AUSTRALIA’S RISE TO RECONCILIATE: AUSTERIC TIMES
Australia’s rising fortunes are fuelling a global demand for more Australian products.
The Australian dollar has been falling against the dollar since July 1, as fears about a US tax cut pushed up demand for American-made goods.
“The global impact of the tax cut has been to pull Australians into the US market, particularly for consumer goods,” said Greg Sheridan, chief executive of Australia’s Australian Manufacturing Council.
He said that helped to lift demand for Australian products in Europe, the US and China.
However, a US-style tax cut would likely trigger another backlash in Australia, where it has become increasingly difficult for the Australian economy to compete on global markets.
“We are now at the point where we are going to need to do some very aggressive spending,” Mr Sheridan said.
Mr Sheridan said that could be difficult for Australians to bear given that the country is already struggling with unemployment, and it’s hard to imagine the economy will bounce back from the blow.
“That’s where the big question is,” he said.
“Are we going to be able to spend that money?
And if so, what’s the impact on the domestic economy?”
We can’t just do it all ourselves.
It’s going to require a very big push by the government and the private sector.
“What’s the reaction to the Australian tax cut?
There have been mixed reactions to the tax cuts.”
This has been a very, very complex issue,” Treasurer Scott Morrison said after announcing the tax changes.”
I would be surprised if there’s not some degree of backlash.””
I think there will be some people who will argue it’s a bit too big and a bit heavy handed,” he added.”
There’s a couple of other people who think the tax rates are too low.
“But while some critics of the changes argue that it’s not the right time to implement tax cuts, other experts believe the changes are needed to stimulate the economy.”
They are very welcome reforms,” said Mark Tait, head of global business strategy at the Institute of International Finance.”
It has taken time for the country to get back on its feet and this tax reform could be the catalyst.
“What are the changes?
Australia has long had a strong manufacturing sector and is now experiencing its most productive year in nearly two decades.”
In some ways it’s really encouraging, the economy is getting back to a real productive pace,” Mr Tait said.
The country also has a strong research and development base, with more than 70% of the country’s research and technical research being done in Australia.
But it also has significant trade barriers, and while the cost of imports has fallen since the US tax cuts were announced, the price of Australian goods has been on the rise.
The US has also had a stronger dollar than Australia, and its economy has expanded faster than that of Australia.
Mr Morrison said the changes would help Australia compete with other nations in the world.”
With these tax cuts that we’re making, the dollar is going to go down a little bit,” he told reporters on Friday.”
And that’s a good thing for the economy, that it gives us an opportunity to have more confidence in the currency and in the future.
“What about the jobs impact?
While the tax rate cuts will be a boon for some, it’s unlikely they will translate into the jobs gains predicted.”
A lot of people in Australia will be concerned about the impact that this is going.
It will hurt people, it will hurt businesses, it could be devastating,” Mr Morrison said.”[But] I think this is a great day for our economy.