World markets are warning Australians that the glory days are over and that we must start the painful adjustment process. The good news is that in many diverse areas Australians are showing signs that they are prepared to adapt.
Last night our currency fell below 93 US cents and it has a lot further to fall, especially if we cut rates further at a time when world interest rates are going the other way. Commodity prices last night were a sea of red. Our share market, viewed in US dollar terms, is headed for a fall of close to 20 per cent in little more than two months.
In London, with the Ashes series looming, they love equating the Syrian pound with the Australian dollar. But the US announcement that it wanted to prolong the Syrian war by supplying arms to the rebels sent the Syrian currency down so sharply that there is at least one currency against which we look good.
But seriously, if you look closely you find that Australians are beginning the process of adapting to the new era.
The first thing we are going to do is change the government. Tony Abbott does not have the change zeal that we really want but he will create a climate that starts the process. Abbott will have the task of trying to create jobs for the large numbers of fly-in-fly-out Australian workers who have been constructing our resource projects and who will return home.
The second step is to show mining companies that our great Queensland coal mines do not have to be shut or significantly curtailed given the low price of coal. All that’s required is a change in management and work practices. As I pointed out yesterday, that’s happening as private equity investors seek to buy mines that are closed or that are losing large sums as a result of bad management (A potential clean slate for coal mining, June 19).
The third step is to reduce the horrendous cost of commercial and infrastructure-building costs caused by the cartel style agreements entered into by the big builders and the building unions. Three states – Victoria, Queensland and NSW are tackling it by banning the agreements in their tenders and the Commonwealth under Abbott will follow. Lend Lease is starting to feel the pinch and along with Leighton and the other big builders will be required to make major management changes.
The fourth step is that General Motors has finally come to the realisation that to be competitive it has to have modern work place agreements. As Ken Phillips pointed out yesterday (The union hand on the wheel that doomed Ford, June 19).
General Motors has workplace agreements from hell. While the unions have not enforced all their rights you can’t run a business that way without huge subsidies. Ford management (and their workers) just followed General Motors into the bad agreement pit and are being deservedly ‘punished’ by being told to go and find another life by head office in Dearborn. General Motors’ Australian managers (and workers) are going to try and change their ways but it will not be easy, particularly as many older mangers and workers are simply looking for the big retrenchment payout. Toyota is much further down the right path (Toyota's worker revolution, May 13).
The lower Australian dollar means that if management of the automotive companies are able to take their workers into efficient workplaces they can survive and perhaps prosper. Some government and union people would prefer the automotive plants to shut rather than lose union control and bad work practices (Unions blocked Toyota wage, productivity talk: report, June 20). Australia will need them to survive.
The fourth area of change is that we have to dismantle the mountain of regulation imposed on the small enterprise community over last six years (I link the last three Howard years with Gillard). Once again the good news is that regulation dismantling is close to top of the agenda for the incoming Abbott government.
In the daily grind of news reports we sometimes forget that we are listening to the world and are starting to adjust.