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borrowing our way to growth « Previous | |Next »
November 18, 2008

Robert Gottliebsen in Spending what we don't have in Business Spectator says:

we don’t have the money to hand out tax gifts in the longer term given that the mineral boom, which spawned all our tax cuts in recent times, is no longer there. Right now we are dependent on the Chinese and Japanese shipping us big lumps of money to finance our consumers who are among the most indebted in the world.

That's a different scenario about our consumers ---deeply indebted. Gottliebsen says that we can only keep going if our banks can keep borrowing overseas in a world where borrowing has become a dirty word. Meanwhile Japan slips into recession due to reduced demand for its exports in the US and Europe. That means less Japanese demand for Australian coal and iron ore.

Listening to the local government chat on Radio National Breakfast about the Australian Council of Local Governments in Canberra I was taken back by what the local government mayors didn't say. All interviewed said they had need for lots of infrastructure investment to help stimulate economic growth not one connected that infrastructure investment to help live in a world of climate change.

Using the global economic crisis to provide a stimulus to tackle climate change is not on their radar. They -- and the Rudd Government --- are talking in terms of roads, swimming pools, parks, community centres ---not recycling storm water, solar power, or connecting wind power to the national grid, energy efficiency, modern sewerage treatment plants. So the rhetoric of "decisive action", "being ahead of the curve" , and "acting decisively" with respect to climate change is political spin.

Here we are talking about new infrastructure projects----dreaming---- when local councils around Australia do not have the funds to maintain existing infrastructure. They are restricted in terms of their revenue and so cannot really plan for the long term.

| Posted by Gary Sauer-Thompson at 5:50 AM | | Comments (7)
Comments

Comments

Local government is talking about taking over some of the ABC child care centres. So are community banks such as Bendigo and Adelaide Banks.

$300 million is not much for all the local councils in Australia. Its public relations--being seen to do something--- not political governance for the long term.

Michael Sainsbury in The Australian says that there is:

no real signs of commitment - or a cross ministerial group, for instance - to focus on driving innovation and technology industries.The single infrastructure spending commitment so far is the $4.7 billion of taxpayer funds being tipped into the grandly named National Broadband Network

He ends by saying that as s it sprays taxpayer money around to grow the economy, the Government should think hard. Perhaps it should consider a national innovation fund set aside for investment in new technology, clean energy and bio-technology.

Otherwise Australia risks becoming even more like the land that time forgot.

The rabbit in the hat as far as councils are concerned is giving them money for water infrastructure. Community centers,swimming pools and broadband will be placed on the back burner.
Water infrastructure in country towns is a vote winner.

BHP Solar is going to quit the production of photovoltaics panels in Australia in March next year. We can kiss Australia's hopes of being a world leader in solar power goodbye.

Les,
re your comment "water infrastructure in country towns is a vote winner."

I would have thought so too.

Nan,
BHP, which had around 40% of the Australian market, says that it can produce the photovoltaic panels more cheaply overseas. The aim is to drive down production costs so that solar is more competitive with grid connected electricity. The latter is currently 30% cheaper at a global level.

They can produce photovoltaics panels more cheaper if they locate themselves closer to their suppliers of raw materials (eg., silicon wafer) and where they can operate at scale.

There's lots of govt money for the car industry to modernize and innovate by producing greener cars. However, there's very little for the renewable energy sector; little nurturing of entrepreneurs to help them seize the moment to create alternative sources of energy.