Readers Respond on State of the Australian Economy

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As I wrote last week, stimulus for the Chinese economy no longer benefits Australia. The steel/iron ore boom is over…and it isn’t coming back.

Which brings me to your responses on the state of the Australian economy. Thanks again for taking the time to write in. It is clear that the China slowdown is having an effect on the economy. Many people’s businesses are down more than 50% over the past 12-18 months, which is a huge adjustment for any business to make.

Below are some of your responses…I’ll have more during the week.

There is no confidence in my area. Shops are closing and no one is replacing them. My own business is down 40% from last year. In fact last 2 months I have dropped 8000 per week in revenue.


We would be a huge bit more stable if we owned our own big industry. But alas governments for years have been selling our big earning industries off. No brainer where all the profits are going, off shore. I am absolutely livid at what has and is happening to our country. Dumb and dumber governments.  Scary times for all generations of Aussies.

[Editor’s Note: That’s what happens when you run constant current account deficits. You have to borrow and sell off assets to balance the books.]


Although we are told there is little or no inflation the cost of living seems to continually increase. Look at house prices/rent isn’t that a cost of living? Business IS slow and as I am self employed I cant afford to give myself a pay rise as I battle to cover my costs. I am convinced that my standard of living is being dragged down and worry alot for my kids and their kids futures. I have no faith in our politicians of any colour. Heaven help us.  


I am a medium size builder in Brisbane.

Conditions are strong in property. The banks are lending to developers. Well managed builders are ok. Margins are tight though. Subbies prices are fairly constant. Materials suppliers are pushing their prices up a lot. Banks are still lending with fairly tight criteria and very close inspection of the feasibility though. They seem to be quite careful and thorough and not dropping standards. Anyone who meets the hurdles will get funding. The banks are looking to give money to people who they think are responsible. Banks are actively marketing themselves in this area.

Banks are also throwing money at business investment in equipment. Some equipment loans are 4 years terms with nil interest rate. I find that attractive and I am keen to invest in equipment with these terms.

There are builders still going broke, which I find surprising in this market. These blokes are overextended, live beyond their means, confusing their cash flow with profit (a guess). Or, maybe they underquoted on a fixed price contract in a market with rising costs.


I operate a small engineering company. Work has been bad for the last 20 months and getting worse.

There has been no more new development/upgrade/improvement work at all in the last 14 months. And it does not appear that there will be any change in the future to this situation. All work is restricted to a select few large companies and the rest of us left out. The small players are dropping faster and faster.

Things maybe improving for some areas of the economy but not in my small field or operating area. The smart country is bleeding brain power and this appears to be increasing.


I’m in the building industry in Queensland. The vacant land market below 200k is alive and well. The existing sales of houses above 500k is struggling. Above 750k is non existent. Similarly inner city Brisbane units above 750k struggle.

I employ 200+ they all work hard and struggle to save. The tax man continues to nibble at their static wages and is leaving all with less each year. Our businesses (construction to hospitality) have all experienced a substantial increase in the cost of basic services… water/power/rates etc have increased at 2x inflation the past 3 years.


I own an import business supplying the Electronics Industry.

During 2000-2004 we were doing around $5 Mil pa, this turnover has now dropped to around 1 Mil pa. Over the last 6 months it has steadily risen to around 2 Mil pa. It looks like electronic manufacturing is picking up.

We are at the leading edge of supply by offering 2-4 days just in time from around the world.

If this continues for the next 6 months I think we may have a resurgence in Australia electronic manufacturing. 

That’s it for today…I’ll publish more of your responses this week.

Greg Canavan+,
for The Daily Reckoning Australia

PS: If you missed it on the weekend, you can check out my colleague Jason Stevenson’s report on the hidden value in the resource market here. Jason is editor of Resource Speculator.

The hidden value Jason reveals is not in the iron ore sector. In fact, he’s about as bearish on it as I am. Read on below for Jason’s analysis.

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Greg Canavan
Greg Canavan is the Managing Editor of The Daily Reckoning and is the foremost authority for retail investors on value investing in Australia. He is a former head of Australasian Research for an Australian asset-management group and has been a regular guest on CNBC, Sky Business’s The Perrett Report and Lateline Business. Greg is also the editor of Crisis & Opportunity, an investment publication designed to help investors profit from companies and stocks that are undervalued on the market. To follow Greg's financial world view more closely you can subscribe to The Daily Reckoning for free here. If you’re already a Daily Reckoning subscriber, then we recommend you also join him on Google+. It's where he shares investment research, commentary and ideas that he can't always fit into his regular Daily Reckoning emails. For more on Greg go here.

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