What it is with official pronouncements by the RBA that makes the media take leave of its senses? The AFR today took the unusual step of reproducing Phil Lowe’s poorly argued speech in full this morning and Alan Kohler throws himself fully into cheer leading at BS:
Just quietly, Australia’s productivity performance has improved dramatically. A year ago there was a procession of stern speeches on the subject, exhorting the nation to do more and the government to do less (regulation etc), and it turned out that 2012 saw the biggest improvement in productivity in more than a decade.
It seems to be largely due to the high Australian dollar, which has now been above parity for two years. This week is the second anniversary of its decisive break above parity, near the end of a 70 per cent revaluation from March 2009 to April 2011.
Two years ago, having watched their competitiveness crumble through no fault of their own, Australia’s business people began the Kubler-Ross “Five Stages of Grief”: Denial, Anger, Bargaining, Depression, and finally… Acceptance. CEOs and boards have now finally accepted that a high dollar is here to stay and are doing something about it; those that aren’t are no longer troubling the scorers.
As Friedrich Nietzsche remarked: What doesn’t kill us makes us stronger.
Kohler goes on to list 10 manufactures that he likes.
I know I’m going to sound like a broken record here but what is the evidence? The latest ABS capex projections for manufacturing in the next year were a disaster. The projected investment of $7.9 billion was close to levels first reached in 1989 unadjusted for inflation. Using the back of an envelope you can halve it in real terms, taking it back to God only knows when.
Yet that is enough for Kohler to claim:
As the resources investment boom ends, manufacturing and services must take over as the engines of the Australian economy. Happily they are starting to do it now, despite the best efforts of the global investors (central banks and hedge funds) that are keeping the currency high, and the politicians that are working hard to destroy business confidence.
The Australian elite has determined that not only will manufacturing be slain at its hand but the crime will be hidden.
