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  • P.D.Jonson

Saturday Sanity Break, 7 December 2019 – Australia’s private sector recession

Updated: May 1, 2020

This blog is written from Sandaken in Malaysia. Great fun with existing friends in KL and now with fellow travellers here. When internet works – intermittent here- we can read Aussie news, but today is not such a day. So we present one of the past weeks best commentary on Australia’s struggling economy. With modest growth from exports (thank you China) and Australia’s government spending (Thank you Josh) our mild private recession is slightly outspent.

Now to Robert Gottleibsen’s fine analysis.

Robert Gottleibsen is a wonderful economic analyst. Today he hits another high. Ten reasons for Australia’s private sector recession. Points are listed below, but please login and reads “Gotters’ fine argum

Gottleibsen’s ten reasons for recession, and his recommended action in each case.

  1. Our largest state, NSW is the country’s engine room, but it has a crazy property development approval system designed to create uncertainty and boost costs. This has driven many developers away from NSW. Remedy: Buy two return air tickets for NSW Premier Gladys Berejiklian: one to Melbourne and the other to Brisbane. There she will then discover how both states have smoothed their approval systems.

  2. Victoria has a deep energy crisis that makes both consumers and business nervous. Victoria creates an artificial gas shortage by banning access to its immense gas reserves – reserves that do not require fracking. These gas reserves are dissolved in water deep underground and would end Gippsland water shortages. Remedy: Send Victorian Premier Daniel Andrews to East Gippsland to see personally the water shortage devastation his bans created.

  3. We are not attacking the carbon problem intelligently. States erect wind and solar platforms without investing in the grid changes required or providing back up and they force coal fired generators into dramatically changing their output levels so forcing break downs. Its chaos and it pushes up energy prices and slashes business investment. Remedy. We need a few long black outs to overcome the political spin. It’s harsh, but it’s the only way to teach some Coalition and ALP state politicians.

  4. Credit growth is now at a very low rate. The last time it slumped to current levels was in the period immediate after the GFC in early 2009. Part of the reason for this is nervousness in the business community. But it’s also related to the attacks on our banking system. Remedy:

  5. The Reserve Bank and the market analysts are all classical economists who were taught that lowering interest rates from very low levels will boost consumer spending and create investment. Wrong. It will boost building activity and that will be reflected in next year’s figures, but it forces retirees and pending retirees plus many younger people to save more; the reverse of what is supposed to happen. Remedy: Get Reserve bank people out of their Martin Place bunker.

  6. Employment-creating small and medium business is increasingly about supply chains. The federal government has helped by speeding up its payments but too many large companies are not interested. The Business Council tried to improve the situation with a list of good payers, but it was useless. It looks like they have convinced the Prime Minister Scott Morrison to try another list. It will almost certainly have the same result./ Remedy: Give Scott Morrison Robert Menzies’ biography and Morrison will learn how Australia’s longest serving Prime Minister was very wary of large corporations and knew that the country’s prosperity depended on smaller enterprises.

  7. On a similar tack, large organisations send out millions of unfair contracts each year whereby the large organisation can change the terms of the contract, but small enterprises have no such power. This curbs small enterprise employment financing and investment. The parliament tried to stop these outrageous practices, but the large enterprises told the politicians to jump and exploited loopholes in the act. Remedy: Same as above. I should acknowledge the Small Business Growth Fund as a step in the right direction.

  8. I have written many tines about Australian Taxation Office thuggery. Remedy: It must be tackled.

  9. WA struggles because it does not receive its fair share of GST money. That needs to be fixed even though it will mean some of the overly pampered smaller states will receive less money.

  10. Ross Cameron is one of Australia’s leading small business researchers and he says that actually mid-market business owners report that business conditions are quite good. But they hear negativity all around them (especially via the media) and sense a lack of confidence which affects their willingness to expand. In addition, business is tough. They point to low levels of consumer confidence, competition, challenges in finding appropriate staff, difficulties passing on price rises, a tighter (but not impossible) borrowing market etc. Remedy: A different and co-ordinated approach is required.

Congratulations, Robert, on a wonderful analysis. Anyone who feels falsely aggrieved by it should take a long cold shower and think again.


Fiona Prior sees the hilarious whodunit ‘Knives Out’. Lots of fun. More here.

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