The road ahead for the Australian economy is one paved with a fair amount of gold, economists suggest.
And evidence to date confirms this view, with growth accelerating and on track to average 4 percent or higher over the coming year – a quite remarkable result given most developed countries around the world continue to struggle to shrug off the effects of the global financial crisis.
That’s great news for business, including passenger transport operators, who will share in the spoils of a strong economy through increased consumer spending.
Yet business owners will encounter many pot holes along the way that will combine to take some of the shine off this golden era.
As Access Economics’ Chris Richardson told a recent transport industry conference, there’s a downside to the return to a “resource-boom economy” – and one that could limit operators’ ability to take advantage of, and profit from, the return to boom times.
Operators in Queensland and Western Australia, in particular, are likely to relive the skills shortages and wage hikes which dogged those states during the last boom. A number of recent business surveys show this is already becoming an issue for business.
In addition, Richardson says that the more the world pays for Australia’s commodities, the faster the Reserve Bank will be raising interest rates. The central bank has raised rates fives times in succession and has indicated more hikes are on the cards, thereby further increasing business’s already high cost of capital.
And strong demand from the resources sector, and the economy in general, for fuel will continue to underpin escalating diesel and gas prices, a key input cost for transport operators.
On top of the 4-percent rise in registration charges and the diesel excise proposed by the National Transport Commission from July 1 (see story pages 20-22), these cost pressures will hit operators’ bottom lines.
Reminiscent of the economic constraints faced by business just two years ago, operators need to keep both hands on the wheel and ensure they’re able to pass on extra costs where they can and, where that’s not possible, focus on extracting better deals from suppliers, employees and other cost centres. Otherwise, that road may prove to be not so golden.