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EYE-BALL Guru on – Glen Stevens – is he the right man to be running the RBA?

June 14, 2012
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Title:
Glen Stevens –
… is he the right man to be running the RBA?
14th June 2012.
The head of the RBA, Mr Glenn Stephens gave an address to the Prime Minister’s Economic Forum in Brisbane yesterday, and made comments that Australian businesses should lift productivity to combat the rising A$ value.His advice is small comfort to the tourism, manufacturing, retail, primary producers and miners.  It is also a case of ducking the real issue.  Rather than have the whole of Australia suffer under a high A$ value – why not get out in the market and do something pro-active to not make the A$ such a ‘speculative currency’ that attracts the speculative investors.  Why pursue a high interest rate policy to fight inflation when inflation is and never will be a problem over the next decade or so?

Why put all of the responsibility to deal with the A$ high value back onto business when all it would take would be some innovative Government policies like that of Switzerland, and other Nations, who fight to protect the value of their Nations exports, and at home industries.

Mr Stevens – by your comments as expressed in the below report on your speech –  use this link to hear full speech –  you have never even thought to manage the currency value as a part of the RBA’s mandate.    The ABC report is published below:

Boost productivity to combat high dollar: RBA

| 14th June 2012 | By chief political correspondent Simon Cullen | Link to ABC Ol-Line story. |

Mr Stevens told the Prime Minister’s Economic Forum in Brisbane that the high exchange rate was not necessarily a bad thing, but it did mean that businesses and governments must look at how workplaces can become more efficient.

He says Australia should stop “pretending” it can compete against the low-wage economies of Asia, and instead focus on productivity gains.

“Better productivity is the imperative to survive,” Mr Stevens told the audience.

“The test really is how many of those enterprises can get the productivity up, because that’s really the way out in terms of coping with a high exchange rate.”

The RBA governor issued a challenge to business leaders to adapt to the new economic environment, and for governments to ensure there were no impediments to such adaptation.

Mr Stevens says productivity growth has fallen in the past six to eight years, and it will take unpopular decisions to turn it around.

He is urging the Government to carry out the Productivity Commission’s “long list” of reform ideas, although he warns that some of the changes will be very difficult to implement, and “politically hard” for governments to achieve.

Mr Stevens’s comments came at the start of the forum, where business leaders, union representatives and senior Government figures are meeting to consider the “hard questions” facing the nation’s economy.

Prime Minister Julia Gillard insists her aim is to “collect good ideas” from forum participants, and then try to implement them.

But she used her opening speech last night to urge delegates to “speak up” about the strength of the local economy to boost confidence.

“The bad news from overseas is making more noise at the moment than hailstones on a tin roof,” Ms Gillard said.

“Those of us who know how strong our economy overall really is do have to speak up to be heard.”

The Government has consistently pointed the finger at the Coalition, accusing Opposition MPs of talking down the domestic economy in the face of positive economic news.

But Opposition Leader Tony Abbott has rejected the idea that he is to blame for the lack of confidence.

“I want our country and our economy to be everything it could be, but with the current Government that’s very hard to do,” Mr Abbott told ABC Local Radio.

“It would be much better if we didn’t have a carbon tax, if we didn’t have a mining tax, if we hadn’t abolished the ABCC (Australian Building and Construction Commission).”
Dollar benefits

One of the Government’s main concerns at the forum is the effect of high Australian dollar on trade-exposed industries, particularly manufacturing and exporters.

But Mr Stevens warned against wishing too quickly for a lower exchange rate.

“Every time we put petrol in our car, every time we go to a store and buy consumer durables or clothing – a lot of which is imported – every time we travel overseas, we are benefiting from the high exchange rate,” Mr Stevens said.

“The exchange rate is one of the devices that is imparting to us the higher wealth that the mining boom brings.”

He also pointed out that in the past few years, there has been a significant shift in household spending, away from the unsustainably low levels of saving before the global financial crisis.

“I don’t think we’re going to go back anytime soon to the preceding behaviour, and frankly I don’t think we should go back to that behaviour,” Mr Stevens said.

But he conceded that the “return to thrift” was posing a challenge for retailers.

Mr Stevens – there is not a lot more to be said – the comments you have made in this speech makes us all aware that you are not qualified to be the ‘safe-keeper’ of the Australian economy.  Either your advisors need to be sacked – or you need to have a hard look at your comments and ask yourself why have you allowed the A$ value to rise without the RBA in there making decisions that protect Australian Industry from overseas speculators and competition.

I’ll debate this with you anytime and you can tell me why you stood back and watched A$100’s billions of trade revenues get stripped from the Australian economy and its industries.  Over to you Mr Stevens.

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The EYE-BALL Guru …

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