IT is really tough on an aged brain but your scribe regularly reads the financial pages in the newspapers.
The trouble is economists. It seems that if you asked 10 economists a question you would get two dozen answers and all would be different but there was one report recently that maybe we should all think about because it came from the Reserve Bank and history has shown the Reserve people do talk sense.
This one said Australia’s economic outlook has been downgraded because of weak prices for our exports, a stubbornly high Australian dollar and budget cuts. In other words, it seems we could be in for some tough times, particularly if the Euro or the American dollar plummets – and that is always a possibility.
One economic writer described the US finances as “teetering on the fiscal cliff”.
That is why there is logic in the federal government’s attempts to bring our national debt down and hopefully gets our budget back in the black.
There is one thing that the economists do seem to agree on and that is that no one seems to have any scheme to bring down the value of the Australian dollar.
The trouble is that our country’s finances are so strong that about a dozen of the biggest economies in the world are buying up Australian dollars because it is so strong. Sadly, this brings about the twospeed economy that has everyone concerned.
The problem is that our mining boom is continuing and miners are still making lots of money while the rest of our economy, particularly our manufacturing sector, is suffering.
While the mining states, particularly WA and Queensland, are hauling in big royalties from their mines, it doesn’t help the federal budget as much as it should and this is a big problem. Sadly, the mining tax had to be scrubbed because of a well financed campaign by the miners.
Australia needs to encourage all sorts of development but how much should we contribute to, say, a mining venture? One company with a big mine in South Australia wants the federal government to carry out costly improvements to the railway system to Darwin, Adelaide and Perth.
Never having travelled on any of these lines your scribe has no idea if the lines are adequate or not but the mining company says it has plans to export about 12 million tonnes of ore per year and has a “reasonable aspiration” of increasing that this rate of production will increase.
The big question must be “who will benefit from a successful mine? And how much will Australians generally benefit from the mine in the form of taxes?”