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Tom Scollon
Chief Editor
There has been a fair bit of debate in recent days about tax cuts at both a federal and state level. The fact is we don't need them. For two reasons.
Firstly the Reserve Bank is on the interest rate warpath and we are more than likely to see another .25% increase in either April or May – and then a pause to see how we react to the waving of the stick. The prime reason for raising interest rates is to hose down our spending exuberance. It is not just to avoid a bursting of the huge property bubble. So if the Fed is trying to tame our spending then why would the government want to give us more to spend?
Secondly what this country needs is an increase in capacity. We need much better infrastructure – roads and railways – so we can carry goods more cheaply and we can reduce the ‘clogging' of our transport infrastructure which is an enormous cost to our economy. We need to improve our water and energy resources. We need to increase our labour capacity so that the strains we are now seeing on employment capacity are eased.
Despite the tentativeness we are seeing in our share market right now – as I write the All Ords is down some 58 points - something we have not seen for some time – we are still well into a resource boom. The world wants more and more of our resources yet we do not have the capacity to ship more.
Some years ago I had the privilege to sit alongside the then Managing Director of BHP, Sir James McNeill at a management training dinner and he said, ‘Son, you don't buy your straw hats in summer'. He was talking about industry capacity and his point was that industry needs to be smart and plan capacity well ahead of the boom.
Governments also need to be smart and if they want to really improve the lot for Australians then give us something that will last – an investment that will grow in the future and not a few sweets that will soon be forgotten.
Enjoy the ride.
Tom Scollon
Editor
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