Happy new (financial) year

With over $300 billion in new mining projects being pushed into the Australian market this year, the decision of the RBA to leave rates on hold is surprising but to be appreciated.

Only one in three households believe that their family can expect that their family will be better off financially this time next year and only 30% of consumers say that they have felt the benefit of the strong Aussie economy in terms of being better off this year than last year.

There has been a steady decline in confidence levels until the threat of another mortgage rate hike was put on hold until August or September this year when we will all be asked to jump all over union claims for a share of the boom town wealth. Talk of great big new taxes; skills shortages and transfer of companies off-shore have increased concerns about job prospects outside the mining sector.

Last month the nation only managed to establish a net 7,800 new jobs with a loss of 22,000 full-time positions, following admissions that there were really another 29,400 jobs lost in April. Is it any wonder that the chances of Glenn Stevens hiking rates in July are now down to one percent?

Gary Morgan says, “The recent decline in weekly Roy Morgan Consumer Confidence, which had fallen for three straight weeks, has halted as Consumer Confidence rose slightly to 113.8 (up 1.1pts).”

The Consumer Confidence barometer has been a very steady guide to the underlying reality that is fuelling Tony Abbott’s cost of living campaign. Households know that they are going to be paying more for electricity, while the big end of town gets all the benefits from the mining boom, highly pad graduates can pick and choose between five or six  $100+k a year jobs before they even sit their final exams and construction workers can demand 7% a year wage rises.

We should be seeing a surge in consumer confidence in line with the value of the Australian dollar but the reality in a divided nation is that consumers expect the worst, while the mining companies that managed to stave off the super profits tax are passing on the costs to the rest of the country.

It is a healthy sign that Morgan’s CEO, Michele Levine, reports that an increasing majority of Australians – 59% (up 2%) – say “now is a good time to buy” major household items compared to 16% (down 2%) that say now is a “bad time to buy”. This means that smart companies that have been protecting their good quality sales staff and revising their inventories need to prepare for a rebounding new financial year.

Business and marketing contingency plans should be revised now to cover products and services for an increasingly cautious domestic market and a strong growth in opportunities for responsive service offers that deliver on time quality assured domestically available products and infrastructure supports. Now is the time to gear up for this new source of demand before the great Aussie beach party break-ups.

What this means for smart companies is that while interest rates are on stand-by for later in the year, find ways to meet with staff, explore ways to increase job security and approach the big banks for extended loans for good business developments. Everyone needs to become part of the team that is taking the business forward and preparing to benefit as the global economic recovery starts to cut in before the Christmas holiday season.

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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. Colin is also a member of the global Association of Professional Futurists.