Money News 31.10.2017

3 Comments

1. 

   andrew ronan
   November 7, 2017 at 3:35 pm:

   Your exactly right Roger, our country’sl long term interests are misaligned with the politicians interests due to the short election cycle, unpopular but necessary decisions ensure a quick end to your political career, just ask Campbell Newman who cut into Queenslands bloated public services and tried to control debt, he was quickly shown the door. This system punishes responsible stewardship and rewards sugar fix spending to the long term detriment of the economy. The other big Elephant in the living room is regulation which is a much bigger problem for small businesses and startups and to be realistic about things, the tech industry is great but in reality most startups are not in tech but normal run of the mill businesses like mine which services the construction industry, I am constantly frustrated by regulation to do with every aspect of my small business and it’s easy to see how regulation snuffs out small business before it gets a chance to even start, for eg my friend runs a medium sized business and employs a couple of officers to deal with compliance for approx 20 staff so about %10 of his staff purely for compliance. My father and son business has to deal with very much similar compliance issues but cannot afford to employ an officer as it would amount to 1/3 of the wages which would be the end of the business. I must hold over 20 certified competencies in order to run my small business they must be constantly updated/audited/recertified it’s really quite insane and I am forever finding that I’m non compliant with something because of a recent change in regulation or lapsed certificate. I have certified audited systems to do with quality and safety etc that I’ve never read and I know most other people in the industry are the same. We get by and make a living doing what we know works, but experience and track record mean Zero in this whirlwind of very important pieces of paper yet it is the only thing that really matters when delivering the end product. I’m not sure but I suspect to the the average Asian small business compliance is a non issue. Hence growth.

2. 

   Brett Edgerton
   November 3, 2017 at 5:57 pm:

   (I wrote this 2 days ago and decided not to post it – not wishing to be seen as “alarmist” – but after the retail sales release today, and now John Fraser’s comments, thought it might be a worthwhile contribution)

   Roger, wondering if you have had any feedback on Brisbane of late?

   I was at a small suburban shopping centre 8 kms south of Brisbane CBD that has 5 or so restaurants, and 2 fish and chips takeaways as well as several chain takeaways, at 7.15 last Thursday picking up some takeout… Two cars in the 30-odd capacity car park in front of that particular restaurant (and a normally busy fish and chips + another restaurant)!! Yes, there was a storm around but nothing out of the ordinary for Brissie this time of year – I typically hate parking at this centre because it’s pokey and difficult to find a spot – at least it used to be!

   Been going to the restaurant for 15 years so know the owner well. He was complaining bitterly about business – said last year was bad, so when this year started better it was a relief, but it has dropped off badly through the year. (Seriously, it almost felt like tumble weeds would blow through.) Restauranteur said that his supplier has said that his business is down across the board except for the outer areas, and put it squarely at the foot of over-leveraged middle to upper income households.

   Saw McKibbin talk the other night and he made the point that if the RBA was concerned about leverage/housing bubble then they should not delay rate increases to address this and as a sort of stress test. It’s what I have been thinking that they have actually been doing already with pushing through repricing of interest only borrowing.

   I am the first to admit that one observation does not at all suggest a trend. But the restauranteur did supply information suggestive of a worsening trend. And, even if this particular night were an aberration, it was truly alarming compared with what I have witness at this centre over the years. I’ve seen nothing even remotely like this previously.

   I was shocked because 1) data suggests that employment is improving in the Brisbane area with the (perhaps temporary) revival in resource industry prospects, and 2) even though the oversupply of apartments would create weakness in that segment of the market and that would cause some spill-over effects to the general property market, I thought the fact that Brisbane prices have not run anywhere near as hard as Sydney and Melbourne in the last decade would protect it somewhat from a sharp down turn.

   These observations are leading to me to reconsider that view and I was wondering whether you have had any feedback on the general economy of this region?

   As much as you hear anecdotes of politicians visiting cities and noticing too many cranes, suggestive of an economy running too hot, for me this portends the next phase is here…

   (with respect to John Fraser’s comments late Friday, absolutely politicians have let Australians down in their disinterest in economic and social reform – but senior bureaucrats have sat by and done little to discourage massive household leverage and the blowing of a serious housing bubble)

   • 

     Roger Montgomery
     November 6, 2017 at 10:11 am:

     Hi Bret,

     We’ve heard anything like this so really appreciate you sharing. Would be great to hear whether that night was an aberration or not. Can you go back and report?