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What else can be done to save the economy?

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In anticipation of Tuesday’s RBA rates decision, with economists split, I fully intended to show the many reasons why a cut was needed. But that was just too typical of someone like me.

And so I’ve decided to look at the same run of worrying economic data for atypical reasons.

To clarify, it’s my contention that Australian governments and too many businesses aim for the predictable, act like everyone else and end up with disappointing results.

This week’s mini-budget said the tipped four per cent growth for 2011-12 was heading to 3.25 per cent. This shouldn’t be a surprise given our screwy interest rate policy in the face of Europe’s woes.

Drilling down, we know business investment has been the one bright spot but retail disappointed during the week, up only 0.2 per cent in October, while building approvals slumped again. Private sector home approvals are at a 33-month low.

Meanwhile, manufacturing is contracting and capital city house prices fell for the 10th month in a row and housing credit has recorded the lowest annualised growth rate in 34 years.

Job ads have been down for six of the past seven months and wage rises have been less than expected.

Need I go on? Nope, there’s heaps of negative stuff.

Conclusion? The economy looks weak now and is not telling us that a rebound is on the way.

Solution? The predictable response is cut interest rates, which I support but what else can be done?

The mini-budget response is generally responsible but it does not add to demand. And there is nothing to encourage business and excite entrepreneurs. That’s because all we get from governments is old thinking.

Businesses are the same and it emanates out of what might be called an accountant’s strategy for tough times — cut costs and batten down the hatches.

Recently, I interviewed Ewen McKenzie, the rugby coach of the Queensland Reds, which won the Super Rugby comp this year coming from second last to first in a season.

I made the point to him that lots of bosses complain about Gen Y employees but most footie coaches have to turn individualistic Gen Ys into a team, which is a massive challenge.

He said Gen Ys have a short attention span and so he speaks concisely. They like colour and like to see themselves on TV, so he incorporates these when he talks with them to maximise the impact.He also tweets regularly to them as he says he needs to know that their non-rugby life is going well as it will affect the team’s results. He says he didn’t win because he had a dream that he made come true. He says all coaches and teams want to win the comp.

It’s about changing behaviours, he says, so game plans get enacted on the field each week and wins happen. He’s a new thinker.

Our governments need to help change workers’ and entrepreneurs’ behaviours. I have never seen a government seriously try to give incentives to business builders and job creators and that comes from old thinking.

A Prime Minister who coached a country — that’s a nice thought.

For advice you can trust book a complimentary first appointment with Switzer Financial Services today.

Important information: This content has been prepared without taking account of the objectives, financial situation or needs of any particular individual. It does not constitute formal advice. For this reason, any individual should, before acting, consider the appropriateness of the information, having regard to the individual’s objectives, financial situation and needs and, if necessary, seek appropriate professional advice.

Published on: Monday, December 05, 2011

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