What lobby group has the loudest voice? In the last decade, without doubt it has been the property lobby. But there are signs the others are starting to wake up.
In responding to yet another poor Australian Industry Group’s Performance of Services Index (PSI) the Retail Trader’s Association executive director Russell Zimmerman told the Australian Financial Review, “We need to see consumers free up spending, people are putting more money away or onto mortgage repayments.”
According to the Australian Financial Review, “The Ai Group index indicated that retailers did not get the bumper Christmas sales season they had hoped for.” The index, measuring activity in the Australian services industry has contracted for the 23rd consecutive month, slipping 2.8 points to 46.1. A figure under 50 indicates contraction.
The Retailers Traders Association is fighting with a housing bubble zapping more and more money out of the economy and having a negative impact on discretionary spending. As house prices continue to outpace wages and household incomes, retailers are forced to take a back seat, with a bigger portion of household income funnelled into larger and larger mortgages.
Some are unable to keep their heads above water, resulting in job losses. The Herald Sun reported, “Ai Group chief Innes Willox said any uptick in festive-fuelled retail activity was more than cancelled out by a deteriorating jobs environment.”
But they continue to fight on. Apparently we were suppose to have one of the best Christmas’s on record. Now the January sales is forecast to go gang busters. The concept is Australian’s are sheep. If they are lead to believe other people are spending up big, then hopefully you too will spend up big. Let’s see if it happens in January.
But it’s not only the Retailer’s Traders Association that is waking up. In the same paper than Zimmerman’s quote, on page 38 Paul Howes, National secretary of the Australian Workers Union is warning about SMSFs adding to our debt-fuelled housing bubble.
He makes reference to Grattan Institute calculations showing $36 billion a year is lost in revenue due to favourable treatment towards property. Let’s hope the May budget starts to address this.
He suggests the reason why the sector is not being “checked” is “because it is the noisiest and most powerful group of rent seekers in the country.”
Howes writes, “The housing rent-seekers’ constant squawking, and exploitation of the peculiarly Australian obsession with property, means reforms of the sector has become the third rail of Australian politics.”
“Yet if we continue kicking the can further down this particular road, it is tough to see how economic disaster can be avoided.”
“There are those using their SMSFs to invest in property debt today who will enjoy the swelling of the bubble during their retirement and die before it bursts.”
“Good Luck to them. But the job of government is to prioritise the long-term future of the majority ahead of the self-interested, short term gains of a minority.”
On Monday, Australia Industry Group also revealed PMI (Performance of Manufacturing Index) fell to 47.6 points for the month of December 2014.
As jobs continue to be lost, will we see other lobby groups rise to the challenge and start to drown out the relentless self interest of the property lobby? One can only hope so, for the long term prosperity of this country.