12/08/2010 - 00:00

Money won’t buy happiness, just insecurity

12/08/2010 - 00:00


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A recent report has revealed that Western Australians are pretty well off, they just don’t think they are.


SURVEYS that double as promotional crutches can be quite dangerous to rely on.

Nevertheless, sometimes they can offer a talking point or a gem of knowledge otherwise difficult to find. For instance, I recently received a set of numbers from banking group ING, which provides a snapshot of why federal Treasury wants a mining tax.

The ING survey endeavours to examine how comfortable people are with their financial position. Its results showed that Western Australians are more concerned about financial obligations such as debt compared to people in other states. This is despite being, in the main, better off.

While it is, perhaps, not that unusual to find the richest people are the most debt-averse, the interesting point from Treasury’s point of view would have been the raw data, which show how much richer people in WA are.

This survey was limited to just over 1,000 people, but ING has assured me it is calibrated against the official statistics, which means that it compares well with data from official gathering points such as the Australian Bureau of Statistics and the Australian Prudential Regulatory Authority.

In other words, the debt, investment and income figures are approximately what you would expect if you examined the real data.

While this was provided to give assurance about the survey views I wasn’t particularly interested in what the people surveyed thought, just the underlying numbers regarding income, savings and investment.

I use them only for convenience to show the relative position of WA people, if indeed they are as representative as ING says.

If they are accurate, they show just how much better off people in this state are both in terms of income and investment; to quite a staggering level.

They also show why a Canberra-based Treasury and a government focused on wealth redistribution would see the value in taxing the mining business, the key reason why Western Australians would be ahead of the pack in terms of both income and their investments.

And why would people in WA feel less secure in terms of their financial position, even though they appear to be ahead?

Perhaps the cyclical nature of mining is part of that mentality. People here know that the good times may not necessarily last and periods of high income provided by mining are soon followed by tougher periods.

Treasury knows that too, of course, but in providing evidence to support its approach it chose to focus on just the past 10 years and the steep incline in earnings as if they were sustainable and long-term.

Therein may be another reason why WA people are cautious in this survey. It was conducted around the time of the resources rent tax debate.

Fast track to failure

AS the Labor Party seeks to (remarkably, in my view) turn the election debate to the economy, I was bemused to see one of its leaders raise the prospect of a high-speed rail line on the east coast.

Although Infrastructure Minister Anthony Albanese only announced a feasibility study for a limited rail link between Sydney and Newcastle in the first instance, it is hard to imagine how another pie-in-the-sky project supposedly fits the concept of good economic management.

I have already expressed my views on the stimulus package. It was overegged and ill-directed, including the schools building program, which is still going on even as the Reserve Bank of Australia considers raising interest rates. But at least there was a financial crisis going on and a Labor government can be forgiven for going over the top.

Many economists actually credit the government for keeping Australia out of recession.

So let’s put that in the past and look to the future.

Currently, a huge amount is being spent to roll-out the National Broadband Network. Just what the NBN will do for economic management beats me.

Business, the most likely user of true high-speed internet access, can already get this in most busy commercial centres on a user-pays basis. For households it is beyond me how this will improve the economy in any meaningful way.

A high-speed rail link will be even more expensive and offer even less. Even the Greens don’t pretend this idea – which they back – will be creating new jobs or have any particular economic benefit.

What I find so strange about both of these ideas is that both make far more sense where a more dense population is present. High-speed rail operates in northern Europe and Japan and when it comes to high-speed broadband, places such as South Korea come to mind.

There are very heavily populated places. Even there I doubt these services are profitable but they are probably more cost-effective than they would be here.

Isn’t it amazing that such big picture ideas should be pushed as forward thinking at a time when the government has turned its back on so-called ‘big Australia’?

Not only is immigration something that everyone in power (or seeking it) wants to reduce, but the current government wants to disperse these fewer new arrivals around regional Australia, all in the name of sustainability.

If the objective is to spread Australia more thinly, one transport methodology that will work poorly is high-speed rail, an inflexible mode of transport that works best as a link between very significant population centres.

As romantic as the idea of keeping up with the Jones might be, grabbing ideas from densely populated places and applying them here only makes sense if it is anticipated that such density is likely to occur here in the foreseeable future.

If, as the government, opposition and the Greens seem to saying, Australia is to remain sparsely populated then surely good economic management would be to look for solutions that suit the kind of place we already have – not pluck expensive projects that will drain the Australian purse faster than a bullet train to Tokyo.

• mark.pownall@wabusinessnews.com.au.



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