Something to be aware of today coming up from Australia, Treasurer Scott Morrison is giving a speech
He'll warn Australia has an "earnings problem"
And will outline the Federal Government's economic plans
Some of the prepared text is already out in the media, such as:
- "I do not want my kids to know what a recession is and everything that goes along with it
- "I recognise that in the absence of a 'recession we have to have', or the threat of 'becoming a banana republic', achieving necessary change will be more frustrating and more difficult. But it is no less necessary, and achieving it this way is far better than the alternative.
- "In the next five to seven years we have an opportunity to prepare our country for what lays ahead and to set our nation up for a new generation of growth and prosperity."
- "Our country has an earnings problem. We need to earn more from what we do and what we produce"
- "To achieve this we must lift our levels of private investment, to replace what has been exhausted in the mining sector, to boost our productive capacity."
- "Private capital is looking for something to invest in ... real income earning projects and enterprises ... where reforms are unlocking value and creating opportunity,"
- "This is the type of the economy that can coax private capital out of its cave - that is our task."
OK, now the thing to bear in mind with this is the he'll come across with warnings and tough talk. But, ladies and gentlemen of ForexLive - do not forget this is a politician speaking. He has just won an election (as part of the government), so the government is in for the next 3 years, and so for the first year of this term (especially) he will talk and act tough, knowing he doesn't have to face the voters any time soon. (ps. both sides of politics do this, this is not a personal criticism .... just the way the world works)
The warm and cuddly side will be revealed in a couple of years time ahead of the election. So the tough talk today and for the next 18 or so months, well the market will see through this for what it is. Don't be fooled. Some of what he says may even be true (it has been known to slip out of politicians' mouths from time to time), but don't get carried away with all the doom and gloom talk today.
In terms of what he can actually achieve ... he faces a difficult upper house (getting new revenue raising plans through, or spending cuts, is going to be extremely difficult) ... part of what he is doing today (and with speeches scheduled in coming days, is to get some sort of public consensus that 'something must be done or we'll all be rooned' so he can get tough decisions through the upper house. As the kids say, good luck with that.
I'll tone down the cynicism for the rest of the session now that is of my system.
ps. Morrison speaking at a Bloomberg function in Sydney