The news broke on the second morning of the Sanctuary Cove boat show. Automotive giant Ford was to close its Australian manufacturing facilities with a resulting 1,200 job losses. That the Australian government had pumped in a$34m of tax payers’ money in 2012 to future proof Ford in oz, turned an economic headline into a political one.
For the industry gathering on the pontoons and in the marquees at Sanctuary Cove resort it was the latest example of a government’s shortsighted handling of an economy that to outsiders looks to have been in pretty good shape.
Unlike most other developed nations, Australia’s economy kept growing in the aftermath of the 2008 global downturn, notching up 21 years of uninterrupted economic growth, helped more recently with a mining boom fuelled by Chinese demand. the robust headline financials – GDP growth of around 3 per cent, inflation 2.5 per cent, interest rates 6 per cent and unemployment 5.5 per cent – unfortunately only tell half the story.
For many in the marine industry, the mining boom has proved something of a false idol, creating a two-tier economy that has pushed up the value of the Australian dollar, effectively tying one hand behind the back of exporters.
it’s not just the dollar that has been on the increase. The mining industry had become notorious for paying big wages, creating a gold rush fever, with workers downing tools in industries across Australia to make it rich out West.
Now Australian consumers are nervous. As China’s growth wanes and the mining sector comes off the boil, the props to the economy are coming down one by one with no obvious answer to where future growth and jobs will come from.
NOTE: This is an excerpt from the country report included in the August/September issue of IBI magazine. IBI Plus subscribers can download the complete report from the IBI Plus website.