CRISIS? WHAT ECONOMIC CRISIS?
Written on the 25 September 2014 by Nick Nichols
SUGGESTIONS that the Australian economy is in crisis have been slammed by an expert panel on the Gold Coast this week.
“I don’t think there’s a crisis by any means,” says Gary Wingrove, CEO of KPMG Australia.
“The Australian economy is quite well positioned, but there are some factors at play that need to be addressed,” he says.
Wingrove was one of three speakers at this year’s Titans of Industry forum held by the Bond University-run student organisation, Bond Investment Group.
He says talk of the mining downturn is warping perceptions of the underlying strength of the economy, which is being driven by both foreign and domestic investment in a broad range of asset classes such as property, agriculture and utilities.
Wingrove says that, through his conversations with CEOs across the country, he is seeing a trend by businesses away from defensive strategies such as cost control and a move into growth strategies.
“We are hearing a lot of people talking about growth and investment, and that is a positive.”
Wingrove says the confidence is reflected in the surge of share market IPOs, which have edged closer to the peak of 2007.
“Some people might say that’s frightening, but there’s a real change from where we were 12 to 15 months ago.
“The political situation is somewhat of an impediment, but overall there is a positive momentum.”
Wingrove participated in a panel discussion at Bond University this week with Dr John Laker, a former chairman of the Australian Prudential Regulation Authority, and Robert Jeremenko, senior tax counsel at The Tax Institute.
Jeremenko sees the tax system as one of the biggest constraints to future growth in the Australian economy.
He says the system, which has been largely unchanged for 70 years, is in need of an overhaul to cope with demographic pressures.
In particular, he identifies inefficient taxes at state government level, such as stamp duty on property sales, as one of the main culprits in reducing the mobility of workers looking for employment in new areas.
Jeremenko also has called childcare costs to be tax deductible for working parents, arguing that it is a cost of finding work.
“We won’t be able to move to the next level until we overhaul our tax system,” he says. “It’s a huge challenge in this political climate.”
Despite the buoyant tone of the panel, John Laker offered a stark assessment of the future of young Australians as the economy faces continued pressure to lift productivity.
“If you look at the gap of productivity that has to be made up to maintain living standards, it’s really a substantial challenge,” Laker says.
“Your generation may be the first generation that doesn’t have the same living standards as your parents,” he told the audience of Bond students.
“That is unheard of in Australian history (when) each generation bequeathed a growing wealthier economy to the next.”
Laker says productivity may be a “nebulous” concept but it has to be addressed across all sectors of the economy, including taxes, the financial system and labour relations.
Author: Nick Nichols