Australia is now in a white collar recession!

Australia is now in a white collar recession!

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The “world’s greatest treasurer” Wayne Swan rejects nation’s ‘low productivity’ tag by declaring that Australia punches above its weight in the global productivity stakes, while attacking critics who blame slow productivity growth on Labor’s workplace laws. In a startling revelation, he declared that Labor had long term policies in place to deal with Australia’s productivity slump. These included skills and education reforms, the National Broadband Network and putting a price on carbon. Wayne, productivity needs ailing infrastructure to be remedied to bring it into the 21st Century.

My point was further highlighted this week when key infrastructure projects at risk as funding dries up – yes Infrastructure Australia is evaluating projects however there is no money to fund them. So the Australia economy is not going anywhere soon – actually it is being grossly mismanaged by a government that has absolutely no idea about fundamental economics. Australia may be (currently) the 13th largest economy in the world with population ranked at 52 – however productivity is on a grand scale decline.

This week I wrote for Property ObserverGovernment changes and interest rate cuts needed to fight Australia’s white – collar recession. Productivity growth has been weak in recent years, which has lowered Australia’s potential growth rate. Our estimates suggest potential growth was 3.5% to 3.75% for 2000 to 2005, but it is closer to 2.5% to 2.75% now. Without a pick up in productivity, Australia will probably have to accept lower GDP growth, higher unemployment and higher interest rates.

BUY PRINT

At the Australian Business Economists’ breakfast this week the “world’s greatest treasurer “declared that his May budget will contain very little new spending and heavy cuts to existing programs as the Gillard government attempts to balance the budget by June 30, 2013. Australia’s tax proportion of gross domestic profit has fallen from a peak of 24.2 per cent prior to the Global Financial Crisis (GFC) to 20 per cent. A horror budget ahead for eastern states where the Gillard government is cutting spending locally, yet maintaining expenditure outside Australia. Work that one out!

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The Reserve Bank of Australia (RBA) meets next week so let’s hope it takes an axe to its cash rate. It needs to be cut by 100 basis points to get the economy going again so let’s see if we’re in charge: RBA says it still rules over rates. It is all very well to read that worst of eurozone crisis over, says ECB although it is very clear that the Australian economy is now double-dipping.

It is pretty clear as NSW Treasurer; Mike Baird sets out emergency plan for next economic downturn as the prospect of a global financial shock that would threaten to tip NSW into recession has sparked an emergency plan to pump billions of dollars into key infrastructure projects to stimulate the economy. So why then, is Infrastructure Australia being told that there are no funds available for allocation for urgent infrastructure projects?

Little wonder that Peter Costello aims for Queensland triple – A, after being named head of a budget audit committee. The RBA meeting next Tuesday is without a doubt right up there with one of the most crucial and important in the bank’s history. John Symond urges ‘out of touch’ RBA to cut rates or borrowers will burst like tomatoes.

The JPMorgan, Fujitsu Australian mortgage industry report announced this week that property market undergoing seismic shift by declaring this once –in-a-generation shift has left debt -weary buyers opting to sit on that proverbial property fence. Australians today are now paying down mortgages at the fastest rate since the peak of the GFC.

Interesting to note that again Mosman house volumes for sale keep diminishing (as I predicted) with sold properties out – pacing new listings.

    MOSMAN – 2088

    • Number of houses on the market last week– 130
    • Number of houses on the market this week – 126
    • Number of apartments on the market last week – 108
    • Number of apartments on the market this week – 104

    CREMORNE – 2090

    • Number of houses on the market last week– 16
    • Number of houses on the market this week – 15
    • Number of apartments on the market last week – 27
    • Number of apartments on the market this week – 26

    NEUTRAL BAY – 2089

    • Number of houses on the market last week – 18
    • Number of houses on the market this week – 16
    • Number of apartments on the market last week – 57
    • Number of apartments on the market this week – 53

Source: Domain Property Monitors

For this week’s sales in Mosman real estate, Beauty Point real estate, Clifton Gardens real estate, Balmoral real estate, Cremorne real estate, Cremorne Point real estate, Neutral Bay real estate, Cammeray real estate
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Queensland tsunami is headed for federal ALP as Julia Gillard’s party is just about over as Labor routed in Queensland. Federal Labor MP’s were quick to point out that it was a Queensland thing (which is rubbish). It was all about the Labor brand and economic management.

Australians are saving not spending – let’s hope that the Wayne Swan’s appointed RBA board recognise this when they meet next week.

My advice to the RBA – slash the rate and cash- in! Wayne Swan’s foolish surplus fetish where no Australian government has ever proposed such a huge withdrawal of spending from the economy.

I will make a couple of predictions.

The cash rate will be 3.75 per cent next week and Wayne Swan will be seat less after the next election. Highly unlikely his next career will have anything to do with economics.

Cheers ^__^

One Response to “Australia is now in a white collar recession!”

  • Ann says:

    I am positive the RBA Board will reduce rates next week. They have been given the message and if they want to be considered for reappointment, they will jump to Swans’s signalling.

    Stunned with Gillard’s reaction to Queensland, it is what she said to the word after NSW election. Exactly the same spin sheet was printed, twelve months apart.

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