Editorial: Still cause for optimism despite tough conditions

As the economy faces a perfect storm of recessionary factors, it is important to stay realistic and be rational, writes the editor.

It is hardly surprising that the latest Queensland Chamber of Commerce and Industry survey of Queensland businesses found they are starting to feel really pessimistic about the year ahead.

Businesses are facing the ultimate quadruple-whammy of rising staff costs, rising interest rates, rising energy prices, and rapidly rising costs of goods and services.

Add to that the fact that it is inevitable, sooner or later, that households are going to slow their spending as inflationary costs hit home, and it is clear that we live in challenging times.

And that all comes off the back of the two-year pandemic that – while cushioned with the much-needed government support – took a chunk out of any cash that smart operators had put aside for a rainy day.

Well, it is about to rain again.

Perhaps the only solace we can find in the numbers is that Australia is so much better off than most of the world’s other advanced economies.

This is particularly the case at a household level.

As ANZ boss Shayne Elliott recently told a business lunch in Brisbane, we could not hope to be in a better position going into a global economic crisis.

Not only are credit card balances at the lowest they have been for a generation, Australians are further ahead in their mortgage repayments than they have been for years – and the proportion of them behind in repayments is super low.

In addition, the jobs market means that anyone who wants a job can get one – and that means that households where one member is working only part-time can easily dial up work to make up for the additional repayments necessary on the family home loan after Tuesday’s seventh interest rate hike in seven months.

That all means there is a way to go until households are in actual trouble of having to sell up. But that truth does not diminish the impact that these interest rates have already had.

A household with a $700,000 mortgage is now paying as much in interest as someone who had a $1m mortgage at the start of this year.

That shows the significance of the Reserve Bank’s response to a soaring inflation rate – the one thing that Treasurer Jim Chalmers identified yesterday as the biggest challenge to the national economy.

It is perhaps little wonder that today’s September quarter survey by the CCIQ found a massive shift in sentiment since its last report among the 320 businesses surveyed.

This latest survey found “a significant deterioration of confidence” – despite the actual performance of the businesses surveyed continuing to be “solid”, with sales revenue remarkably holding up.

In fact, despite their outlook being pessimistic, right now actual business conditions are better than they were during the entire decade between 2010 and 2020, at least according to the Pulse survey.

But the many signs of trouble ahead include that sales have now declined for two quarters in a row, and that cost challenges are “many and are collectively leading to the erosion of business viability”.

Add to that concerns about reduced consumer confidence and global geopolitical issues such as the war in Ukraine and the pessimism about the future for the state’s business community is understandable.

But it is important to stay realistic and to be rational.

Optimism is also often a good idea.

And so let’s hope that as a nation we can ride out these global economic storms relatively unscathed, as we have in the past.

COVID-19 STILL A REAL DANGER

We have said it before, but we will say it again: the Covid-19 virus remains a very real threat in our community, and we must all stay vigilant, despite it often feeling these days like it has simply disappeared from our lives.

The latest reminder comes today, with infectious disease experts warning of a possible Christmas spike in Covid cases driven by two new variants detected in three states, combined with a dramatic slowdown in Australians having their necessary booster shots.

This warning should serve as another reminder for all of us to do what we can to protect those we love. This means staying home when you are symptomatic, wearing a mask when in public for a few days after you are feeling better, and to limit the size of gatherings, particularly those indoors. We are all very well practised at these measures by now.

And as University of Sydney infectious diseases expert Professor Robert Booy says: “Covid is still a killer, and it kills far more vulnerable people than influenza – and so taking precautions is wise.”

Responsibility for election comment is taken by Chris Jones, corner of Mayne Rd & Campbell St, Bowen Hills, Qld 4006. Printed and published by NEWSQUEENSLAND (ACN 009 661 778). Contact details here