Where does Australia find it's wealth next?

From what it appears our governments over the past 22 years have destroyed this countrys wealth.

The Howard government sold all our assets/gold and converted it into liquid cash at bottom lows. The Rudd/Gillard government blew all that revenue on a recession/stimulus/pink batts/school halls. The Abbott government spent more than the previous governments yet cut public services (big spending on defense and other things).

The Abbott/Turnbull /Morrison governments finds itself in a position where the mining boom is over and there's nothing more from the Hawke/Keating era left to sell. What do they do? Increase migration and replace the mining revenue with homeowner equity.

Once there's no equity left and that migration fad ends where does our wealth come from?

 

Exports are at record highs and about to tee off thanks to LNG ramp-up and booming coal prices:



Budget will be back in surplus in no time at this rate.

Unfortunately that won't be enough to save ScoMo...

 

Which country do you consider to be rich because it owns lots of gold reserves and intrastructure assets?

 

According to the RBA deputy governor Guy Debelle who was the assistant governor of financial markets at the time of the GFC, said recently that the Rudd stimulus was undoubtedly the right decision , even allowing for hindsight .
I wonder how the current government would deal with something like that today, I suspect they would just throw everyone under the bus, based on their previous opposition to stimulus spending.
Although they are doing a pretty good job at throwing each other under the bus at the moment.

'On the edge of an abyss': RBA reflects on Lehman collapse 10 years on

"You were seeing some really historically very deep and liquid markets seize up."

"Debelle backs Rudd 'cash splash' as 'effective'
In Australia, the then Labor government — led by Prime Minister Kevin Rudd and Treasurer Wayne Swan — responded with massive stimulus dubbed "a cash splash" to keep Australian consumers and businesses spending.

Dr Debelle said that decision to spend the revenue proceeds of the resources boom — along with guaranteeing bank deposits — was undoubtedly the right decision, even allowing for hindsight.

"It was the right thing to do," he said.

"The cash splash, as it was called, was an effective way of getting the stimulus into the economy pretty quick and it worked."

Dr Debelle is in the business of predicting the next financial crisis and believes the next one will be different to the events leading up to September 2008."

 

Technicaly you missed Kevin Rudd and Julia Gillard.
If you remember they wanted to impose a super mining tax because we were in the boom?

 

Plus our migration is unlikely to end anytime soon been going for well over 200 years.

We are large place with alot of assets good climate great people.

 

Do you have the chart for Imports? thats important as well to see if we get to a trade surplus. And are your exports denominated in AUD or USD? makes a big difference. AUD has gone down almost 30% past few years so if its in AUD then the growth doesnt mean much.

Budget will only be back in surplus with spending cuts as spending keeps increasing with population. The main spending is in welfare and health, pollies need to keep this spending up or lose their votes. They will also need to spend more on infrastructure to keep economy afloat now that house prices are coming down.

LNG ramp up and Coal prices can be very transient as well depending on oil and commodity prices.

 

Thats a great point about the gas , but are we selling ourselves short with our massive gas exports . With the exception of W.A no one has managed to reserve a percentage for domestic use.
Even on two big new projects about 300km of the coast from Broome , but in Federal waters , in the Browse Basin its all exported.
One is the Shell Prelude which is loaded straight onto ships and exported and the other is the Inpex Ichttys project through Darwin, but closer to Broome , but again its in Commonwealth waters.

 

Incorrect. Even if we assume exports stay the same and currency depreciates (I.e AUD falls) it’s good for economy. This is the reason why some countries, China for example, artificially devalue their currency.

If AUD falls
1) Imports are more expensive. People buy less from overseas and more locally. Local production becomes competitive and manufacturing starts to pick up. Remember when AUD was equal to USD? Manufacturing was shutting down like insane and shedding jobs. Now the reverse is happening though ideally Australian manufacturing would need AUD at 60 US cents to be competitive.
2) You get more dollars for the same amount of exports. Before you were selling a kilogram of Product A for 1 USD and getting 1 AUD. Now you are selling it for the same 1USD and are getting 1.3 AUD. Awesome more money no more work. In fact you can reduce your prices and become more competitive and sell more. Bigger economies of scale. Treasure Wine estates is a good example of a company that constantly highlights how Aussie wine exports are benefiting from lower AUD.
3) We are a service economy. Lower AUD means local labour becomes more competitive.

A million of other reasons why lower AUD is good.

Caveat: important to distinguish between lower currency and a free falling currency. I’m not talking about a Tirkish lira scenario.

Disclaimer: everything in this post is imaginary and theoretical only

P.S. Do your own research.

 

It doesn't get reported much for whatever reason but we've already had a massive cumulative trade surplus over the past 21 months of A$25 billion.



There was a major blip at the end of 2017 due to Cyclone Joyce in the Pilbara but the whole of 2018 has been a huge surplus of $8.2bn.

Agree commodity prices are volatile, more important for the Federal Budget will be the trajectory of employment - if the current pace holds up then balanced budget is imminent, possibly even by June.

Still won't be enough to save the Coalition, though, they're well & truly shot in the polls!

 

Good to know we are in a trade surplus, perhaps that's why no one in Canberra is too concerned about house prices moderating in Syd/Melb and also why the AUD was holding up pretty well until recently.

with regards to employment, I am not too sure how that will go if property prices continue to fall and loan volumes fall. That will surely have some significant negative filter down effects into construction businesses like bunnings.

In any case, I do wonder how long before we see our next election and change of PM LOL.

I will be betting on BS ;D



P.S. @Noobieboy : Note that I did not in anyway say that a lower AUD is not beneficial.

What i meant with the exports in AUD was that for example : lets say we exported 10 billion USD worth of commodities this month. Then next month we export another 10 billion USD. However if the AUD dropped 5% in this time, then if you chart it in AUD, it would seem like exports increased 5% and seemed like some growth happened when in fact exports were flat if denominated in USD.

In the past year we have had the AUD gone down from 80c to 71c to the USD in the past 9 months. That's a 10% drop. So if you use AUD to chart exports, it may seem like 'hey we had good 10% or more of growth. But in absolute USD, there may not have been any growth in export value.

So when looking at AUD denominated charts we need to keep in mind the currency fluctuations happening.

 

Perfect @Kangabanga. Just was making sure we are on the same page.

 

America?

"United States
Tonnes: 8,133.5

Percent of foreign reserves: 75.2 percent

With the largest official holdings in the world, the U.S. lays claim to nearly as much gold as the next three countries combined. It also has the highest gold allocation as a percentage of its foreign reserves at over 75 percent. From what we know, the majority of U.S. gold is held at Fort Knox in Kentucky, with the remainder held at the Philadelphia Mint, Denver Mint, San Francisco Assay Office and West Point Bullion Depository."

 

Yes, but for the last 12 years it has been triple the long term average and is plainly not working. So there is always the chance of a popular backlash. We might be large but a lot of it is not arable so we have quite a limited carrying capacity which we will be bumping into before long.

 

There is definitely growing discontentment with the immigrant policy.

Lol maybe Scott Morrison should consider reducing immigration. That might help him to win the election.

 

Some how I doubt it as his only approach is to lie about it.

 

Countries like japan and China devalue their currency because their economy revolves around manufacturing,ours is almost non existent, we dont even have a car industry anywhere.
We export commodities, and i dont think the likes of BHP, Rio ,Chevron and Shell will share the love to much.
Much of it will go to shareholders.
For the average person in the street, everything just gets a little more expensive .
Including mortgages when a portion is funded from overseas .
For people that work in travel and tourism its good news , but at the same time ,these industries dont really pay a lot in wages.

 

Tourism doesn't pay much to individuals, true, but it employs unlimited numbers of people. It has serious flow-on benefits to support industries - transport plus vehicle maintenance, cleaning, gardening, food and beverage, printing, wine industry, advertising, furnishing to name a few.

 

Australia's manufacturing sector has never been stronger

Just employs a non existent 800,000 australians for about $350 billion worth to our economy.

 

I think immigration levels will become a BIG political issue of the future.