Poverty, not productivity, is the path for Australian competitiveness

[SpacePete]

Comment by Deutsche Bank's Australian chief economist on the reliance on devaluation of the AUD to boost exports:

"Unfortunately, it makes us more competitive by making us poorer, as opposed to productivity, which makes us competitive without making us poorer at the same time."
From: Aussie tipped to dip below 60 US cents

Unfortunately it will be a race to the bottom.

 

[col0016]

That was what I never understood about wanting the dollar to fall for exports... what is the point of exporting more if the money you get is worth half of what it was a year ago? Is it just to improve our terms of trade? But since we rely so much on importing cheap crap from China etc, won't it just make all that cost more making it worse?

I imagine a devalued dollar is good for exporters and bad for the rest of us.

 

[SpacePete]

Yep. And a falling dollar makes it even more expensive for local business to tool up with technology from overseas to even remain competitive. And then banks will be reluctant to lend money to businesses in an economy that is contracting.

 

[RichardAL]

Yep. And a falling dollar makes it even more expensive for local business to tool up with technology from overseas to even remain competitive. And then banks will be reluctant to lend money to businesses in an economy that is contracting.

If banks become reluctant to lend money, there might well be issues in the property markets - at least that's what I've read recently !

 

[smk762]

http://www.smartcompany.com.au/fina...-small-businesses-over-next-three-months.html

The Australian Tax Office plans to target up to 90,000 small businesses it says are failing to comply with their tax obligations over the next three months...

The number of wind-up applications made against small businesses is also soaring.

Previously the tax office has denied the wind-ups were a "crackdown" on small business but many SMEs begged to differ with one SmartCompany reader complaining "big multinationals are raping this country of profits and taxes yet the ATO will go after the small guy who employs a few people and is struggling to survive".

How's an Aussie small biz meant to compete with an international megacorp running double Irish sandwiches out of Singapore? Little guy spends too much time navigating through the tax system rather than building the business, and then get bullied by the ATO for less recouped than it probably costs to investigate. All this adds stress and loss of productivity to local SMEs until they eventually go bust or are absorbed by an international megacorp.

I though the Libs were meant to be good for small business?

 

[SpacePete]

I though the Libs were meant to be good for small business?

Remember when the Libs were demanding the opposition support a budget measure to let small businesses write off new assets worth up to $20,000 in one financial year instead of four? Remember they were demanding it be passed as a matter of urgency? And Labor agreed and called a vote to get it passed, and then the Liberals voted against it because Labor tried to get it passed urgently.

That should explain clearly the priorities of the Liberal party. They care more about playing these petty political games than they do about supporting small business.