June 14, 2012
Glenn Stevens, the Governor of the Reserve Bank, Glenn Stevens, in a speech titled, "Glass Half-full" last week has observed that the nature of public discussion is unrelentingly gloomy despite reasonable growth, low inflation and unemployment.
This gloom and negativity has intensified over the past six months. even before the recent turn of events in Europe and their effects on global markets, Australian's were grimly determined to see their glass as half empty. This is in the context of the multi-speed economy undergoing structural change due to the mining boom.
Why the gloom? Steven's says that one reason is that the period of real household assets per person rising at 6 per cent or more per annum and households actually to withdraw equity from their houses, to use for other purposes came to an end in 2007. Households began to save to reduce debt levels and their consumption patterns have shifted from goods to services. That impacts on the retail industry.
the key message for today is that the multi-speed economy is not just about the mining sector squeezing other sectors by drawing away labour and capital and pushing up the exchange rate. It is doing that, but slower growth in sectors that had earlier done well from unusually strong gains in household spending would have been occurring anyway, even if the mining boom had never come along. It is these changes in behaviour by households, in asset markets and in credit demand, that I think lie behind much of the disquiet – dissatisfaction even – that so many seem to have been expressing.
This post-boom depressive public mood is in flight from the structural adjustment currently happening behind our backs in the sense that is expresses an unwillingness to adapt to the changes.
You can see the negativity in the fears that fears that widespread deployment of solar PV and wind could not be supported by the national electricity grid. Behind the fear of fluctuations is the resistance to the development of a highly flexible electricity grid and one that is designed or adapted for renewable energy sources. Behind that resistance stands a refusal to change, let alone end, the dependence on centralised fossil fuel generation (ie coal) and shift to to renewable energy based society.