Are We in a Recession?

malkakas on 09/10/2014 - 10:56
Last edited 09/10/2014 - 10:57

Hi folks,

I just wanted to start a discussion about the state of Australian economy.
I work in IT industry.
I am starting this thread because for about a year ago our company had about 80-90 employees, now we have only about 50-60 people. That is 20~30% reduction in staff numbers. Many people were made redundant due to lack of projects.

Few months back I thought to move on to a different job, but now even the thought of finding a new job is scary.
In the meantime client is trying to reduce their cost by reducing the budget from our contract and there was a talk going on about off-shoring some of the services we provide to the client.

Also there were some news reports about mining and manufacturing sectors losing tens of thousands of jobs. Housing price growth stalled in September, the Aussie dollar came down to below 90 US cents without much influence from RBA.

So if we put all these tell tale signs together, doesn't it indicate that Australia is in a Recession?

feel free to share your thoughts about this topic.

cheers

Poll Options

  • 11
    In a Recession.
  • 127
    Heading Towards Recession.
  • 81
    Not in a Recession.
  • 6
    Economy is Booming.
Financial

Comments

  • jnewau on 09/10/2014 - 11:14
    +35

    A recession is multiple quarters of negative growth. The economy is still growing, so no, it is not in recession. It's not growing as fast as it was, but you could say that the mining boom was an aberration anyway and perhaps we are back to more historically normal levels.

    It's not much use using your own anecdotal evidence to make inferences on the state of the whole economy. eg I also work in IT for a service provider covering 3 states, and we are adding new starters every week at the moment.

    The falling dollar has more to do with global commodity prices and demand, not microeconomic issues. It's not a bad outcome anyway

    There are significant challenges - a lot of jobs being created are part time, the housing market is very much dominated by non productive investment, and personal debt is very high. There are plenty of challenges out there but its not all gloom and doom.

    • ESEMCE on 09/10/2014 - 11:48
      +9

      The ridiculously high Aussie Dollar has been a huge reason for projects not getting off the ground, and/or companies offshoring.
      The Dollar dropping is a good thing for everyone except people who want to buy imported goods.

      • pjetson on 09/10/2014 - 11:56
        +4

        The Dollar dropping is a good thing for everyone except people who want to buy imported goods.

        Which is most of what ordinary people have to buy, because we don't manufacture anything any more.

        So, exactly who is a lower dollar benefiting?

        • StewBalls on 09/10/2014 - 12:05
          +13

          So, exactly who is a lower dollar benefiting?

          People who want jobs; or have jobs they'd like to keep…just sayin' ;)

        • retiredfeline on 09/10/2014 - 12:29
          +4

          Manufacturing is not a significant export any more. Tourism, education of foreign students, and SaaS sales are also exports, and they have been hurt by the high AUD. Whether the quality matches the price at a lower AUD is another debate.

        • pjetson on 09/10/2014 - 13:04

          @StewBalls: I was serious in my question. My own job is affected to some extent by the level of the Australian dollar because some of the inputs are priced in US dollars. Therefore, a lower dollar doesn't help me keep my job.

          Please explain how the lower dollar helps people who want jobs. Which jobs will a lower dollar help them get?

          And for people who want to keep their jobs, which jobs will a lower dollar help them keep?

        • ESEMCE on 09/10/2014 - 13:07
          +2

          Local manufacturing and primary producers (farmers/miners), retailers (fewer people direct importing), Local service providers (ie anyone who could have their job offshored).

          Imported goods/services prices effectively go up therefore the local stuff is more competitively priced, therefore more Australians will buy Australian/use Australian services), therefore more Australian jobs (or at least jobs don't disappear overseas), therefore fewer unemployed.

        • StewBalls on 09/10/2014 - 13:08

          @pjetson: I was also serious in my answer…scubacoles & greenpossum have also both indicated scenarios that are impacted by a high Aussie dollar…that's a good start for you to do some research.

          Your situation intrigues me though, in your estimation; other than consumers of overseas goods & services; exactly who is a higher dollar benefiting?

        • pjetson on 09/10/2014 - 13:16

          @scubacoles: Other than food, what local stuff is there to be more competitively priced?

        • ESEMCE on 09/10/2014 - 13:17
          +1

          Salaries.. :-)

          There's heaps of local manufacturing still. A lower dollar means those companies become more competitive both locally, and internationally.
          The Aussie Dollar has sat at 80c or less for the vast majority of the time since it was floated in the 1980's. It's returning to "normal" levels after an abnormal period of high value for the past 5 years.
          http://www.exfin.com/historical-forex-aud

        • pjetson on 09/10/2014 - 13:33
          -1

          @StewBalls: I didn't put forward the view that a higher dollar was benefiting anyone, I am just completely unconvinced that a lower dollar really helps anyone other than the profits of a few big companies. It only seems to have negative outcomes for the average person, or at best no change at all.

          If you look at the biggest companies in Australia, we have a couple of huge miners, Wesfarmers, Coles, the big 4 banks, maybe Fosters, and some financial/insurance companies. Out of those, the miners and Fosters will obviously make more money out of a lower dollar. Where will their extra profits go, and how will those extra dollars help the rest of Australia?

          At the SMB end of business, companies who make anything will have higher input costs, but if they export (and only a few do), they will make more profit.

          The level of the dollar should not significantly affect service companies who cater for the local market. Those who export their services (and, again, few do), will make higher profits.

          Higher education is interesting. Apparently, it's very profitable to educate overseas students, and it will obviously get better with a lower dollar. But, again, who in Australia does that benefit? Most of the students will go back to their own countries and generate wealth there.

          scubacoles mentions retailers, but most of them sell mostly overseas manufactured items. As far as I can see, they only win by consumers having to pay more for things. Again, how does that help?

          Nope, I'm afraid I can't see how a lower dollar helps Australians in general.

        • pjetson on 09/10/2014 - 13:36
          +2

          The Aussie Dollar has sat at 80c or less for the vast majority of the time since it was floated in the 1980's

          And just look around your house to see all the items that you were able to purchase because they were cheaper with a higher Australian dollar.

          Now we have a chance to fill our houses with Australian goods that will, according to the myth, somehow be cheaper with a lower Australian dollar. Good luck with finding anything.

        • pjetson on 09/10/2014 - 13:39

          @scubacoles: Actually, before the dollar was floated, it was above parity with the US dollar. That means except for a very short amount of time over the last few decades, the Australian dollar has ALWAYS been lower than it was before it was floated.

          If a lower dollar is such a good idea, I guess I've very much misinterpreted what has happened to Australian manufacturing with a lower dollar.

        • retiredfeline on 09/10/2014 - 13:40
          +1

          @pjetson:

          Higher education is interesting. Apparently, it's very profitable to educate overseas students, and it will obviously get better with a lower dollar. But, again, who in Australia does that benefit? Most of the students will go back to their own countries and generate wealth there.

          That's a narrow view of higher education. Foreign students are not the majority of the student population. In fact if anything, they are subsidising the local students. So you think it's a bad thing that foreign students are helping to pay for a higher level of local education? That's even before you consider the benefits of graduates who will go back to their home countries with connections here, or the ones who migrate back and raise the skill level of Australia.

        • StewBalls on 09/10/2014 - 13:58
          +4

          @greenpossum:

          Foreign students are not the majority of the student population. In fact if anything, they are subsidising the local students.

          Spot on. All of the foreign students I've met pay 3x the domestic rate for tuition…then there's also the money injected into the local community by way of accommodation & living costs etc.

        • ESEMCE on 09/10/2014 - 14:10

          High (EDIT) Dollar means importing things is cheaper therefore Australian Manufacturers have to drop prices to win customers.. In many cases this has lead to companies moving all or most manufacturing overseas or simply going bankrupt.
          Pre-Float importation tarrifs were propping up local manufacturing, not the value of the dollar!

          Sure, it means you'll have to get out of the habit of buying a new phone, coffee table and TV every 2 years, but in my world that's not a bad thing!

        • pjetson on 09/10/2014 - 14:23
          -3

          @greenpossum: I was specifically addressing the point that higher education was an export, which it clearly is. However, I just don't see how a lower price for overseas students is a benefit for Australia.

        • pjetson on 09/10/2014 - 14:26
          +1

          Low Dollar means importing things is cheaper

          Ummm, I think you may have that backwards.

        • pjetson on 09/10/2014 - 14:43
          +1

          other than consumers of overseas goods & services; exactly who is a higher dollar benefiting?

          Reminds me of that Monty Python sketch "What have the Romans ever done for us"?

          Are you really asking that other than the great majority of average Australians, who is benefiting from the higher dollar?

        • StewBalls on 09/10/2014 - 15:34

          @pjetson: I dunno, are you really asking how: a lower price for overseas students is a benefit for Australia?

          Your word for the day is competition mate…well, that and turnover. Bums on seats = $$$…it's a business, if students don't get value for money here, they'll go to the US, UK, CA etc, etc…Honestly, a lot of this stuff is really self-explanatory, it's not rocket science, it's economics 101.

          You seem to be confounding yourself with comparisons of apples & oranges…over the decades there have been significant changes to the industrial relations landscape that are outside the mere influence of the value of the AUD, making your simple longitudinal comparison somewhat inaccurate.

          Seriously, you've had the basic economics of the dollar value explained to you rather well here, along with the socioeconomic ramifications, but given your rather cryptic quote earlier:

          My own job is affected to some extent by the level of the Australian dollar because some of the inputs are priced in US dollars. Therefore, a lower dollar doesn't help me keep my job.

          …whatever that means in real terms; perhaps you're not seeing past your own vested interests here???

        • retiredfeline on 09/10/2014 - 15:43
          +1

          @pjetson:

          I just don't see how a lower price for overseas students is a benefit for Australia.

          Reminds me of the joke about the pencil seller on the street who was selling each at million dollars each. A bystander asks: Isn't that a bit much? The seller replies: Yeah, but I only have to sell one.

          Anyway the joke is a bit of an exaggeration, but as Stewballs pointed out Oz universities have been suffering from competition from cheaper countries. For the same amount of AUD charged, it will cost foreign students more in their currency to study here, so less of them enroll, and this income stream is reduced. This is a fact. However it does not cost locals as much more to provide the educational services when the AUD goes down, because most of the inputs are priced locally and there is some economy of scale.

        • pjetson on 09/10/2014 - 19:05

          Seriously, you've had the basic economics of the dollar value explained to you rather well here

          Then we must be reading different forums. The basic economics of the dollar is that for almost all consumers, and for most businesses, a lower dollar means higher costs. It's irrefutable.

        • pjetson on 09/10/2014 - 19:11
          -2

          Anyway the joke is a bit of an exaggeration, but as Stewballs pointed out Oz universities have been suffering from competition from cheaper countries. For the same amount of AUD charged, it will cost foreign students more in their currency to study here, so less of them enroll, and this income stream is reduced. This is a fact. However it does not cost locals as much more to provide the educational services when the AUD goes down, because most of the inputs are priced locally and there is some economy of scale.

          I completely agree that a lower dollar will mean that overseas students will pay less for their education. That may or may not translate into more students and therefore more income for universities, who can tell. But even if it does, how does that help Australians, who are now paying more for their education than ever before. There is no downward pressure on the price of education for Australians, therefore Australians will not pay less. And that is a fact of economics that you can take to the bank.

        • pjetson on 09/10/2014 - 19:20
          -1

          @StewBalls:

          whatever that means in real terms; perhaps you're not seeing past your own vested interests here?

          I am merely countering general claims with specific examples. Perhaps I could interest others in doing the same?

        • pjetson on 09/10/2014 - 19:24

          @scubacoles:

          Pre-Float importation tarrifs were propping up local manufacturing, not the value of the dollar!

          Are you therefore saying that local manufacturing was never viable?

        • retiredfeline on 09/10/2014 - 19:37
          +1

          @pjetson:

          That may or may not translate into more students and therefore more income for universities, who can tell.

          The universities certainly can and that's what they have been saying.

          But even if it does, how does that help Australians, who are now paying more for their education than ever before. There is no downward pressure on the price of education for Australians, therefore Australians will not pay less.

          That's very strange reasoning. Universities have to come up with a certain amount of funds and if less of it comes from full fee paying students, they have to reduce services, beg the government for more money (good luck with that), or charge locals more.

          So you think if we banned all fee paying foreign students from coming here, education would suddenly become cheaper? Isn't it rather convenient to blame everything on foreigners?

        • pjetson on 09/10/2014 - 20:31

          @greenpossum:

          That's very strange reasoning. Universities have to come up with a certain amount of funds and if less of it comes from full fee paying students, they have to reduce services, beg the government for more money (good luck with that), or charge locals more.

          I agree. So I guess that means you have strange reasoning too!

          So you think if we banned all fee paying foreign students from coming here, education would suddenly become cheaper? Isn't it rather convenient to blame everything on foreigners?

          Sigh. That's a huge stretch from what I said. Have you even been reading the forum?

          I am blaming nothing on anyone. In fact, I've done nothing but agree that education is one of the few industries that will benefit to some extent from a low dollar. However, universities making more money from overseas students will not result in local students paying less, because there is no downward pressure on prices from anywhere else.

          All I can say is WTF to your claim that I am blaming anything on "foreigners", and I think you should apologise for that slur.

        • Baghern on 10/10/2014 - 09:53

          @pjetson:

          Offshoring isn't as attractive.

          Long term this is really good for IT, as IT has been heavily offshored over the last 5-10 years… which followed the exorbitant wage increases of IT jobs.

          IT is an innovation job space, jobs disappear and appear at will.

        • malkakas on 10/10/2014 - 11:52
          +2

          @Baghern: IT is not alone from Offshoring threat. The car industry is going to be offshored (Holden to Germany, Ford to USA). Many of the call centres are offshored. Yes the offshore call centre experience is horrible but companies take their call centres away regardless of reduced quality of service to keep the costs down.

          Luckily most of government jobs can't be offshored due to security reasons. otherwise they also will be gone.

          In my understanding wage increase is a by product of short supply of skilled people and high cost of living. Short supply of skills can be addressed by increasing the skilled migration for specific jobs. Then there is the need for the housing for new migrants, if new housing not provided for the added population it contributes to the increase of housing prices. If housing prices go up then it contributes to high cost of living. So the circle goes on and on.

          Government needs to take action on all these issues to keep the jobs in Australia.

        • Bretlyn on 10/10/2014 - 20:49

          @pjetson: Lower USD may result in increased overseas students result in them spending more money on tuition, accommodation and living expenses. They spending more in Australia results in increase in jobs. As a result, Higher Education is the largest export industry in Victoria.

        • tunaroll123 on 11/10/2014 - 01:50
          +1

          @pjetson:

          Do you even understand how the tertiary education system works in Australia pjetson?

          There is no upward pressure or downward pressure on university fees/prices for domestic students. There is capped system in place in Australia where domestic students only pay a portion of the actual cost of fees with the balance paid by the Government. You can argue that the 'true' price of tertiary education has increased but overall, for the majority of Australians at this point in time, it is irrelevant - because domestic students (if eligible for HECs) have never paid the 'true' price (unless they are full-fee).

          Universities making money from international students may not result in domestic students paying less BUT makes a significant contribution to their overall income of which they then use for their spending (buildings, services, everything). A majority of their income actually comes from Government and State funding of which most of them are derived on their 'research' capabilities.

          I'll give you a breakdown (Department of Education 2012 Finance Report):
          - Government grants (44%)
          - Government contributions to course fees (15%).
          - Full-fee and international fees (25%)
          - Investment revenue (4%)
          - Other sources (renting out rooms, paid-services, etc.) (12%)

          Also, the largest chunk (government grants) as a proportion of total university income has reduced since the mid-1990s at which was almost 60% and now it is only 44%. Rest of the proportions for other categories hasn't changed much. However, the majority of shortfall has come from fees from international students and full-fee paying students.

          So to say that international/full-fee students (currently contributing 25% of university income) does not benefit Australian students is just plain wrong on so many levels. Not all "Benefits" come from a reduction in prices. And Australians paying 'more than ever' is also wrong, maximum contributions (fees) charged by universities which is set by the university hasn't increased since the 2010 reforms.
          http://en.wikipedia.org/wiki/Tertiary_education_fees_in_Aust…

          Until this cap is removed, universities cannot charge domestic students above these thresholds.

          Also, a lower dollar means higher costs for "most businesses"?!?!?! There are pros and cons to an Australian dollar. And unless you breakdown your 'most businesses' by at least the industries you claim are suffering from higher costs, than I remain unconvinced. How do you define "most businesses" anyway? By the income they generate? By the size of their assets? By sheer numbers? By number of employees employed? By sales figures? By profit? At least define what you are talking about.

        • arcticmonkey on 11/10/2014 - 10:48
          +1

          @malkakas:

          "Luckily most of government jobs can't be offshored due to security reasons. otherwise they also will be gone."

          With scumbag, lying Abbott and Hockey in charge, more and more jobs will go offshore.

          Here's are some examples of the lying Liberals at work:

          http://www.governmentnews.com.au/2014/08/medicare-outsourcin…

          http://www.smh.com.au/federal-politics/political-news/end-un… (another broken election promise)

          www.smh.com.au/national/public-service/public-service-union-…

          At the same time, Abbott accepts a $60,000 scholarship for his daughter and has entitlements to public money for the rest of his life.

        • hornoscous on 11/10/2014 - 15:02

          Yes it does mean higher costs…. IN A WAY… yes it will mean that the importing of any product WILL cost us more. So a lot of the products you buy will increase in price.

          However, this is a fantastic thing to stimulate the economy because it closes the gap between the cost of imported goods, and locally made goods. This in turn means that local manufacturers, retailers etc. do NOT need to lower their prices to the point where they make no margin, just to compete and stay in business.

          Just think, if local businesses could operate with a higher profit per unit sold, then they could afford to put on more staff, provide better quality products, better service, and so on.

          THIS is why economically it is better for this country if our dollar falls.

          Higher import costs = higher local prices = higher profits for local business = overall better quality of life for EVERYONE

        • pjetson on 11/10/2014 - 15:58

          @tunaroll123:

          Do you even understand how the tertiary education system works in Australia pjetson?

          Yes, I do, thank you.

          There is no upward pressure or downward pressure on university fees/prices for domestic students.

          I think you'll find that's just what I said.

          You can argue that the 'true' price of tertiary education has increased

          Which I did.

          I think you're largely arguing points that I did not make. You seem to agree with the points that I did make.

        • Harold Halfprice on 12/10/2014 - 14:52

          ive got no knowledge in economics or anything of the sort, so im not going to pretend i know what im talking about
          But id assume part of the reason we dont manufacture things is because of the dollar being too high, and thus being cheaper to manufacture overseas

          but with a lower dollar, should that not also mean the potential increase of local manufacturing once again?

        • chuie on 13/10/2014 - 08:37

          @pjetson: Look, a lower dollar has its pros and cons just as a higher dollar does. It may be less advantageous for us as consumers, but you are underestimating the benefits it has for our export sectors, as has been raised before.

          At any rate it's out of the our hands and up to the free market/RBA.

        • Baghern on 13/10/2014 - 09:39

          @chuie:

          There's a reason why most of the world's nations dropped their currency whenever there is a financial crisis.

          There's a reason why the US is peeved off at China for keeping their currency low…

        • chuie on 13/10/2014 - 12:06

          @Baghern: Yes but "free market" countries don't have direct control over their currencies. All they can do is lower the cash rate which may influence its value, and even that isn't necessarily in the hands of the government.

          China's an exception.

        • Baghern on 13/10/2014 - 14:23

          @chuie:

          meant to be directed at PJ.

          Why low currency value is good for the economy.

          As external things are more expensive, people buy local. At the same time, you can also export.

    • MrGrinchy on 11/10/2014 - 19:28

      Considering all GDP growth is created by credit , if we subtract credit then we are negative for last 10 years .

      Just because you borrow so many k personally doesn't mean its counted as taxable income.

    • marcozmitch on 03/12/2014 - 15:07

      One the positive aspects of this poll is the perception people have. Whether we technically are in a recession may not matter as much as what people feel or think.
      A certain politician referenced lived experiences in peoples lives.
      If people feel/think their money is not stretching as far or there is a perceived threat to their current or future opportunities, (or that of their family members), this to them may make them feel that Australia is heading for recession.

  • adamren on 09/10/2014 - 11:42
    +1

    2. Heading Towards Recession.

    Unemployment increases much more and people can't make mortgage payments, then it gets interesting.

    Confidence goes down and it's a spiral.

    Wouldn't mind seeing the housing bubble pop, at least outside of luxury apartments in Sydney and Melbourne. A 30% drop would be nice. Will strange to see what affect negative gearing repeal would have (doubt they'd ever do it though).

  • melgibson on 09/10/2014 - 11:43
    +3

    We will be. Close to 2 decades of non stop growth almost demands a nasty one.
    Speaking anecdotally,most ppl i know are asset rich, cash poor. They have invested heavily into their house, and have a sizeable mortgage. Now…..what happens IF that asset depreciates and (WHEN) interest rates rise?

    • adamren on 09/10/2014 - 11:55

      Yep. Interest rate set to rise after Janet Yellen moves the US rate up around August or so. Will be very interesting.

      Gov. Stevens wants the AUDUSD down under $0.80 apparently, so only 5 more cents to go. Will be hard to see how it won't move up once the rate goes up too.

      • strikerzebra on 09/10/2014 - 12:07

        It's at 88.5 cents at the moment so 8.5 cents

        • goingDHfast on 11/10/2014 - 08:52
          +2

          That's the OzBargain spirit… Don't let 'em get away with that 3.5 cents!!

      • Cobalt_ on 09/10/2014 - 18:05
        +2

        Anyone who believes that the Fed will raise rates above zero (negative real interest rates) must also believe in fairies and unicorns. The US government has no capacity to pay interest on the 17.8 Trillion dollars of debt they are currently holding.

        Not unless they plan to hyper inflate it away with even more aggressive money printing. That usually doesn't end well as far as history has shown.

  • Unorthodox on 09/10/2014 - 14:24

    Patchwork economy.

    So we WOULD BE if it wasn't for mining pulling the economy through.

    So the answer is no, we are not.

    I personally think that we are heading towards a recession as the mining boom has peaked and begun to slow.

    Key things to look out for that might keep us going:

    • agriculture
    • construction
    • housing (not great at the moment)
    • medical industry
    • ESEMCE on 09/10/2014 - 15:07
      +2

      Mining will benefit from a lower dollar!
      Selling the same mineral for the same USD price means more AUD profit without anyone doing any extra work or getting any extra pay.
      That extra profit potentially makes currently unviable mines viable again which would prompt companies to invest to develop those mines. Therefore driving employment.

      PS. Mining accounts for <15% of Australia's GDP.. It's effect on the Australian Economy is vastly over-estimated by most people.

      • Unorthodox on 09/10/2014 - 15:39

        Definitely! Although commodity prices have decreased meaning our terms of trade still weakens… Combined with slowing demand from China (they seem to be focusing on buying mines in Africa) means we'll continue to see a slow down.

        That's definitely true but in general the public seem to consider mining, retail and manufacturing as the main topics, disregarding services such as education, agriculture and medical provisions.

        Even though it's sub 15%, the level of investment and indirect 'confidence' keeps us from realising how bad the economy is.

  • malkakas on 09/10/2014 - 15:10
    +2

    In my understanding their are multiple factor that affect the economy.

    1. high house price . According to ABS the average weekly income in Australia is about $1123. The Median House price is around $650,000. If a average person buy a house with 20% deposit then he has a mortgage of $520,000. the weekly repayment for a 30yr loan term at 5.5% interest rate is $681. This higher repayment makes the life harder for an average person. Then they have to cut back their other expenses such as dining out, movies, holidays, etc.. to make the ends meet.
      These cuts affect the local businesses and it hurts the economy.

    2. High dollar rate is partially responsible for the death of car industry. High dollar rate is also responsible for the reduction in mining profits and reduced income from agricultural exports.

    3. Reduced demand for our coal and iron ore from China and other major importers.

    While the government and RBA can't control Chinese demand, they could have controlled the high house prices and high dollar rate.

    • scotty on 09/10/2014 - 22:07
      +1

      The only dial RBA seems to have is the interest rate? To de-value AUD they will have to lower the interest rate, and that makes credit cheaper, which then might result higher house price.

      I think to combat high house price it needs more than just RBA fiddling with the interest rate.

      • malkakas on 10/10/2014 - 09:41
        +1

        RBA could have imposed lending restriction such as reducing the percentage of "Interest only" loans to reduce the upward pressure from the investors on housing market.
        But such a measure seems highly unlikely as most influential bureaucrats and politicians are baby boomers and they have massive property portfolios. So they like to keep the housing prices up to make their retirement happy.

        • RockyRaccoon on 10/10/2014 - 10:26
          -8

          Yep its the baby boomers again!!!

          What horsshit.

          The reason we have high housing demand is because we dont build enough houses. Plus the costs of building new has dramatically increased due to government regulations and corruption at ALL levels of the building industry. Developers Councils, and YES the building unions as well. Everyone is taking something.

          And why do we need more houses, because we have a government that wants positive immigration flow and we dont have a policy to provide low cost housing. (This doesnt mean dont have immigration, just means we should factor in housing for them).

          Building a house costs upwards of 200K for the house alone. Same house in USA costs half that much.

          So because they were born in earlier lower cost times, the baby boomers have houses. AND they had different expectations.

          They didnt furnish their houses right away with the latest Ikea goods, Flat screen TV's etc. Once a month they ate out at the local fish and chip shop, had one car, no internet, whereas the later generations saw what the baby boomers had accumulated over many years and wanted the same right now.

          And take the "free Uni education they got"

          It was only for those in a very small timeframe 1972-1976 or there abouts. BUT they never got a government pension to study. so while no fees they had to work to live. ( the student support pension is worth more than the HECs fees) And btw only 1-2% of the population even went to Uni, if that.

          Generalisations on generations sounds great for a media hack, but often aren't based on reality. But then that wont sell papers will it.

        • malkakas on 10/10/2014 - 10:36
          +1

          @RockyRaccoon: But my argument is that Baby boomer politicians governed the country from Federal govt to your local council for past 2-3 decades and they made sure to limit the supply of land and hence drive the price upwards.
          If you read your local news papers you can see a lot of baby boomers and retirees complaining about high density housing in inner city suburbs.

        • Baghern on 10/10/2014 - 11:26

          @RockyRaccoon:

          When ever I goto a house inspection/auction its always packed with baby boomers… I wonder why… tax concessions, higher tax free thresholds, negative gearing…

          Why no fix? Something about a big voting block…

        • yoyo on 10/10/2014 - 12:11

          Just saying, Property market is not the only game in town (mind you if you read the Fairfax news paper it would have you believe that is it is).

        • RockyRaccoon on 10/10/2014 - 18:05

          @malkakas:

          and in twenty years it will be same complaint about the Gen X politicians as they get older and have accumulated wealth…

          @Baghern

          Thats not what everyone is saying. They say it's overseas people at every auction. Your survey of one doesnt stack up, unless you are looking at what you want to see.

        • Baghern on 10/10/2014 - 22:35

          @RockyRaccoon:

          Umm who is everyone? A few xenophobes? Anyone not a ertain colour is a foreigner?

        • RockyRaccoon on 11/10/2014 - 08:27

          @Baghern:

          A few xenophobes?

          Guess again - unless of course you believe everything that doesnt match your one eyed views is unreasonable

          This from Todays SMH

          The October Australian Property Institute Property Directions survey found 96 per cent of Sydney respondents felt foreign investment was a significant driver, more than the 88 per cent it registered in May.

          Read more: http://www.smh.com.au/business/chinese-investors-are-pushing…

          And not everyone with Grey hair is a baby boomer, and not every grey haired, bidding at an auction is bidding for themselves, some are bidding for their kids.

          BTW, my comment was in response to your wide ranging original comment

          its always packed with baby boomers

          Is not "always", but you now have taken my response totally out of context.

          Look around its not Always what you want to see.

  • affable on 10/10/2014 - 08:19
    +3

    Firstly, tourism is doubly affected by the AUD. A high AUD means Aussies travel overseas rather than locally, plus overseas tourists go to a cheaper country.
    Just look at the QLD island resort closures over the past few years - Lindeman, Dunk, Long Island, Great Keppel, Brampton etc.

    http://www.couriermail.com.au/lifestyle/queensland-island-re…

    When was the last time you saw a backpacker, they are an endangered species these days!

    Secondly, two -ve quarters of GDP growth is an almost certainty if you've had as strong growth as Oz in the past 20 years. Technically it might mean a recession but that's about all.

    Thirdly, with the ABS getting the employment figures messed up recently, how can we even trust their GDP guesstimates?

  • Randxyz123 on 10/10/2014 - 10:43

    This isn't something I wanted to be reading given I finish my IT degree next year and will need to start searching for a job…

    • malkakas on 10/10/2014 - 11:16
      +4

      I suggest you work harder and earn good grades in your degree. Then you'll be able to find a job.
      try to get some exposure to mobile development (iOs and/or android). do some small coding projects that you can demonstrate to your prospective employers.

      • rolly2112 on 10/10/2014 - 11:59
        +2

        yes work harder be more productive America needs you and as the 55th state we must pay our part to the fatherland to stay safe from the Chinese - see perfect sense!

      • scrimshaw on 10/10/2014 - 12:31

        given I finish my IT degree next year and will need to start searching for a job…

        I hope you are actually working now (and not bludging like I was doing in uni)… I know a lot of friends who have IT and engy degrees but cannot find a job in their chosen field and end up picking up other skills to work so that they can make ends meet.

        It'd be wise to earn some other skills other than IT to make yourself recession-proof. You don't want a long period of unemployment after graduation as it would look bad for your resume.

    • yoyo on 10/10/2014 - 12:17
      +9

      I graduated from IT in 2004 (Software Development), and not a day that passes by and I don't regret the decision that I went into IT.

      Here are the problems with IT:

      1. IT is always seen as a cost centre, and business would find any excuse to reduce the cost.
      2. Very easy to outsource, as a consumer you cannot tell where it was made, and there is no shipping cost involved.
      3. This might be specific to Australia, but we don't seem to be a market leader, we are a follower most of the time, the development houses (doing real software development, not plumbing) is very limited. Admittedly , we have a small market so it would be very hard to innovate in this country.
      4. IT is being treated as a commodity (like the power supply), you don't need so many people to do it.
      • scotty on 10/10/2014 - 14:08
        +4

        Looks like you are on the wrong end of "IT". All the companies I worked for since I graduated (engineering degree in computing) have IT as their core product — software company, SaaS company, online company, etc. In these cases IT are not the cost centre, and what you are reaping is usually proportional to the effort you are putting in.

        • cmafra on 10/10/2014 - 16:11
          +11

          I disagree with you scotty, he is not on the wrong side, he is just on the major side of IT.

          What do you think employees more IT:

          All the Google, Facebook, Oracle, Microsoft, Ebay and other IT products and services companies

          or

          All the other businesses that use IT as a cost center: e.g.: All mining companies, retails, food chains… in this second group you can also include all the companies that will do IT consultant work like Accenture, Infosys, Delloitte, etc as they will have the majority of the customers non-IT core businesses.

    • ItsMeAgro on 11/10/2014 - 16:29

      Nevermind, business is always good in IT in companies with competent management. It's still one of the easiest and most enjoyable jobs for people once you've got the education/experience.

      Learn to program well and speak English fluently, and you'll always be in high demand.

      I'll probably be hiring again soon myself…

  • Sydneyman on 10/10/2014 - 17:44
    +6

    Australia cannot have a recession with the current immigration policy. We import NET immigration of 250k+ a year. As a percentage of our population it is the highest in the western world.
    All of these people will spend 5k a year on food, 5k a year on this and that..

    Don't be fooled with GDP growth and avoiding a recession though, REAL living standards are dropping and dropping fast.
    Aus creates 75k jobs in a year yet the working age population increases by 200k. Do the real sums and don't look at the headline figures.

    It costs a huge amount of money on infrastructure and associated costs though, estimates are as high as $500k+ PER PERSON.
    Each of these people need additional ambulances, power, waste disposal, public transport etc. etc. A recent immigrant pays $1.8 for a bus ticket on a bus which CAPITAL paid for by the existing population costs a million$.

    It takes a very long time to pay enough taxes to contribute what birth citizens essentially inherit.

    Cut our obscene immigration policy and Australia has been in a recession for a long time.

    • arescarti42 on 10/10/2014 - 20:48
      +7

      You're mostly right.

      The Government (both flavours) likes massive population growth, as it gives nice headline GDP figures. It's as simple as more labour in = more things produced (higher GDP). It's great for their big business mates as well, who have more people to sell stuff to.

      The problem of course is that on a per capita basis wages are falling and we're actually getting poorer.

      • cannedhams on 11/10/2014 - 23:33

        Dead right. During the GFC, we may have avoided recession technically, but per capita we certainly experienced downturn. For the average mug it definitely felt like a recession.

  • Bretlyn on 10/10/2014 - 20:58
    +2

    Interesting discussion…

  • HingleMcCringleberry on 10/10/2014 - 22:09
    +1

    A slowdown in economic growth can still feel like a recession, even if the economy doesn't contract or meet the "technical" definition of a recession (two consecutive quarters of declines in GDP).

    The technical definition is rather meaningless anyway, particularly in the context of the issues relating to GDP (e.g. the domestic economy could contract but GDP continues to grow due to export growth) and the delay in reporting (around one quarter). A better indicator of a downturn is probably how far the unemployment rate is from a long run trend, in conjunction with the participation rate.

    An unemployment rate of 6.1% is still pretty low by historical standards and relative to other developed economies, but it has been trending higher. The risk is that it continues, with interest rates already at historically low levels, though a depreciating currency should cushion the impact to some extent.

  • letmecry on 10/10/2014 - 22:59

    Recently, we put an ad to sublet a room for the same price as we did last year.
    We normally got 5-6 people contact us and we invited 2-3 people to come and have a chat. We could fill up the room within 2-3 weeks time.

    But this year, for the first 2 weeks we had only a single person contacted us and the worst thing is he asked for a bargain for the rent. I had never had anyone asking like this before. Two weeks later, we got another guy to move in. There were only 3 people contacted us!!

  • T1OOO on 10/10/2014 - 23:20

    Yeah it is the worst iv seen it in 15 years. Hope it picks up.

  • syousef on 10/10/2014 - 23:21

    Too many words when 2 will do: We're ****ed!

  • jackofspade on 11/10/2014 - 00:25
    +7

    It's a recession when your neighbour loses his job; it's a depression when you lose yours.

    • syousef on 11/10/2014 - 07:17

      What is it called when you're forced to work double the hours and lose all your perks thanks to a "collective bargaining agreement"?

      • RockyRaccoon on 11/10/2014 - 08:38
        +7

        DOUBLE the hours and lose ALL your perks

        called exaggeration

        • syousef on 14/10/2014 - 17:49

          Yes but it's effective for making the point.

      • ItsMeAgro on 11/10/2014 - 16:30
        +1

        It's called time to find another job. Plenty out there.

        • syousef on 14/10/2014 - 17:55

          @mgowen

          All I'm hearing at the moment is how rough it is out there to find a job.

      • zeomega on 11/10/2014 - 16:32

        What rubbish. I've only heard so many good things about CBA/EBA from all my techs, that it's not even funny. Sometimes it makes me wonder why I even studied engineering. Some of them earning easily double of my income. The harder you work, the more you make.

        You sound like one of the few that always get let go, demanding more for working less and slacking on the job, ensuring you use all your sick leave etc.

        • cannedhams on 13/10/2014 - 00:12

          Yeah, I know a screw fitter who has been let go after the car works have all closed down. He's held a union card his whole life and is currently living off his redundancy. Its been a rude awakening for him having to look for any old job that he can find.

        • syousef on 14/10/2014 - 17:52
          -2

          @zeomega

          You know nothing about me, so that's rude and uncalled for. Who do you think that makes look bad? You or me?

          I hardly use sick days and I have 6 months of leave saved up. I also got voted into starting and finishing later without extra compensation via an EBA a couple of years back. I've found the increased disruption to my sleep to be very rough.

  • Azn310 on 11/10/2014 - 02:10

    Its funny this come from an IT person, IT industry have been creating bots / automation processes to replace human.. Why pay $25 an hour for a lazy guy to come to work when you can have a machine working 24/7 with 99.9% accuracy rate.

    A friend of mine complained because he is now asked to have his performance level (rated by some new software) above 80% or he risk losing his office 9-5 job.

    So now, lets sit back, sip on your favorite alcoholic drink and re-think. Are we heading towards recession or something worse?

    • whooah1979 on 11/10/2014 - 09:22
      +1

      tell your friends that when lose their jobs because of automation that they could always work as a courier/delivery. more specific as a pdo (auspost mail contractor). it's hard work, long hours, <70k p/yr, but at least they'll know that they've a job for the length of the contract (normally 5yr).

      • Azn310 on 11/10/2014 - 14:28
        +1

        Have you by any chance heard of Drone delivery currently developed by Amazon and self driven cars by Google?
        Or at least the free parcel lockers by Auspost?

        Auspost is struggling to survive. They will have to cutback sooner or later. Really, why hire someone to deliver a 'sorry we've missed you' note when they can just send an SMS or email and parcel can be picked up by customer 24/7 rain or shine ?

        I also know starting from March this year Auspost make motorbike posties deliver 500g parcels. Most would be too lazy, so.. 'Sorry we've missed you'

  • peterpeterpumpkin on 11/10/2014 - 11:06
    +10

    At least two of the companies I have worked for have shut after I had left - one big and one small. Either I'm really bad luck or it just goes to show that unless you work for a monopoly you should always be ready to switch jobs within a few years anyway. Or if you're mortgageless and carefree wait it out for the redundancy payout and travel the world :)

    From my world experience it would be laughable to think Australians are worth what we are paid on an international level - even after the dollar is corrected to 80% of its current value. Without our beaches, climatic stability, political stability and relative isolation from the world's problems our house prices would be greatly diminished and we wouldn't be paying $300/hr for a plumber. We're simply not that good on the scale of global productivity.

    The whole economic system is bullshit anyway and rewards bullshitters. Most companies are extremely inefficient but fixing inefficiencies costs jobs and only increases wealth for the proprietors and remaining workers. It's crazy we live in a technologically progressing world that still blindly aims to produce jobs ahead of needs.

    • rgr on 11/10/2014 - 14:26

      Couldn't have said it better myself.

      • syousef on 14/10/2014 - 17:56

        Well what you're doing is talking us into a lower standard of living. It's no longer politically correct to call that 3rd world standard I'm told.

  • phamid on 11/10/2014 - 11:50
    +1

    I'm in the same industry as yours, originally in the Managed Services space and moved onto datacentre work instead.

    From my experience, it's certainly heading down towards a recession for the industry. The Managed Services space I was at had to let off staff and pivot themselves, I left before the ship sank, but I'm glad their still going strong. Clients are looking for cheaper services and most often the servers are getting retired for cloud services held by larger, more competitive companies.

    I've pivoted myself to work in the corporate space instead and work from there. There's certainly a market for local IT people. I've started my CCNA, MCSA, ITIL and VCP. Not because I want to cram it on my resume, but to validate myself on my own knowledge and prove that I'm capable and continue learning.

  • billyjc1984 on 11/10/2014 - 12:25

    In ireland during the boom food was very expensive, now its in recession and the cost of food has halved mainly as ppl just couldn't afford it so the supermarkets had to slash prices. AUS food prices are ridiculous at the moment especially when compared to what the farmers get paid for their products. Coles & Woolies need to be regulated somehow; there is no competition even ALDI is more expensive than when they first came here.

    I can only comment on my sector I work in construction after a 4 year degree and 4 years of experience i still get paid significantly less than a qualified union plumber, they get 120,000 a year in my company on the day they qualify. As an engineer I start on 50000 & after 4 years Im not on 100,000 yet. Engineers and architects are the new lower class here, tradies are taking over. Banking wages are worse. Its creating a new class system and god help you if you are just out of college as its getting very hard to get a graduate job.

    Having emigrated when there was a recession in europe i see the exact same pattern here. Although i hope it wont be as bad as we have the mining boom here and AUS has a shortage of housing as opposed to an oversupply in Europe. This all should result in a short recession or price adjustment here, i hope.

    For me when you look at wages & then compare them to mortgage values its the best example of a need for an adjustment. My prediction is a short recession, 2 years, and then hopefully steady sustainable growth.

    • Azn310 on 11/10/2014 - 14:31

      For some reason, i just keep thinking Coles bread.. Coles bread..when you mentioned Ireland.. Looks like their PR strategy worked

    • [Deactivated] on 11/10/2014 - 22:27

      Then unionise.

      • billyjc1984 on 12/10/2014 - 17:49

        Unions have gone too far and have too much power; they need to be stood up to and taken down a peg or two for the good of the economy. The unions are part of the problem. Im not saying that unions are a bad idea, far from it, properly run & not corrupted they are brilliant. I wish i was in a union it would help me hugely. Its just the unions in VIC have too much power they are just a cancer on the construction industry at this stage.

        Its over 35 deg you go home.
        it rains for more than an hour you go home.
        24 more days off than anyone else off each year.
        pay increase each year to match inflation regardless of economic conditions.

        Yeah, the unions are taking the piss at this stage. Not to mention they are so corrupt its not funny. The only ppl that dont think that the construction unions are a problem are the ppl in it & their families.

        • MarkB4 on 12/10/2014 - 18:28
          +1

          Straight out of the right wingnuts prayer book.

          You wouldn't have your present (if meagre) pay and conditions without past union/organisation …

        • Baghern on 12/10/2014 - 22:26

          You want to start over… and begin with "the construction union"… problem is same Australia over

  • chnach on 11/10/2014 - 15:14
    +2

    No because the government denies it

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