Naturally the media is full of Julia Gillard as Canberra closes down for the winter break. What is less clear is that Wayne Swan is going to be redoing the budget figures as Kevin Rudd and Lindsay Tanner eject from the tough team that has begun the rewrite of the forward estimates to respond to pressures to bring in a surplus earlier than would otherwise be required or expected.
Gillard is still committed to returning the budget to a moderate surplus by 2013 and carrying forward the schedule of tough management of the public sector expenditure over the next few years. ANZ bank chief economist Warren Hogan expects a compromise on the Resources Super Profits Tax, which may mean a delay in the introduction of the rise in the superannuation guarantee from 9 to 12% and that there will be uncertainty around the new leadership despite Wayne Swan’s retention of the Treasury Portfolio.
All this should lead consumers to want to save and cut back luxury expenditure, but the reality is that customers are coming back to major household expenditure. The reality is that there will be a further instalment of the tax cuts, more payments in pensioner’s pockets and a greater willingness of households to believe that the GFC was over talked by Rudd last year. Taken together this suggests that smart companies will make more direct contact with their customer base, offer new financial year specials to attract new customers and continue to exercise a steady hand over inventory until the dollar continues to rise and gold prices begin to fall.
There has been a strong rise in buying sentiment with 58% (up 2%) of Australians saying now is a ‘good time to buy’ major household items is also great news for Australian retailers — now at its highest since mid-January.” Gary Morgan says: “Just days before Kevin Rudd was forced to step down as Prime Minister the signs of improvement in his position were just emerging. Weekly Roy Morgan Consumer Confidence has climbed to 123.6 — its highest point since April 24/25, 2010 as all key indicators rose after strong rises in stock markets around the world, and after Kevin Rudd indicated he had started negotiating with the mining companies about the Government’s proposed 40% Mining ‘Super Profits’ Tax.
Especially significant for this week’s rise was rising confidence about personal finances with 30% (up 4%) of Australians saying their family is ‘better off financially’ than a year ago compared to 28% (down 7%) that say they’re ‘worse off financially’ and 41% (up 4%) saying they expect their family to be ‘better off financially’ in a year’s time compared to only 15% (down 2%) that expect to be ‘worse off financially”.
It is too soon to tell whether the first female PM will lead to any significant change in retail spending, but there is no doubt that small business can now see a rebound in consumer demand, higher profitability and improving economic conditions. Business confidence has already been restored since the record low levels recorded in Sensis surveys over the past year.
Small business will be looking to the Gillard government to provide more direct incentives to small business to take on workers with disabilities, train more skilled workers and make a real effort to curb bureaucratic interference from the ATO and the regulators.
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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.
Email dr.colinbenjamin@marshallplace.com.au
Contact: CEO Dr Jane Shelton, Phone +61 3 9640 0099
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