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There's a few things that just about every business has as input costs.
Real estate (either buildings or just land), energy (particularly electricity, in some cases also gas), transport, labour, communications, financial services.
Over the past 20 - 25 years we've implemented policies (state and federal) which have thrown away the energy cost advantage we once had. First it was electricity but now gas is getting costly too. What should be a national asset, we've got just about every energy resource in our own backyard and were once highly competitive, is now a liability.
Real estate prices have gone through the roof that is well known.
Our interest rates are high by global standards.
Transport we have a natural disadvantage due to distance, compounded by lack of investment into strategic transport options (eg rail) so as to protect established operators (trucking, airlines) and then doing at unnecessarily high cost what investment we do make (eg private toll roads built at high cost and then needing to make a profit on top of that).
Communications we're way down the list of that one in terms of internet speeds and so on and we're not cheap either.
Add all the above together and it's inevitably we'll be uncompetitive with labour costs too. With workers paying such huge costs to simply live in Australia, wages need to be high.
It's pretty hard to run a business, any business, that competes in global markets when all of your key input costs are high when compared to competitors. If it was just transport (due to distance) or just gas prices then most businesses could work around just one problem, but once you add in high costs for everything else then it's no-go.
We're in for tough times once someone wakes up and realises that shuffling houses and digging holes isn't going to sustain Australia economically in the long term. We haven't got just one problem to fix, it's pretty much everything.
Who's to blame?
Energy - state governments initially but in more recent times the Australian Government has done pretty much everything it can to push things the wrong way.
Real estate - governments at all levels let it get out of hand and in many cases encouraged it. Deregulation of finance is surely a factor there (Australian government).
Interest rates - well they have to be high if we're to attract enough capital to keep the housing bubble going whilst productive industry fails.
Transport - natural factors are unavoidable but state and federal governments have added to the problems.
Communications - Australian Government.
Labour - Unions play a role, but if house prices are going to the moon then it's inevitable that workers will want higher rates of pay. Labour cost is both a cause and a symptom of the bigger problems.
How to fix it? I really can't see any solution that doesn't first require a major recession, asset price falls (especially housing) and a conscious decision to focus on making Australia economically competitive. That will require a reversal of many previous policy decisions. We need cheap energy not "competition". We need affordable housing not a "boom". We need economical transport not guaranteed profits for a few. We need modern internet that's affordable and actually built. We need wage restraint but it has to be in the context of also restraining costs, particularly housing. We need the banks kept in check not fueling bubbles. Etc.
Real estate (either buildings or just land), energy (particularly electricity, in some cases also gas), transport, labour, communications, financial services.
Over the past 20 - 25 years we've implemented policies (state and federal) which have thrown away the energy cost advantage we once had. First it was electricity but now gas is getting costly too. What should be a national asset, we've got just about every energy resource in our own backyard and were once highly competitive, is now a liability.
Real estate prices have gone through the roof that is well known.
Our interest rates are high by global standards.
Transport we have a natural disadvantage due to distance, compounded by lack of investment into strategic transport options (eg rail) so as to protect established operators (trucking, airlines) and then doing at unnecessarily high cost what investment we do make (eg private toll roads built at high cost and then needing to make a profit on top of that).
Communications we're way down the list of that one in terms of internet speeds and so on and we're not cheap either.
Add all the above together and it's inevitably we'll be uncompetitive with labour costs too. With workers paying such huge costs to simply live in Australia, wages need to be high.
It's pretty hard to run a business, any business, that competes in global markets when all of your key input costs are high when compared to competitors. If it was just transport (due to distance) or just gas prices then most businesses could work around just one problem, but once you add in high costs for everything else then it's no-go.
We're in for tough times once someone wakes up and realises that shuffling houses and digging holes isn't going to sustain Australia economically in the long term. We haven't got just one problem to fix, it's pretty much everything.
Who's to blame?
Energy - state governments initially but in more recent times the Australian Government has done pretty much everything it can to push things the wrong way.
Real estate - governments at all levels let it get out of hand and in many cases encouraged it. Deregulation of finance is surely a factor there (Australian government).
Interest rates - well they have to be high if we're to attract enough capital to keep the housing bubble going whilst productive industry fails.
Transport - natural factors are unavoidable but state and federal governments have added to the problems.
Communications - Australian Government.
Labour - Unions play a role, but if house prices are going to the moon then it's inevitable that workers will want higher rates of pay. Labour cost is both a cause and a symptom of the bigger problems.
How to fix it? I really can't see any solution that doesn't first require a major recession, asset price falls (especially housing) and a conscious decision to focus on making Australia economically competitive. That will require a reversal of many previous policy decisions. We need cheap energy not "competition". We need affordable housing not a "boom". We need economical transport not guaranteed profits for a few. We need modern internet that's affordable and actually built. We need wage restraint but it has to be in the context of also restraining costs, particularly housing. We need the banks kept in check not fueling bubbles. Etc.