MONEY MATTERS & BUSINESS OVERVIEW
RBA Retains 1.5 Percent
The Board of the Reserve Bank of Australia (RBA) has announced that the basic cash rate remains at 1.5 percent. Nearly every analyst is tipping this rate will remain for the calendar year. (It has been at 1.5 percent for 25 months.)
CHINA KEEPS BUYING OUR PROPERTY
Despite some doomsayer claims, the latest stats clearly show that the various actions by governments have not had much effect on property sales to Chinese buyers. Currently, Australia is second favourite behind the USA for Chinese property buyers and recent government moves to restrict such overseas purchases have been politically motivated due to claims that prices are being inflated against locals’ affordability.
Even with negative actions targeting overseas buyers which range from increased interest rates, higher stamp duty and ghost taxes for property left empty, the number of Chinese acquisitions continues to rise. Victoria now leads New South Wales and Queensland for property sales to Chinese buyers and real estate industry specialists say there is no predictable end to the present boom.
OUR ECONOMY IS GOING VERY WELL
What a pity the mass media are fixated on whatever bad news they can find about the economy when the overall picture is really very impressive. According to Australian Bureau of Statistics (ABS), real gross domestic product grew by 0.9 percent in the last quarter, yielding an annual growth of 3.4 percent which is well above the ABS growth rate, previously predicted to be 2.75 percent.
This also means the economy has now completed 27 years of continuous growth since the last recession of the early 1990s. Also the latest ABS jobs data shows the highest level of vacancies since records began in 1979. As a result of this good performance, ratings agency Standard & Poor’s has praised the situation, maintaining the Triple A rating.
CYBER-SECURITY JUDGED BEST BUSINESS
As a sign of the times, the 2018 Telstra Australian Business of the Year winner has been announced as Penten, a Canberra-based cyber-security specialist. The company provides secure wireless devices to the army and other government agencies to protect them from cyber threats.
Their biggest sale this year was a $1.3 million contract from the defence force. It uses AltoCrypt technology with USB sticks to provide secure access to information over Wi-Fi. The company has been in business for three years and now has 40 employees.
EASTERN CROP FARMERS DOWN NEARLY 50%
The ups & downs of the primary industry continues with the news that the eastern drought has nearly halved eastern crop output. A new report from the federal government's agricultural forecaster has tipped the NSW winter crop to be down 46 percent on last year, with steep falls also forecast for Queensland and Victoria. But farmers have warned that the crops in the three eastern seaboard states could be below these forecasts, given the impact of warmer conditions and frost in recent weeks, and the prospects of a dry spring.
The leading forecast for winter crop production is that it will drop 12 percent for 2018-19, to 33.23 million tonnes. The national figure is boosted by prospects in Western Australia, where the winter crop is forecast to rise 12 percent to 16.32 million tonnes.
THE BIG NEW POWER USER
As the hot weather begins, comes the annual debate on which businesses should be made to turn down to save electricity. While the usual suspects start to be targeted, a newcomer will soon be in the sights of activists. The latest figures on electricity use reveals that huge data centres which operate 24/7 are now up there with the most volt thirsty.
In fact, Australia's obsessions with social media and search engines, alongside a cloud computing drive from corporations, is powering the growth in energy intensive data centres which now use as much energy as regional cities. This data is held in large buildings that are becoming the fastest-growing consumers of power in the country. (There are currently over 100 data centres around Australia and many more are planned.)
CAR SALES DIP DUE TO PROPERTY COSTS?
The car industry has become the latest to blame the high cost of property for taking away business. After over a decade of runaway new car sales gains, 2018 is shaping up to see the previously booming graph take a noticeable dip.
Economists are claiming their research is showing a growing number of youngsters prefer to do without a car and parking spot for the sake of a better apartment and public transport. (The current estimates of buying and running a $25,000 new car is a weekly outlay of around $120. And real estate specialists in major cities admit a property within walking distance of a train station sells for up to an additional $200,000.)
AND FINALLY, ACTION ON BAD FRANCHISING
Following much negative publicity by bad franchisors over their disadvantaged franchisees, the Australian Competition and Consumer Commission (ACCC) is to use its powers. Maximum penalties for franchisors who breach the sector's code of conduct will be increased to $10 million - instead of the current $63,000, the consumer watchdog says.
Recently, franchise industry giants including Dominos, Caltex, 7-Eleven and Retail Food Group have been accused of operating business models that crush franchisees, push many to underpay staff and lead others to financial ruin. The ACCC insists its new action will force bad franchisors to improve.