Australia has one almighty brand problem

Australia has one almighty brand problem
Australia has one almighty brand problem

I was asked this week if I could remember the last time we saw such a hostile response to a federal budget. I responded ‘no’ – as it would have been well before we had access to the internet.

When the world moved into the online space, the internet always appeared with a capital I, which has been replaced with a lower case 'i'. So what happened to the capital “I” one might ask? Well the “I” became you – the consumer, where through this very process (for better or worse) this online revolution has changed how we do business in the modern age.

When one looks at the problems facing the budget, it’s quite clear that Australia has a massive productivity problem. Wages have flat lined which has seen living standards rise just 2.6% over the last five years. The modern day terminology is “on hold”, which is exactly what the Reserve Bank of Australia is doing with the cash rate given our labour market is, best case scenario, neutral and employment growth won’t exceed population growth.

When you’re paying (an estimated) $1 billion just in interest each month, it’s time for any responsible government to say ‘enough is enough’. Just like our neighbours across the ditch did in recent years when they too had to re-calibrate their economy and today, are predicting a $370.5 million surplus with 4% growth.

Unfortunately in Australia’s modern day political arena, there is no room for compromise given the central influence is to play populist politics, not policy. We see differing opinions on how Australia will create a sustainable budget that successfully negotiates a path into the future. If Australia was to continue on the current path without significant change, the present budget would be seen as a soft – touch.

Australia has one almighty brand problem

Source: Department of the Treasury

For arguments sake, this is the budget graph that brought a ‘stunned silence’ to the Coalition where Secretary of Treasury described it as “the most alarming single piece of information” he had seen about Australia’s future economic prospects, adding that it created a “stunned silence” when he presented it to both the state treasurers and cabinet. Again the significant point to be drawn from this graph is that with our declining terms of trade and an ageing population, our productivity needs a complete ‘about–turn’.

I wouldn’t hold your breath on that because, when one looks at Australia’s top 20 brands not one is directly involved in technology. On the other hand when one looks at 2014 BrandZ Top 100 (this is a PDF file so takes a little while to download but well worth the read) we get a pretty good idea of how bad we are performing on a global stage.

Following three years at the top, Google has bumped Apple from the number one position when, in 2014, Google’s brand shot up 40% in a year to US$158.84 billion (A$171.86 billion). All up The BrandZ Top 100 Most Valuable Global Brands 2014 added $310 billion to reach $2.9 trillion in brand value. Prior to the BrandZ Global 2014 results, the Top 100 had increased an average of about 6%, $125 billion annually, since the global financial crisis of 2008 and 2009. This year, led by apparel, with a 29% overall increase, all categories rose in brand value. And 10 of 14 categories experienced double-digit growth, indicating that brands across the economy have moved beyond recovery into a period of new growth. In the meantime, Australia sits in a mental void trying to work out what to do following the mining downturn.

The rise of China as a superpower could see it control as much as half the world’s financial assets by 2030.

For those who recently raised concerns about China’s attraction to Australian property, Secretary of Treasury, Martin Parkinson, told a forum this week in Hong Kong that China’s foreign exchange reserves now approach $4 trillion. Today, China now accounts for around 11% of both world trade and global GDP but only accounts for 3% of gross holdings of overseas assets and liabilities. He went on to say that this figure, which includes foreign exchange reserves, could triple to $16 trillion. The rise of China as a superpower could see it control as much as half the world’s financial assets by 2030.

Puts the Australian budget into a different perspective, especially when you read how China is preparing for its ageing population – paying for the grey. Although Australia is a long way off telling families they have a limit of just one child.

For the second time in 2014 Mosman houses for sale managed to stay above the 100 mark which either tells us more people are selling or houses are not selling as fast. It will be interesting to see in coming weeks, what the correct reason is, although we should note that clearance rates have dropped significantly. Sceptics no doubt, will attribute that to the federal budget!

Robert Simeon

Robert Simeon

Robert Simeon is a director of Richardson Wrench Mosman and Neutral Bay and has been selling residential real estate in Sydney since 1985. He has also been writing real estate blog Virtual Realty News since 2000.

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