John Sage

Fin Review Adds Blame to Economy Pain

By John Sage

The Financial Review has taken a swipe at ‘misguided’ Aussie taxpayers in its front-page article of Deloitte’s latest business outlook report.

The publication and Chris Richardson, Deloitte Access Economics partner, have labelled the national dismay over plummeting interest rates as nothing more than an ill-advised whinge, completely dismissing the very real impact these rate cuts make on the lives of everyday Australians.

Mr Richardson said that the cuts are a way for the RBA to create more jobs and boost wage growth, which I understand, but for the Fin Review to go on and say that the frosty reception to the cuts is due to people’s pessimism is downright insulting.

These massive cuts hit people where it hurts – right in the hip pocket. Promises of future stimulus and faith in the RBA’s decision to push unemployment down have merit, but not at the expense of recognising the genuine turbulence this is going to cause people’s savings.

Retirees living off the interest of their live savings are not ‘pessimistic’.

Mum and Dad investors are not ‘pessimistic’.

SMSF investors are not ‘pessimistic’.

There’s nothing misguided about crunching the numbers on your finances and seeing that the June and July cuts are going to leave you worse off – at least in the short-term.

John Sage Financial Review blame

In the article, Mr Richardson even lists the problems that the economic downturn is currently responsible for, including low wage growth and global trade stalling, but asserted that there was “heaps of stimulus and it’s arriving fast”.

Here’s the thing. The macro events that may deliver benefits to the Australian economy are miles away to people experiencing the micro effects.

Mr Richardson has rightly said that the RBA did a poor job explaining the reason and timing of the cuts, and if people have been frightened by what they think the reasons are for the cuts, most of the blame rests on the shoulders of the RBA. Their concerns over the short-term impacts, however, are 100% justified.

Looking into your pocket and noticing the space previously occupied by money is not pessimism. It’s called being a realist.