But the fall is also having some remarkable side benefits. The combination of the dollar’s fall and the fear of the coronavirus means that increasingly Australians are happy to stay home and that’s helping offset the decline in Chinese tourist and student numbers, particularly in apartment rentals which are still edging up. When the Chinese students return rents will therefore rise in many areas.
But the world looks deeper at Australia, and the fall in our currency is not just a fall driven by the prospect of lower interest rates and a fear of a downturn in China as a result of the coronavirus.
Australian companies, particularly miners, detect a rising anti-Australian sentiment in European investment houses, driven by the environmental concerns that were raised during the bushfires. At times that leads to irrational demands like asking BHP to leave the Minerals Council because of that body’s perceived pro-coal views.
The truth is that even before the coronavirus and the bushfires, we had an Australian government that had been too slow in addressing the fundamental forces that are hitting the job market and that make higher unemployment a certainty.
Instead of pulling out all stops to address the real issues, too many in Canberra look to the Reserve Bank to again lower interest rates. In the general community, it is widely understood that lower interest rates no longer boost overall business activity and will probably lift unemployment further. The prospect of lower rates hits the dollar and boosts many asset prices but does nothing to address the issues.
We must urgently stop large companies delaying payments to smaller enterprises and forcing unfair contracts on the employment generating sector. And we must top the taxation authorities making their own laws in tax collection. We need to make the renewable power generation system work properly in the grid with back up, led by the plan to make Tasmania an Australian power battery.
Once Australia takes these actions it will encourage cash flow lending to create employment. The realists in the government understand this, but it’s hard work because of a rearguard action by some powerful ministers.
And there is now a new employment hazard. Our promising young workers now must go home on the dot at the end of their shift because if they keep working, they generate unaffordable penalty rates. Enterprises around the land must now reduce their labour content and are wary of expansion and hiring. Canberra ministers blast the large enterprises for underpaying staff, because rightly they should have understood the law. But the ministers have not grasped the fact that the law is making employment more rigid and lessening its attraction.
The only area where we enjoying greater activity is home building. And guess what? It’s an area of extensive performance contracting and flexible small enterprises. That may be the way of the future in many areas. But dwelling building is being helped by government guarantees of home deposits.
But that tap will soon be turned off when the quota of loans is filled up. It will restart again on July 1. That’s a stunt that could only be devised in remote Canberra.
Turning those sorts of programs on and off at a time of rising unemployment is simply crazy. Those dumping our dollar know nothing about that sort of silly action, but they detect something is wrong. The good news is that all the basic policies are in place to fix our problems. It just needs strong leadership.
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As the Australian dollar continues to set new lows it is clear that the world believes something is going seriously wrong Down Under.