Kohler: We are priced out

Congratulations to Alan Kohler for being the first in the MSM to FINALLY cut through the guff to Australia’s real problem:

On Thursday last week, JP Morgan’s Australian economist Stephen Walters published two devastating charts. Here they are:

150216AK1

To sum up: interest rates and the minimum wage are roughly double the global average, electricity costs about 50 per cent more here, and the price of gas is getting on for triple the global average. And while wages growth here is the weakest it’s been since the 1990s, the average wage level remains 70 per cent above the global mean.

Business confidence has slumped and it is generally agreed that the biggest problem in the Australian economy right now is the failure of businesses to invest.

…Although the recent Canberra circus is undoubtedly a factor, for most business people the real problem is the cost of doing business in Australia.

Exactly. And the Walters chart does not capture the biggest factor of all, land prices, which are astronomically high relative to other nations.

We’ve had two consecutive booms, the first in land prices, the second in mining and it has left us with an incredible dose of Double Dutch disease with everything from dirt to the dollar pricing us out of global markets.

It’s not confidence, it’s competitiveness. It’s not cyclical, it’s structural. And neither the RBA nor Government has the faintest clue about the real problem. Indeed, applying cyclical solutions – such as inflating asset prices to chase wealth effects and “confidence” – only makes the real problem worse.

Comments

  1. Yep. As someone in an Australian business that is looking at outsourcing back office operations to NZ, I know what you mean. Maybe we should be considering Germany!

    • NZ are a better option. The Germans are great at manufacturing cars but woeful at back office operations like IT and anything else.

      • German car makers moved up the supply chain and developed a strong niche in the luxury segment, and wiĺl continue to enjoy their enviable position for as long as there are status conscious buyers out there with deep pockets. That doesn’t necessarily mean the rest of their economy is equally brilliant. Their IT services including telcos are an example of where they are not.

  2. And all the blue collar people here, especially tradies, charge “like a bush bull” (as they like to say here in rural Australia). I wanted a guy to do a couple of hours work on my gutters. I expected a quote of $200 or so, but no, he wanted $750! Whatever you think is a reasonable charge, multiply it by 3 here in Oz. 😡

    • One of our local plumbers was $70 / hr (cash). To fix an old piston pump. Which I ended up working out how to fix anyway.

      Another guy we use is $45/hr. More reasonable.

      I charge $40-60/hr for high level IT/integration stuff. Is that too expensive, do you think?

      Don’t compare to India/Pakistan/Bangladeshi rates either. You are not comparing apples with apples.

      Tim

      • I work in procurement and I charge 200 per hour to advise you whether you are paying too much.

      • Flawse, that is patent robbery.

        Sure, you pay for expertise, efficiency and tools, but $300/hr is a joke.

        I’d pay $300/hour for a copywriter that sold my products.

        Like I said, we paid 45/hr for someone to install an undersink filter. Under the house, welding, compression joins, etc.

      • I don’t pay it Tmarsh. Plumbers have to be one of the most unskilled of trades. There’s little in that regard I can’t do myself.
        Lots of single older women here they rip the s..t out of!
        According to my young electrician friend it relates to the plumber’s union being very strong. He gets about 1/4 the plumber – I know which one has more danger and requires more knowledge.

      • $200/$300 per hour, that is steep, but the problem I have is so little of it gets declared. So you end up getting guys working half days, making $3K per week, declaring a third at best to offset expenses, paying almost no tax and then lining up for Family Tax A,B and every other middle class welfare there is.

        Meanwhile our best and brightest up stumps and head to the US and Europe where they are actually respected. Coincidentally, in those same places I can do a renovation for 25-40% of the cost here in Australia. We’ve got it ass backwards that’s for sure.

      • Anyone who literally has to deal with your shit is worth $100 an hour.

        I pay it so I don’t have to do it.

      • Bubbley
        Installing some downpipes, air circulation in roof, some general plumbing (not sewage) is not worth $100/hr

        Especially not a cash job

        Skilled labour isn’t cheap and cheap labour (generally) isn’t skilled: I get all that, but you get to the point where it’s p!ss taking (my brother is a builder retrained in duct fitting/plumbing)

      • “I don’t pay it Tmarsh. Plumbers have to be one of the most unskilled of trades. There’s little in that regard I can’t do myself.”

        Bingo.

    • ErmingtonPlumbing

      Well thanks to the ever more punitive work safe laws and penalties, I risk losing my house whenever I take an apprentice or subbie onto a roof to do repair work.

      As an owner operator, the ocean of legalistic documentation, employees and sub contractors are required to fill in and sign, accord me very little to no protection should a serious injury or death occur.
      The system is structured to protect large company shareholders, directors and insurance companies. Not me!

      Over the last 15 years the increased risk to owneroperator trade businesses has been dramatic.

      My Plumbing and gas fitting contractor license also entitles me to perform roofing contracts but because of Work Cover laws I intend to avoid roofing work almost completely (when i return to Sydney in March) as the only way to be competive in that space is to work illegally. Basically this eleminates me from property maintenance contracts with Real Estate’s and facilities management companies.

      And while I’m on my regular rant I might just add that not a single roof truss is installed Legally in NSW either.

      Oh and guess what, public liability insurance doesn’t cover you, if your breaking these well intentioned laws, so a double risk there too.

      If I’m not billing 600-700/day after materials then I will not even be around and avaliable to perform your repair work a year down the track. The same applies to all small tradie businesses. ( don’t forget our overheads and unbillable hours!)

      In closing I ask you,…… do you risk losing your house every day at work?
      Not to mention your life or limb.

      • not a single roof truss is installed Legally in NSW either

        Please explain.

        I will add that 99% of guttering does not comply with the code.

    • The tradies feed off the property bubble. I noticed that more when I stayed down the NSW coast for a while. A large amount of local businesses are driven by property – grass cutting, plumbers, painters, etc. When the housing sector declines the decline of the economy will be precipitous I think. There will then not be that many that have $750 spare to do the guttering.

      • You can thank the neoliberal Howard government for the hyper RE and Tradie side show. Remember all the we need more tradies to service the RE market and not everyone need to go to University meme. It was sold on the premiss that tradies made more money sooner and as a result more over the long haul, with out Hex or smaller Hex down side.

        Does anyone have a functional memory longer than the last financial quarter.

        @ ErmingtonPlumbing

        Should we inform the commentariat that what passes for RE these day has more in common with white goods and the same quality of life time guarantee.

        Skippy…. Roof trusses you say… there’s a good bloody reason Fire Men don’t go on them any more… gang plates…

      • EP , I wrote an article here last year on Bullshit housing where I highlighed the problems with gang plates in coastal regions but no one took any notice.
        Add to that the short life of Zincanneal roofing, PVC guttering, Pop rivets in window frames, insufficient edge distance for slabs for the corrosion protection of the reo, and plastic plumbing installed in the slab and any number of other advancements we have had in the building industry in the last 15 years.
        The current life of a modern constructed typical punters home is about 15 years. WW

      • Gezz… don’t get me started on slabs, aside from structural issues they’ve made them pest habitats. Cut into a waffle pod and brace yourself of a Sci Fi event…

        @WW would have like to seen that post.

        Skippy…. FYI to have a house built to last with any sort of quality just double the $$$$ per sq. meter just for a start and add on the same for fittings.

        PS. Door hinges…. arrrgh…… crapifiction of everything for lower price. I think about now C quality is the new A quality.

    • Yes, if we are going to have a licensed system for the likes of electricians and plumbers it should be open to everyone with courses and exams available, not rationed out to a cosy little cartel. Its not capitalism nor socialism at work here, just plain extortion and cronyism.
      especially when you consider other jobs with similar skill levels which pay maybe $20 – $30ph or thereabouts.

      • ErmingtonPlumbing

        @ 99

        Becoming an electrician or plumber is open to everyone.

        Trade courses ( with exams ) are available in all Australian states.

        Practical training takes place with a competent employer, that training is called an “apprenticeship” (shit pay for 4 years)

        Most plumbers on wages earns around $25-$35/hr doing maintenance work and around $30-$40 on construction work
        hardly extortion and cronyism.

        And as for your “cosy little cartel” , just open the trade section of your local paper, full of small trade businesses ready to under cut each other for your custom. ( you’ll need to call more than 1 number though and I recommend, not the biggest ad)

        By all means come and join us comrade, Ill be looking to put on an apprentice later in the year, and intend to pay my apprentice 25% more than the $8.67/hr first year award wage, that’s $10.84/hr brother……………………still keen?

  3. Listened to a Sky Business podcast from a show Friday night, with Roger Montgomery and some Federal MP. They asked the MP for the issue he perceives as most important for the public at present. His unequivocal answer was cost of living pressures. Yet not a minute later he was talking about the need for further rate cuts and the scourge of deflation. Neither Roger or the host pulled him up on it, but what hope do we have with these guys.

    • The host was Mark Todd from NAB . He may not have pulled Kevin Hogan (seat of Page) at that point, but he did go him over the deficit fixation, and told him the Govt needs to borrow at low rates for Infrastructure. Mark Todd is one of the few astute sell side commentators on Sky Business.

      • ” He may not have pulled Kevin Hogan (seat of Page) at that point, but he did go him over the deficit fixation, and told him the Govt needs to borrow at low rates for Infrastructure. ”

        John Hewson and Jeff Kennet were arguing the exact same thing the other day. Jeff Kennet actually went on to rubbished PPPs arguing government should just go it alone.

        P.S I think Mark Todd went a bit light on Kevin Hogan because they’re mates (which Mark Tood declared).

      • insomniac
        What gives you the impression I would not rather definitely disagree with said pollie?
        However the notion that there is some low interest rate pudding, with no cost and no consequences, that will go on forever needs to be addressed.
        There are costs and consequences!

      • @flawse…just a gentle repost the pollie reply. Being one of those $100 per hour tradies (thinking of putting it up to $120), dont have the time for an in depth reply. But in short, v short, and no doubt outlined countless times think private debt is the bigger problem, collapse of FIRE to expose this..Govt to fill the void via ir spend. Govt bonds but bring in a sharp razor to middle class welfare but esp. Ng on establised housing and Super. If Govt doesnt pick up the slack then we will truly be rooted…then I’d be thinking of reducing hourly rate to $50 (wont go lower lol)

        regardless mark todd has the smarts.

  4. Exactly. And the Walters chart does not capture the biggest factor of all, land prices, which are astronomically high relative to other nations.

    Yeah as if Mr Kohler would admit that. Would leave his world view in tatters.

  5. If everything is expensive but wages are higher too, doesn’t it simply mean that it’s a problem of an overvalued currency?

      • Something about all the profits being funneled off shore…. thingy…

        The main reason most people I have spoken to over the years, about wanting to live n Australia, was great public services and commensurate wages which not only enhance social cohesion but good will.

        Skippy… lower prices are not a cure all…. corporatist must be laughing their asses off in the executive lounge…

    • Camelo

      If that theory was true then it would apply if the dollar was 10 cents.

      In other words if we were expensive by world standards and the dollar was 10 cents USD, would you then say the problem was the currency?

      The problem is policy.

    • The words ‘US$, 2013 constant prices appear on the wage chart’. Does that mean that the average price of currencies in US dollars in 2013 is being used as a constant across that chart. Could look different if second half of 2014 had been used.

      If the chart is allowing for currency fluctuations, it might still look a bit different if it finished in Jan ’15, not Jan ’14.

      At $75k AUD average full time wage (as distinct from earnings), today’s US exchange rate gives $US59k. Probably too high, but far closer to the US/UK line in that chart than what they’ve got.

      • +1.
        Important to know the exchange rate used for the comparison.
        And therefore at what exchange rate the non-mining economy is broadly at par with US/UK equivalent.
        Especially as the exchange rate was inflated through 2013 with safehaven type buying.

  6. It’s a question that I’ve been asking for a couple of years now, Why aren’t Aussie entrepreneurs leveraging the low cost of capital to develop new businesses?

    The creation of “New assets” has two follow-on effects
    – Locally available Investment capital is divided across a larger asset space meaning that Asset inflation is minimized
    – Our Animal Instincts “greed etc” are piqued…just the thought that someone / anyone could create lasting value out of nothing (which is what startups effectively do) will attract more capital wishing to replicate this feat…and so the ball starts to roll…with it an invisible hand begins the dynamic reallocation of wealth, a vital function in any thriving economy.

    BUT none of this is happening in Australia, WHY?

    Personally I think the problems run much deeper then just competitiveness, and can be traced back to an inadequate/ failing education system. We’re simply not creating the skilled work force that’s needed to compete in today’s global market place. think of it this way, if technically you cant do the job it’s immaterial how cheaply you offer to contract your labor.

    • @china- bob
      “We’re simply not creating the skilled work force that’s needed to compete in today’s global market place.”

      + many CB

      Unfortunately our political class & their masters believe two things . 1, that Australia’s role in the Global economy is to be a Mine /Quarry and to a lesser extent a farm.
      2, That the Chinese economy would continue to grow gangbusters for ever .

      Education standards could & have been down graded .
      Our population dumbed down to be FIFO workers.

      We are caught with our pants around our ankles as the lights come on.

      • A few months before leaving Australia I had a short conversation with an ATO representative which roughly translated involved me grabbing my ankles and praying for mercy….simply not my style so I took the other implied option…exit stage left!

        Without a doubt there are more problems than just education but long term I still believe it’s where we need to start with the fixes.

      • “Education standards could & have been down graded”

        That’s a cultural thing here in Oz. Having a brain and some intelligence is frowned upon.

      • @china- bob
        “We’re simply not creating the skilled work force that’s needed to compete in today’s global market place.”

        Quibble… no one wants to train anyone but shop for a widget to plug in to the system with immediate results.

        Banks don’t loan to entrepreneurs because their high risk, average of 3 failures before they get it right and only at 5 years of operation can one remotely consider it viable.

        As far as the education system goes its attacked as a bogyman at every twist and turn by the free market pay as you go mob.

        Skippy… just deserts methinks….

    • Well that’s the result of 30+ years of pandering to every whim of business.

      When every problem is solved by “make labour bear the costs” and ultimately making management every sociopaths wet dream, why would business develop the skills necessary to assess risk, to innovate?

      Our executive class ate much more of a problem than our wage costs. The latter are receiving generational low wages share, just calibrated due to a global currency war.

      The former are highly paid welfare recipients, convinced their remuneration is down to exceptionalism

      • Lost me there RP… surely individuals obtain/develop differentiated skills so that they can maintain (advance) their standard of living within this competitive and changing global skills/opportunities landscape.

        I’d say Australia’s problems stem from the over-sized rewards (award wages etc )delivered for globally undifferentiated skills (plumber, electrician etc) this invisible hand shapes the skills landscape by effectively telling the individual that these skills are adequate and sufficient to support a good life style. The students are happy, the parents are happy the schools are happy unfortunately at the global level we see the obvious inadequacy of this strategy.

      • You’re talking about tertiary skills, that’s just as much the responsibility of the business community as it is other stakeholders.

        For undifferentiated skills, the reason holden workers need $70k p.a. is to pay for their $450k houses. They have no other response than to claw at wage share, which us at multi generational lows anyway.

        The dollar soared 50% in 3-4 years, no line worker can increase their productivity 50% in that amount of time.

        What has happened is the realization of risk, risk is what capital gets a return for.

        I dont think its fair to berate the performance of labour because they dont hot seat into your positions vacant, when our execs are unimaginative and incapable of lasting decisions.

        If it wasn’t for Keating and Button 30 years ago, id hate to think where they’d be today.

      • Too true CB. I gasped out loud last year when my neighbour’s daughter explained that one of her friends, with a A in physics at high school, has decided to pursue an electrical apprenticeship rather than education in engineering, maths, etc.

      • No argument from me Keating did a fantastic job of setting the national agenda unfortunately the structural changes he sought were only half completed and the Australian workforce has spent the past 10 years backsliding..we desperately need another Keating an orator that can capture the national imagination and convince the populace to move in a certain direction that will be good for the whole population, as opposed to this zero sum RE game that actually shrinks the asset pie and diverts cash flow to the unproductive.

        Maybe the exchange rate will become the tool by which Australia rewards globally differentiated skills (and therefore creates the vector to develop them) but I wouldn’t count on it because capital flows are far more important to the pricing of a currency then is labor supply / availability at a given cost point.

      • Rusty

        What was the reason for high wages before the period I’m your example? Before their houses were $450k?

      • I’d say Australia’s problems stem from the over-sized rewards (award wages etc )delivered for globally undifferentiated skills (plumber, electrician etc) this invisible hand shapes the skills landscape by effectively telling the individual that these skills are adequate and sufficient to support a good life style. The students are happy, the parents are happy the schools are happy unfortunately at the global level we see the obvious inadequacy of this strategy.

        Careful now. You will have a lynching mob after you for suggesting that …

      • Well paid Australians are what we should be aspiring to, not just high paid execs, high dividend earning share holders, high rental receiving propert owners and high pensions for the elderly.

        We want to link unionized auto makers wages to Thai auto makers wages.

        Want to link the Aussie age pension to the Thai age pension too?

        Wage share may be high, but they were exporting until recently so competitiveness wasn’t impaired by their wages, rather crippled by currency war and upward nominal wage pressure by land prices flowing onto wage demands in recent times.

    • There are some doing that but I think most of the 40-something year-olds that would be the key developers of such new businesses are so highly leveraged with such a high cost of failure (e.g. out of housing forever at current prices) that it has bred extreme conservatism.

      That’s my position and I know several others with entrepreneurial instincts that are deliberately not pursuing high-cost business ventures in favour of trivial, low-cost cash producers.

      • Auto

        Good point. Perhaps it will be the millennials that will risk innovation.

        They’ll be renters (untill we have a monument housing crash) and have nothing to lose.

      • A bank will give you a loan at the drop of a hat. A venture capitalist in oz is still very risk averse which disincentives startup. Why would you put cash to a startup when you can make easy money on property? Applies to both the investor and the entrepreneur.

    • CB, as an entrepreneur with a breakthrough point of care medical technology (lab quality, ultra low cost medical diagnostics in your hand) that’s been bootstrapped to working prototypes and now has 15 granted patents we still can’t raise money in Australia. Everyone who looks at it says, “great idea, that’ll be huge, but you’re too early for us to invest.”

      I’d love to tap into this mythical pile of cash you think exists here for early stage companies. One can’t get debt financing because the banks want your house. I sold that to get the business this far.

      The problem here is a dearth of risk capital and savvy VCs. Then there’s the private equity bloodsuckers who want to back it into a shell and flip it while talking massive fees and leaving us with not enough cash to get to market. They’re almost all transactional vampires in this country.

      There’s more chance (still, remarkably) to get funding for a rocking horse poo mine in Woop Woop than a high tech business that has massive global potential.

      • Why aren’t you raising overseas (US)? Funding is easy here, you could remain in Australia (but why would you), there are many Aussie startups who have received US funding now.

      • @mdsee
        Agreed this mythical cash does not exist, but that’s only half the problem because logically when the RBA pushes the ZIRP button we should see capital chasing Risky ventures to achieve out sized returns. Aussie capital is simply not seeking out-sized returns by funding out-sized risk, unfortunately they’ve discovered a better safer formula that leverages almost zero risk RE strategies…see my response below.

        From personal experience one of the questions that I was asked again and again is: Why should I commit high risk capital to a venture that creates mainly intellectual property using mainly foreign labor (as was the case for my undertakings…because I couldn’t find properly skilled Aussies)

        Maybe one day I’ll return to Australia and start a VC firm…but I’m not sure why…as I’ve written on numerous occasions the success of a startup/VC’s is mostly a function of your exit options, since Australia lacks many medium sized companies that would absorb / grow startups your exit options are extremely limited and because of this your execution risk is so much greater for a less likely reward.

      • How much capital required are we talking about here and for what market cap?

        I can assure you it is impossible to fund anything to do with mining and has been for almost three years.

        Some colourful gentlemen in Perth no less just raised a fair bit of money for a medical marijuana company with some tenuous link to Israeli technology and listed it on the ASX.

        I will hold further comment regarding that deal but if there is any money to be raised in Australia at the moment medical (particularly devices) has the highest chance assuming everyone has aligned/reasonable expectations.

        Last year had a full on boom in early stage biotech. Until reality hit home with some huge busts. I have a little experience with two device stocks on the ASX – the love has certainly gone – but it is miles better than for exploration / mine development.

        On the broader point – the lack of interest in risk taking is a result of the wise Central Bankers of the world creating a time bomb of debt and everyone with half a brain sitting back on the sideline protecting their cash from the inevitable. Australia is simply the worst of a bad bunch at the end of a 20 year coke binge.

        The forced participants in the ASX are just pumping their money into the same 8 names.

      • This is similar to my experience, except we’re too late for VC and too early for PE. We also have an FDA clearance and CE-Mark and about to ink a distribution agreement with one of the publicly-traded US CRM companies.

        I might have some ideas for you.

      • Kodiak,

        I looked to take us to the US in 2007 when we had the cash to do so, but we had no granted patents and the technology hadn’t been demonstrated. In that environment I reckon we still would have had a chance at funding, but…the inventor’s wife (a whinging Pom) said “I don’t want to live in America”. Game over on that plan. Then came the GFC.

        Now we’ve pumped all our cash into the IP and don’t have enough left to fund a decent bash at raising capital in the USA.

        The other problem in Australia in the VC space is that they’re not interested in anything that has a long development cycle (2 years) or regulatory hurdles to jump. They’re throwing their money at mobile plays because they can fail fast for less, the diligence costs them less and the investment required to get it to market is a fraction of what a high tech manufacturer needs.

      • What’s your business? We’re currently going through a capital raising, so we’ve beaten the bushes recently. Fingers crossed, I think that we’re about to get funding, but it’s been hard going, especially since I think that we have the potential to be standard of care, we have the clearances and reimbursement.

        Worse still, the private mobile health space is a bubble. There has been a ridiculous amount of funding for things that will never make money. It’s a wonder that they passed due diligence.

        Have you got a website? Also, there’s a health-tech startup group that meets in Richmond on Thursdays. We actually turned up a few leads by speaking there.

    • Too hard to get start up capital/VC.

      If I lived in Silicon Valley, I’d have no probs getting 100-500k for some of my ideas. Seriously, I’ve worked in that area for a dev studio, and the $ some of the start ups are getting based on the most cursory business case is truly wacky.

      • @Tmarsh
        No arguments from me, I believed I had committed capital until Sydney RE started to show signs of life, than faster then one could blink “my capital” was chasing the RE dream. The problem is that they made a motza, so who am I to fault their business acumen. Matter of fact I was the fool that bailed, I was the only member of the consortium that pulled out my personal capital and chase other opportunities. My other opportunities turned out to be no where near as lucrative nor as simple as their Sydney RE plays.

    • @CB

      Personally I think the problems run much deeper then just competitiveness, and can be traced back to an inadequate/ failing education system.

      The reason is much much simpler. Why do you need an education or to take risks in projects when you can mint money on property or working in the mines.

      Money/income has not been a problem for a large part of the population atleast since the turn of the century. Combine that with the cost of living and no one in their right mind would give up a 80K + job to possibly make a million in 10 years time.

      I personally have been approached atleast one serious start-up and outright rejected it because of the above reasons. Had I had my own house with an insignificant mortgage, I would have reconsidered.

      • @ff
        In many ways I see this as national accounting fraud.
        let me explain: If as a company director I sold of assets of undeniable tangible value (land, buildings etc) I would need to show this in the company accounts through a reduced value of assets on the books, this would result in an immediate increase in important investing metrics like Price/Book. Yet as a nation we can sell not only our assets but also sell a promissory note (bonds) that indentures the next generation and I can do this without so much as a side note disclosure on the national accounts.
        Each foreign sale of assets (both private and public) reduces our local asset base and should therefore be subject to the same scrutiny that a company director would expect if they funded the ongoing operational costs of their business from asset sales. Sure a countries accounts are infinitely more complex than a companies BUT….

      • @CB

        Completely agree. However, the average punter (and they are exactly that) only sees housing going up and much like your Sydney RE mates, they don’t intend to take risks because they don’t have to.

        This is a government endorsed and household manifested model that has essentially become a self fulfilling prophecy aka the confidence fairy in full flight.

        From a personal perspective, they are all right ofcourse. This has lead to the macro economic situation we find ourselves in. Won’t change until the culture does and I am fast losing hope that the culture will change.

      • In many ways I see this as national accounting fraud.

        You can’t really blame the boomers at all.
        IF I was sure that the young generation would happily live without a fair share of land, minerals, water, etc AND would happily pay debts rung up by past generations to 3rd parties, THEN I too would sell off everything, run up debt and party. Why not? You only live once.

        My only question: How can the boomers be so sure about the young?

    • I am an entrepreneur. Right now I’ve got a large equity stake and management position in a private medical devices company. I had considered starting up something myself, but the high cost was a non-starter.

      It’s brutal to get capital in Australia as well. The future isn’t looking so good. I’m glad that my kids have US citizenship or can work in the UK on a commonwealth visa.

      • i’d be interested in your ideas. I’ve turned over every damn rock in this place I can find looking for investment. Met with C-Level execs of major multinationals who all love the technology, just want to see it close to FDA approval. Local VC says “get the partnership with the multinational and I’ll give you $10m”. I said “give me $3m to get the technology to the point where I can get a deal done. If I get the deal without your money I won’t need your money (and probably wouldn’t take it on principle and because what you were offering was not only far too expensive but punitive as well).

        So no deal. And Australia misses out on a great technology business with massive global potential. If I can’t get it funded soon I’ll shut it down.

      • I’ve informed my kids that America is the last place they should go to work or study, its getting quite ripe over at the Free Market quick stop.

      • Why do you think that, Skip? The US has been so poorly rated for so long that it bears no resemblance to reality. Any young and enterprising person would be better off there than here.

    • @chinabob. I am a middle manager from a large corporation enrolled in an MBA at a university featuring prominently on Top 50 lists. Each week, I’m completely stunned by how light on the coursework is.
      It’s a business where they take your cash up front and deliver the least possible to get you to pass.

      • Respectively I’d suggest that long term this is your problem not their problem. It’s the classic training conundrum, if people are paying for education then they dont want to be “failed” so we reduce the difficulty until everyone passes …unfortunately nobody benefits. It’s part of the reason that personally I just dont do “further education”

    • @Hugh Pavletich

      ” Is anything being learned from Texas?”

      Yes Hugh we are doing a great re-enactment of the Alamo

  7. Does this mean MB will consider lowing its subscription from $149 p.a. to aid in this increased national competitiveness?

    • LOL great example. NY Times Digital subscription is US$180. How can MB justify being almost the same rate?

      • “NY Times Digital subscription is US$180. How can MB justify being almost the same rate?”

        — – NY Times is BS reporting & truth is immaterial.

      • Probably because NYT sells 100,000’s (+) of subscriptions and has a solid base in advertising and product sales. MB has one primary income source: Subscriptions, which can be guaranteed don’t run into hundreds of thousands or millions.

        Then again NYT also has a sea of staff, sooo…

  8. You and Leith are bang on target this morning. But how does the MB solution – cutting rates – fit with the story that we have an inflation problem?

  9. This is an erroneous straw man argument. Higher wages should be an aspiration of any economy. What is wrong with that? We are only ‘priced-out’ as the headline says, if our goods and services are globally uncompetitive. Where is the evidence of that?

    • Hmmm…let’s see…

      Last year I looked at a software business opportunity that involved local dev costs of $40/hr vs US-based dev costs of half that.

      Right now I’m weighing up engaging 4-6 developers in the Philippines for the equivalent cost of 2 locally, and thats factoring in further AUD devaluation.

      Most businsss growth, whether it’s import-competing or export-focussed has the same issues regardless of the industry. I just sold a cane farm because labour costs, along with the high dollar makes it unprofitable. Add the price of land to the mix and a lot of new business ventures start to look like financial suicide or outright massichism.

  10. “applying cyclical solutions – such as inflating asset prices to chase wealth effects and “confidence” – only makes the real problem worse”

    Or such as interest rate cuts to improve business / consumer sentiment & spending / borrowing.

  11. Let’s talk basics, in the last 10 years our dollar has boomed, wages boomed, TOT boomed as well property.

    Wages chased property and mining investments, property increased wealth and the dollars boom had a nice multiplier effect on top.

    Whilst obviously a lower dollar has great affect on these numbers it does not factor in the required increase in wages required to just simply maintain the lifestyle we currently enjoy (talking importation of goods). By this im I’m implying that life will get very “rough” to become competative.

    If you want answers why then just look at the banks who play a zero risk tax payer backed game.

    Wiley wolf we will talk more soon about currency, i read your replies over weekend and am thinking threw a few things. With that said AUD @ 40c/usd in next 5 years. (Near parity short term? Maybe)