Expectations crunch

The credit crisis may go longer than it needs to purely through the lack of direction so evident from our leaders. COLIN BENJAMIN

Colin Benjamin

By Colin Benjamin

In the next week the RBA will be faced with an expectations crunch. Wayne Swan and the Federal Government have been putting downward pressure on inflation while the spin-doctors at Ford were announcing a downward correction in their labour force across the country.

Even Westpac chief economist Bill Evans, who last week was giving us the good news that consumer confidence was on the rise is now saying that “it is now clear that we need a significant easing in interest rates”, accepting the suggestion that consumers are saying that the economy is weaker than the economists had led us to believe.

Finally, the RBA is in a position to make a 0.5% cut so that we give the market a clear sense of direction – we are going to increase the prospects for job creation, develop value-added industries and support small and medium business enterprises that are prepared to go global via the net, and a few well-placed relatives.

It is now obvious to most people that the sub-prime crisis has challenged all of the players who do nothing more than hope for a bottom to the market to make their next speculative killing. It is clear to the average Aussie household that their kids have less and less chance of moving out into a new home, that their schools have no sense of direction and that the leadership of the country is overseas.

The Consumer Confidence barometer shows that there is a continuing credit crunch with vast numbers of unionists and low-income households expecting that nothing will change and everything is getting worse. Last year’s election was a desperate lunge of hope that Kevin07 had answers to the unions’ campaigns about the crisis in our hospitals, schools and childcare centres. Now there is a sense that Kevin would rather be anywhere else but Australia because he doesn’t have any idea what needs to be done.

It was easy for the union movement to generate a campaign on WorkChoices that would affect somebody else while losing thousands of members a year throughout the campaign, without having to present a case for value-added industry, assistance to small business to take on extra staff by dropping payroll taxes and counter other disincentives to growth, instead of the fear of union entry via OH&S changes and unfair dismissal provisions.

Across the nation, studies are showing a willingness to reverse the hope that Labor has any answers, and to punish them for being strong on spin and weak on leadership. This expectations crunch will mean that only practical and immediate actions will be taken as real and everything else will be seen as more committees and more excuses.

There is a growing sense of frustration that is fuelled by kids coming home from the Olympics and asking how it is that Hong Kong has an effective “Octopus” ticketing system, there are fast trains and efficient underground systems, that sports facilities in local communities are so much better, etc. Whichever party can harness this comparative experience with some clear, well defined and stepped-out plans is going to have a stunning set of victories with a frustrated electorate.


Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton. 

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