strict legal terms the States may re-enact legislation imposing income tax liability. However, which State wants to be the first do so? The past few years seem to show that Australians love tax cuts, so what chance does a State Government have at an election if it decides to become the first to levy income taxes since 1942?
Second of all, the established limits of Commonwealth power have expanded enormously since 1942. Many commentators believe that after Workchoices the Commonwealth can effectively control pretty much every aspect of the publicly and privately owned corporations used by the States to provide many public services (e.g. prisons, hospitals, universities, private schools to name some obvious ones). So far it hasn't, but if a State did decide to levy income tax, you could expect the Commonwealth to decide the gloves are off and start seriously pushing the limits of its constitutional power. And the High Court would now not blink an eye at a lot of the projects which were seen as constitutionally radical in Whitlam's day. What will the States spend their extra money on then?
Third of all, if a State did decide to start levying income tax, they could say goodbye to grants, which at present account for about half of the States' collective revenue.
In other words, State income tax would break the federation, simple as that. This has nothing to do with which political party is in power. Under both major parties the Commonwealth government has always zealously defended and expanded its constitutional authority.
Complain about this comment
And incidentally, the fact that fiscal federalism was less than cooperative under Howard is a notorious fact. His administration frequently refused specific purpose grants for infrastructure and other projects if the labour to be employed was anything but non-union and on AWA's.
Complain about this comment
As an outsider I'd better not pretend to understand the Australian system, otherwise I'll have Aussiened berating me.
However the arguments above seem to indicate that there is, at best, some confusion between where state and federal responsibilities begin and end, and at worst, hostility between the two levels of government.
That can't be a healthy way to run the country, can it?
At the end of the day, a certain amount of tax goes in, spending comes out and costs are incurred along the way through the machinery of government itself. Seems like we might have rather too much of the third element here.
Complain about this comment
paulcrossleyii, you are right in a way and wrong in a way about the hostility and confusion between the states and commonwealth.
This stems from the fact we used to be a bunch of separate independent colonies. Independent from one another, that is, not from Old Blighty. The confusion comes because to make a nation we had to create an umbrella of laws under a Federal banner, and one size did not fit all.
Secondly a lot of the Federal legislation was enacted and created before Globalisation, before the Internet, before a lot of tax revenues were even thought of. Integrating new revenues and responsibilities into society is where we get confused about who is responsible, and who pays.
However it is nowhere near as bad as the US system with 50 states, with 50 different sets of laws, etc.
In Oz we have been streamlining laws for the past 15 or 20 years through COAG, through the competition commission, productivity commission, etc. Red tape has been cut to the tune of +$20Bn a year in administratively needless red tape. This is one advantage we have above the US, aside from banking regulations. The process is, however, continuing, with the question inevitably being asked - do we need States AND Local government.
Complain about this comment
paulcrossleyiii hit the nail on the head with both his observations. There is considerable confusion about where state and federal responsibilities begin and end and there is hostility between both levels of government.
There is historical and political context for both.
Australia is, by definition, a federation of colonial states with a constitution that defines which level of government is responsible for what.
Unfortunately, the constitution was a political document authored by the major states who were never going to vote themselves out of existence.
Foreign affairs and trade, defence and raising taxes etc is a federal role and education, health, roads is the role of the states.
But these black and white rules never really worked for several reasons.
Firstly, the states all have overseas jaunts to raise global investment in their patch (foreign affairs and trade) and pinch major industries and events off each other to boost local economies.
And although they run hospitals and schools they love to blame the federal goverment for not funding them enough when outcomes frequently fall below people's expectations.
On the other side, successive federal governments have moved into traditional state responsibilities like health and education to win votes because everyday people don't want to know about foreign affairs policy experience at election time but about how good their hospitals, schools and roads are going to be.
Paul Keating once said as treasurer before a premier's conference (which preceded COAG and the GST) never stand between and premier and a bucket of money. (he said this when the majority of state premiers were Labor)
The other historical context is that state governments are elected on platforms of self-interest, that is to govern for Victoria or New South Wales. And a lot of that involves petty arguments with other states but always with the federal government for giving too much money to one state or ignoring another.
Many voters, myself included, believe the states which represent the continent of Australia when it was a collection of British colonies each with their own navy and railway gauge (true), should disappear because it is basically a duplication of federal government.
You are right, it is not a healthy way to run a country.
It is mindless duplication.
But because the nation is so vast, there needs to be strong model in place to allow the federal government to effectively operate schools and hospitals, etc because local needs differ so much across the nation.
The hostility is also driven across party lines.
Complain about this comment
Hi paulcrossleyiii, I promise I will never berate anyone who seriously wants to understand anything *S*
Originally Australia was a series of British controlled States. Then in 1901, a Commonwealth Government was formed to oversee those areas where States were either in disagreeance or were unable to deal with, such as defense, etc.
This was done so that Britain could deal better with Australia as a whole, rather than having to deal with a series of states, often in opposition.
After 1901 to the present time, as klldbbydth indicated, the Federal and State Governments have adjusted different portfolios so that there is less double shuffling or duplication of services. In moving towards a more Federated Australia, has come the belief that we need to TOTALLY break from British rule. Now we are an independent nation in the sense that we have our own House of Representatives, and Senate, but all legislation must be approved by the British Queen's representative, namely our Governor General.
The underlying sentiment, rarely expressed publicly, is that many who want States still want British involvement, while the Federal push wants us to move towards a Republic.
So...
Any attempt by the Federal Government to over ride a State area, faces the bro British stance, while any attempt to remove the Queen as head of state, is deemed to be a cause for destabilisation.
Not that is a very, very abrieved explanation, and there will be those that may disagree in specific areas, however I don't have all that much room to explain fully what Australia is or how we are run.
Hope this is of some help *S*
Complain about this comment
firstly thanks to Aussiened, Rolinator and Carltonblue for some exlpanation and opinions.
I think I already knew the basics (why the states have so much power and roughly where the demarkation of different issues was supposed to take place), but it's good to hear about stuff like COAG, competition between states and get some local opinion on what, to someone used to the UK system, seems a little bit of an odd way of running things.
I don't quite buy the idea that by doing away with states you encourage a Republic (and vice versa) other than that I suppose if you're going to have 2 lots of major constitutional change, why not have them at once?
What's the consensus? Do the states have too much power, not enough, just right? Also, what about local government? What are they supoosed to do? Our ever-tunnelling Mayor here in Brisbane seems to have quite a lot of power at his finger tips, when I thought all he'd be doing was emptying the recycling bins.
(Sorry for attempting to nap your job here Nick!)
Complain about this comment
One point your missing about Australia's economy is that personal debt is running at 150% of GDP and we have a current account account deficit, which is currently 6.2% of GDP.
Australians have spent a whole lot of money on flat screen televisions.
Australia is still largely a resource based economy with china as a major trading partner. This may indicate some degree of 'decoupling' from the US economy. However, If China were to be drawn into the mess in the US, the effect on the Australian economy would be severe.
Complain about this comment
Seriously you are complaining that our banking practices are better than the US.
How about getting down to the real reason for all the mess, those greedy bankers, insurance companies and the like over in the US. Seems to me they should NOT be using people tax dollars to save those jackals instead they should start a court case to try then.
Oh and leave Kevin Rudd out of the picture, you can mention John Howard and his friends in the US if you like.
Complain about this comment
Lucky? I don't think so. We're in for a hard time just as much as the US or UK is. It's just nobody wants to use the "R" word yet.
Australia's terms of trade has underpinned a crazy consumption binge underpinned by debt. Now the party is over - commodity prices are starting to ease with the international financial turmoil. Not only are the Chinese looking for resources in developing countries, which are cheaper and which are so desperate for the cash they'll turn a blind eye to environmental and safety concerns, it's also alleged they're stockpiling iron ore so they can influence prices. If so, this will mean the record prices for ore we're seeing right now won't be sustained.
Meanwhile the banks, who've loaned us all piles of foreign money obtained from the wholesale markets, have to charge consumers and businesses interest that's well above the official central bank rate. Our major trading partners save Thailand and China (thank heaven for China) are on the brink of recession. So even if we could dig more stuff out of the ground to pay down our now considerably more expensive debts (which we can't, because we never invested in infrastructure when times were good), demand for our products is set to drop, which means our export earnings will suffer.
Australia runs an enormous current account deficit - it's something like the fifth-largest in the world in dollar terms, yet there's only 21 million of us. Australia's banks imported money via the wholesale market to throw at Australians to buy garbage we didn't need and that we didn't make, so we could drive nice cars and watch big flat-screen tellies in our huge, ugly, poorly built, poorly-designed eco-unfriendly houses in unsustainable suburbs which were hopelessly overpriced and which are often a good 50 minute commute by carbon-unfriendly car from our workplaces.
As credit dries up and commodity prices fall, Australia's unsustainable private debt binge of the last fifteen years or so will hurt us deeply. Maybe we'll be in for the disaster that they're predicting will befall the US - a decade-long deflationary recession a-la Japan in the 1990s! If so, our national priority will be growth at any cost, and that'll mean the government's carbon trading scheme won't impact much on industry or consumers.
We're in for an economic and ecological reckoning.
Complain about this comment
Yes I fully agree with Tuppmeister. Even though we are weathering the storm better than most, that isn't necessarily going to be the case in the future. Eleven years of deliberate government waste while encouraging the private sector to go into inbelievable debt has left us extremely vulnerable...yet we still have these conservative idiots preventing our Labor Government from increasing the buffer against the up coming onslaught, and wanting this Government to spend, spend, spend....anyone would think the old communist Labor nuts of the days of old had joined the Liberal National conservative coalition.
This is not a time for Government to be giving out dead end hand outs...we need to build infrastructure, we need to consolidate, we need to tighten up so that we weather this mother of all cyclones we are about to face....not go sailing as if nothing's wrong
Complain about this comment
Nick Bryant!
I hope that Australia, will not go thru the financial crisis, like the "most" of the world, has gone thru!
But, the chances are Australia will go thru it. Soon..
Complain about this comment
Nick,
Compared to US and parts of Europe, Australia looks like a shiny new coin. But the reality is that we have lost more than 25% of share value since January on the ASX-ALL Ords.
Commercial interest rates are currently 2.5% above the Reserve Bank's current cash rate (ie our central bank) due to the LIBOR rate being 10 times where it is normally. Average lending rate is 8.5% per annum.
Australia is currently running a trade account deficit that requires our commercial banks to still seek out around a billion dollars every week in financing globally. So they have to still go cap in hand to New York and London to continue maintain liquidity. They can weather the storm but they are certainly not doing anyone any favours down here.
Luckily most of us are still in jobs and our lending practices are not like that of the americans who quite frankly are the greediest, and have some of the dumbest regulators on the planet.
On another note, remember the asian money market crisis in 97? The western bankers were all very critical of poor regulatory practices of Asian banks ? My how the worm has turned......
Complain about this comment
If Australia's economy is in such good shape, why is the AUD plummeting in value against all significant currecies, even the NZD?
Complain about this comment
View these comments in RSS