Australia's Economy Is a House of Cards
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Take Australia National Broadband Network (NBN) strategy as an example. Connecting every house and business to a fibre optic line would have "future-proofed" the nation for generations. Instead it was destroyed by the conservative government, along with investments in renewable energy, a resources super tax and a range of other progressive ideas.
This country is run by dinosaurs. While there are intellectuals, theres also a proud culture of ignorance and weird working class arrogance. Instead of having pride in working class jobs and pride in working class people who put food on their families tables and support their community it seems theres been a concerted effort to warp it into and "us vs them" attitude of "true blue" working class Australians against white collar "know it alls". This is plain to see when the current Prime Minister and former investment banker goes into rural towns wearing his untarnished Akubra and adopts his fake working class accent to stoke tension between rural and city people.
Australia often has bushfires every 7 years or so that have historically cleared out a lot of dead wood and given the bushland an opportunity to breath and grow again. New policies to prevent bushfires meant woodlands accumulated fuel which led to cataclysmic-ally large bushfires like black saturday, ash wednesday etc.
Its hard not to think that Australias approach towards governance is similiar and that the only way for us to re-set the agenda is through a huge depression.
Well not only are they wrong. Matt Barrie (the author) is wrong too. No Prime Minister has ever been elected by the people. All of them have been elected by their party room. Australia elects Representatives and Parties. Mr. Barrie seems to be wading into topics that he doesn't have the chops for...
It's a shame because there is some interesting opinions in this that wind off into almost stream of consciousness.
If he had stuck to making his point with data and scrapped the anecdotes it would have made it an easier read.
It really need an editor and fact checking.
As of 2011 there were 7.7 million households in Australia (according to the ABS) so how does 910,000 (or 888,207 in the table) become "29.2% of all households in Australia"?
(I may well be missing something...)
> This brings me onto Australia’s third largest export which is $22 billion in “education-related travel services”. Ask the average person in the street, and they would have no idea what that is and, at least in some part, it is an $18.8 billion dollar immigration industry dressed up as “education”.
> While some of these students are studying technical degrees that are vitally needed to power the future of the economy, a cynic would say that the majority of this program is designed as a crutch to prop up housing prices and government revenue from taxation in a flagging economy. After all, it doesn’t look that hard to borrow 90% of a property’s value from Australian lenders on a 457 visa.
A 457 visa doesn't have anything to do with a student visa... This comment feels like intentional misdirection, because those two things are not at all related. (A 457 visa is a skilled worker visa - although as with all skilled work visas, it has got it's own controversy and, as the article points out (in an underhanded way I would say, again...), until recently had some very odd "skills" (and probably still does...))
> How much the banks will be left to carry when the market turns and these students flee the burden of negative equity is anyone’s guess.
AFAIK, if you're a temporary resident in Australia getting a 90% loan (and even if you're not a temporary resident in some (many?) cases) there's a requirement to get Lenders Mortgage Insurance. So... The insurer will be left to carry said burden, not the bank? Unless my understanding of LMIs is off. And again, they're not a student if they're on a 457 visa, so this is all a bit inaccurate anyway...
Back to the "education-related travel services" side of that quoting, friends of mine work in the Higher Education industry and it actually is huge business for them getting international students. And their respective organisations make a lot of money from it. (And it's not just higher education, even schools in Australia make a lot of money from international students.)
And, in my opinion more importantly, this is an export industry, so it doesn't matter that only "some of these students are studying technical degrees that are vitally needed to power the future of the economy". It's not about those degrees being vitally important to Australia's economy, because it's an export... (And the underhanded nature of that line is a bit much for me...)
> You now know what all these tinpot “english”, “IT” and “business colleges” that have popped up downtown are about. They’re not about providing quality education, they are about gaming the immigration system.
Sure, I mean, I don't know how technically accurate this statement is so taking it at face value, just because there are some dodgy education providers, the whole 18 billion dollar industry is now denigrated to an "immigration industry"? Apparently there are 6 Australian Universities in the top 100 worldwide [0], but no, the whole show is actually _mostly_ just an "immigration industry"?
("Ask the average person in the street, and they would have no idea what that is" - a huge number of my friends know that the Australian economy makes a heap of money from foreign students studying here, maybe they don't know it's the third biggest export, but still... Again with the underhanded language...)
This article is quite grating...
[0]: https://www.timeshighereducation.com/world-university-rankin...
> As if the Australian economy needed further headwinds, the developer-enamoured evangelical right have crucified NSW’s night time economy. Reactionary puritans and opportunists alike seized on some unfortunate incidents involving violence to simply close the economy at night.
In the last couple of years, the only lockout laws I have heard about apply to the CBD of Sydney, and nowhere else. But here, the author conflates the Entertainment district of the CBD with the entire NSW night-time economy.
Perhaps, by the numbers, it's fair enough to conflate those things. But a strongly suspect he's just very wrong.
That, combined with any downturn is going to see a bunch of Baby Boomers sell their houses to make up for their lost 401k money only to find that no millennials (and certainly no millennials without jobs) can or want to buy their houses.
Keep in mind, unlike the stock market which has dozens of safeguards and controls, the housing market has exactly zero safeguards. Think about that for a second. The housing market is operating off the same system Wall Street basically had in 1873.
Bubbles certainly do come and go, but the larger issue here, the one that will compound the bubble greatly, is the lack of political resolve to tackle it. A bailout is a political no-go. It looks like the full force of this bubble will have to be ridden out.
If anything 2008 was WWI, and the bubble coming up will be WWII.
tip: Start a local facebook group. The amount you can save in borrowing power tools is amazing...
In Sydney I counted 50+ cranes earlier this year. Will the demand for X amount of new towers continue? Will buyers support it or become Miami 2.0? How many empty condos are there in Miami right now?
They are also very prideful about the state of their economy.
I've also noticed cranes here are used for midrise apartment block construction which I'd never see for comparable building in the US. There's a lot of safety rules and a strict building code so maybe that's why.
From the article regarding Chinese investment: "Foreign investment across all countries into real estate as a whole was the largest sector for foreign investment approval at $112 billion, accounting for around 50% of all FIRB approvals by value and 97% by count across all sectors - agriculture, forestry, manufacturing, tourism - you name it in 2015-16."
And: "Around $32 billion invested in real estate was from Chinese investors in 2015-16, making it the largest investment in an industry sector by a country by far."
That's $32b of the $112b in real estate.
As to determining which is the most significant factor, I will leave that to those with far greater understanding of the area than mine.
The widely reported "104 quarters of growth" is indeed impressive but it's ironic that the achievement was breaking the record of the Netherlands -- who set their record through extractive industries (oil in their case). And in fact Australia suffers some of the "Dutch disease": a loss of other primary industries, like manufacturing, wage and property inflation, and a sectoral imbalance.
None of this means the sky is falling (or doesn't) -- the economy is flexible, and China's economy, being huge, has a lot of inertia. But people should be honest in how they characterize it.
This whole article is basically "the entire world economy is a house of cards wtf!" Yeah, no shit. We've known that for a decade now. Australia rises and falls with the world economy and if/when China crashes things will be ugly everywhere.
I have searched for the article using 'Freelancer.com' and the earliest one is from 10 days ago titled 'Freelancer.com has ruined my life'. I also see similar articles to this from longer ago. Definitely seems like a site to avoid.
Searching for 'Matt Barrie' only gave this story.
I would love to see the article about them being scam artists.
This is a link to this story, but with the original references and links.
The only things close to bubble bursts were scam driven things like the sub-prime mortgage collapse in the USA.
People have been crying "bubble" my entire life, and
I'm yet to see one actually "burst".
Edit: attempt to add clarity.
The core of what I'm trying to say is almost any increasing asset is labelled as a bubble now days. I'm not denying that there aren't shady investments that appear and collapse all the time, some are enormous, like the tech bubble.
But it requires further classification. There are gambling bubbles built by thousands of agents where some have seen astronomical profit, but then there seems to be more stable "bubbles" like all of the bubbles mentioned in the article.
A bubble isn't a bubble, not without further clarification.
OP never mentioned Aus - only that they had heard a lot of talk of bubbles but hadn't identified any. I was just giving a few recent examples that I'm sure most would agree qualify as such.