Beyond the new normal - where to now for Australia's multi-speed economy?
"As a bank, we're a bit more optimistic, but there are still a lot of challenges out there." This was the view of Alan Oster, Group Chief Economist at NAB, at Lander & Rogers' annual Economic Briefing in Melbourne on Wednesday this week.
Over 300 attendees heard Alan Oster, Group Chief Economist at NAB; John Durkan, Managing Director of Coles; Ken Marchingo, Chief Executive Officer of Haven; Home, Safe; and Carolyn Viney, Chief Executive Officer of Grocon; discuss the new "normal" for the Australian economy and the outlook for their respective sectors.
According to Oster, a key issue facing the Australian economy is the significant slowdown in mining investment as we move away from the investment phase into a focus on export. "Against this backdrop, the RBA’s challenge is to stimulate the rest of the economy to fill in the hole," said Oster. "Non-mining business investment is still quite poor, and this is a key issue to resolve."
Oster was quick to clarify the question of whether Australia was in a housing bubble, stating unequivocally that there was no housing bubble. He also cautioned against talking about Australian house prices as being among the most expensive in the world, citing European cities such as Paris as places where house prices were truly unaffordable.
Commenting on the food retail sector, fellow panellist, John Durkan, noted that while food retail doesn't experience the same highs and lows as other industry sectors, feedback from their customers indicated that Australian consumers were still feeling a bit uncertain about what the economy was doing. As a result, consumers are feeling the need to be cautious in terms of value, and therefore food retailers have been focused on productivity and using technology to help deliver lower costs to their customers.
From an affordable housing sector perspective, Ken Marchingo said that the collapse in low-skilled jobs in Australia is leading to the creation of a generational underclass. This was particularly visible in regional areas where he said organisations like Haven; Home, Safe were dealing with third generation unemployed families. Marchingo also said lack of sensible policy around affordable housing means that people who have worked all their lives are finding themselves unable to afford to rent on retirement. "We've got to address the house price issue, but we can't do this until we address housing policy in Australia," he said.
Caroline Viney agreed that housing and housing policy was an issue in Australia, commenting that it was not just a government issue, but that industry also has a significant role to play. In terms of the economy more broadly, Viney said that, "In Australia, we have a level of prosperity that we take for granted." However, she also noted that with the decline in mining investment, further economic growth is likely to be significantly impacted without corresponding growth in infrastructure investment.
The Lander & Rogers Economic Briefing is an annual event held in Melbourne and Sydney. Further information and footage of the Briefing is available at Lander & Rogers' YouTube channel.