Post election rear vision analysis presents a very fragmented and divided scene with competing political tribal leaders conspiring to produce an uncertain future.
Parliament is divided between rural agrarian socialists (the Independents); inner urban environmentalists (the Greens); mining state nationalists (resource boom state righters); the xenophobic outer suburban workers (the lost labourites of NSW and Qld) and the contractors/consultants and propertied clans living well in middle-class isolated burbs (the Conservatives).
In this environment, smart business leaders will need to identify which segments offer the best chance to convert special interest pleadings into profitable prospects. There will be plenty of opportunities to get close to the market, find the emerging trends and build a three year business plan based upon the inevitable handouts won by each of these distinct market segments, including a farming boom, broadband connections, remote area investment allowances and handouts to dozens of newly marginal electorates.
Smart companies are only too well aware that their costs of doing business are rising at the same time as consumers are retreating from excessive consumption. Consumer confidence is falling according to Westpac and households are heeding Tony Abbott’s call to cut down on the debt and pay off their mortgages. The trading desks are giving a rate rise a 60% bet following the RBA’s minute stating: “Members considered that if the central scenario came to pass it was likely that higher interest rates would be required, to ensure that inflation remained consistent with the medium-term target”.
Glenn Stevens cannot hide his glee at the prospect of preaching that the property market is what people should be most worried about at present rather than the costs imposed on consumers by the continuing desperate plight of the resources boom magnates. He said earlier this year: “I think it is a mistake to assume that a riskless, easy guaranteed way to prosperity is just to be leveraged up into property. It isn’t going to be that easy”.
The RBA intends to jump all over any optimism by small business with a couple of rate rises this year because the mining and oil industry giants are granting huge wage rises to their workforce and the rest of us are going to have to cut back our spending to pay tor the multi-speed economy.
Glenn takes the economic big picture approach that says that there is only one national market and we all have to make a donation to the national interest rates being hunted down by international carry traders from the depressed Northern Hemisphere capital markets.
Europe’s economy is slowing as global growth cools and governments from Ireland to Spain step up spending cuts to rein in their budget deficits. German investor confidence fell this month and the European Union said last week that the region’s rate of expansion probably halved in the current quarter.
In America we see a stream of economic advisors jumping ship ahead of the mid-term Tea Party elections and the Obama administration planning to print money as it goes out of electoral fashion. Glenn is determined that we should join the pessimists with a bout of anti-inflationary zeal.
Now is the time for all parties to come to the aid of the country. We need to demand real consideration to extending super profit taxes to the financial institutions that gave us the short-lived speculative crisis and call for cutbacks to payroll taxes that penalise start-up enterprises ambitions to become larger business enterprises.
While gold prices continue to break records and new regulations drive banks to hoard funds, it is time to shift the focus from month-by-month credit squeezes and reward smart companies that develop new products and services, invest in skills development and innovation and enhance productivity.
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Dr Colin Benjamin is an entrepreneurship and strategic thinking consultant at Marshall Place Associates which offers a range of strategic thinking tools that open up a universe of new possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship.
Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099
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