‘This needs to end’: ‘Absurd’ list of errors sending Aussie households broke
One of Australia’s leading finance experts has put a blowtorch on the leading causes of Australia’s economic woes – and no one is spared.
Interest Rates
Don't miss out on the headlines from Interest Rates. Followed categories will be added to My News.
COMMENT
Everybody assumes that the only way to kill inflation is high interest rates.
It’s just not true.
A lot of the inflation in the economy can be solved by common sense policy.
Gas is a good example.
Businesses and households right across the country are going broke because they can’t afford gas.
That’s even though Australia is one of the world’s largest gas producers.
It’s absurd.
The problem is we export all our gas.
MORE: Bank move could deny borrowers rate relief
That means the domestic market is left high and dry, and forced to pay between $10 and $20 dollars a gigajoule for gas.
Meanwhile, the Americans are only paying $5 bucks a gigajoule.
That’s because America puts America first.
They make sure domestic industry has enough gas before sending gas overseas.
Australia does the opposite.
MORE: Home loan trap taking years to escape
The situation here is now so bad we’re about to start importing liquefied gas, which will see gas prices go even higher.
That’s why we need legislation that forces big gas companies to reserve 20 per cent of their production for the domestic market.
That will see gas prices in Australia drop dramatically.
That will make the cost of doing business much lower, and will see inflation driven down.
Another way to kill inflation without hiking interest rates is to reduce the waste in government.
Believe it or not, one in five workers now work for the government.
Four in five of the new jobs created over the last few years have been in sectors that rely on government spending.
We also have more laws than ever, because we have more bureaucrats than ever. That makes the cost of doing business higher.
Something needs to change.
That’s what Elon Musk has realised in the US.
Too much money is being spent on a bloated bureaucracy and pet projects.
This needs to end. Reigning in government spending will see inflation go down. But that requires a strong leader with a strong vision.
Mass migration is another big part of the Australian inflation problem.
We’re bringing in hundreds of thousands of new people every year.
We can’t house them, and our infrastructure can’t keep up.
This is driving inflation in the housing and rental markets.
It’s also sending the construction industry to the wall because they can’t keep up with the out-of-control demand.
So we need a pause on migration until the economy catches up.
That will also help bring down inflation.
The same goes for silly taxes.
The payroll tax is a good place to start.
Why does the government tax businesses to employ people?
That’s the last thing we should be doing if we want to bring down inflation and keep the economy healthy.
The same goes for the fuel excise tax.
If the government scrapped the fuel excise tax, fuel prices would come down massively.
That would see inflation fall, and it would take pressure off the Reserve Bank to keep rates high.
This is all common sense stuff.
All these things can be done with just a few pieces of legislation.
It’s time for Canberra to step up and do their jobs.
We can’t force the Reserve Bank of Australia and mortgage holders to do all the heavy lifting.
Mark Bouris is Executive Chairman of Yellow Brick Road Home Loans
Originally published as ‘This needs to end’: ‘Absurd’ list of errors sending Aussie households broke
‘Unfair’: What Aussies savers should do
Frustrated Aussie savers have been urged to get one up on banks who have left them in the dark by doing one thing.
US CEO wants huge Aussie mortgage change
The head of the world’s largest investment firm has called for a new type of mortgage that would represent a major shake-up in Australia’s housing market.