While his Business Spectator colleague, Robert Gottliebsen, continues to lobby the Government to support his billionaire mate, “Highrise” Harry Triguboff in a bid to stave off an apartment bust, Alan Kohler has penned a timely article today claiming that Triguboff’s rise to the richest person in Australia is a sign of what is wrong with the economy. From The Australian:
[Triguboff] also symbolises what’s wrong about Australia: debt… apartment approvals are now running at 10,000 per month, having risen over seven years from the long-term average of around 4,000 per month. That’s why Harry Triguboff is so rich.
Another thing has happened over those same seven years: Australia’s ratio of debt to GDP has taken off…
It turns out that the doubling of our terms of trade between 2000 and 2012, from 60 to 120, was a bubble, based on unsustainable Chinese demand pushing up commodity prices…
Happily a new bubble — apartments — has replaced that one…
China’s and Australia’s debt to GDP ratios are almost exactly the same, and close to the highest in the world…
Both of these debt mountains represent a danger for Australia.
…it would feel a bit more comfortable if Australia’s wealth was coming from competitive advantage rather than debt-funded apartments.
Well said Mr Kohler. The Australian economy’s so-called “rebalancing” is really just another bubble – a bubble in apartment construction, dwelling prices and private debt – which is not sustainable.
Worse, as noted by Houses & Holes yesterday, we are precariously placed “to be collateral damage in a gargantuan monetary fight between the world’s two super powers”.
Thus, like Gina Reinhart before him, Harry’s place atop the BRW Richlist is likely to be short-lived and will end as soon as the apartment bust arrives. Unfortunately, so too will Australia’s so-called economic “rebalancing”.
