Monday, May 5. 2008
I suppose it's inevitable that when you return from a week spent somewhere close to the equator you notice that the Sydney temperatures seem much colder than when you left. So too does the 'economic press' - at least in terms of general 'signs'.
I read the Weekend Financial Review more closely than I would normally do over the weekend and noticed a brief article on page 16 of the AFR commenting on deteriorating payment terms by 'big businesses' to their smaller suppliers. In summary the article offered the following data from Dun & Bradstreet:
1) Average invoice payment time increased in Q1 2008 to 55.8 days - the highest level since 2001
2) Businesses with more than 500 employees took an average of 62.7 days to pay invoices
3) Payment time has increased 5.6 days in Q1 2008 compared to Q4 2007
4) The increase in invoice payment time from Q1 2007 to Q4 2007 was 3.8 days
You don't have to be a financial genius to realise that many small companies are being hurt very badly by larger companies significantly impacting their cash flow.
Fortunately for Exetel we have corporate customers who don't fall in to these pernicious categories and, when I checked, we only had two corporate customers who hadn't paid their April invoices within the trading terms of 15 - 21 days (unsurprisingly a bank and one of the top three global accounting practices). However I can fully understand the difficulties that non-payment on time by our corporate customers would incur.
Today's IT news had a piece on the ongoing decline of IT jobs for the third successive month:
and other comments about the continuing conservative attitude of companies regarding new projects and more rapidly winding down current projects earlier than planned:
"The IT&T sector fell again last month by 1.92%, bringing its fall to 9.73% in 3 months."
"Recent news that big four bank Westpac is planning to send more of its functions offshore will augur ill for IT&T, according to Olivier, as well as the embattled Financial Services and Banking sector which itself has fallen 11% over the past 3 months."
While all of this was easily forecastable from November 2007 it is still a bit of a shock to realise that all these signs are exactly the same as they were prior to the last two major downturns in the Australian economy which resulted in very, very painful results and a lot of hardship for a lot of people.
According to the various economic commentators there is now no guarantee that the RBA won't again raise interest rates either in May or shortly thereafter which would see even more distress in the house/unit owning section of the communities around Australia and make it even tougher for people with maxed out credit cards.
Then there is the current 'treasurer' and 'prime minister' telling everyone they can get to listen to them that next weeks budget "will contain some very tough decisions". Apparently these tough decisions are necessary because "the government wants a solid budget surplus to protect Australians from any overseas events".
The contempt this statement shows for the Australian electorate is breath taking. They assume that everyone has forgotten (never knew?) that the previous government not only produced 11 consecutive budget surpluses that completely paid back the gigantic debts of the last Labor government but that the current financial year (courtesy of the last Costello budget) will be the 12th consecutive surplus - and a very large surplus at that.
Nice to return to Alice in Wonderland country - or more accurately - "Kevin in Blunderland"
....it's hard to believe that a majority of Australians actually voted for this vacuous clown.
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Paying back a debt is not always in the best interests of a country.
Particularly when the debt is incurred for infrastructure which is utilised for decades. Why should the hear and now taxpayers pay for those who are yet to be born?
Your comments on running a small business in the Australian tech. sector are interesting but every time you put your economic speculation thinking cap on, you look the worse for ware.
I have no love for any political party - but you should re-examine the 12 Liberal years of economic impact without your rose-coloured glasses.
Don't blame me, I voted liberal.
Seriously though, while liberals didn't invest particularly heavy in infrastructure (including spending some decent cash on broadband like they should have) they encouraged businesses to grow through tax cuts, AWA's and various incentives.
I hope this downturn isn't bad for exetel, and it may be good to come up with retention plans as customers may disconnect their broadband as budgets become strained. It may be a case of offering leaving customers the chance to move down to the cheaper slower plans at no cost, and back up later on at no cost.
"Down Turns" are never good for private citizens or commercial organisations and a lot of pain is caused by them.
The current comments by the current 'government' are right up there with a previous Labor treasurer's sanctimonious piece of BS - perhaps you remember the infamous pronouncement that hurt so many Australians so very badly (without touching the pig farm owning, antique clock collecting person who said it - I often wondered where the money came from for his purchases considering his expenditures far exceeded his minister's salary and allowances):
"This is the recession Australia had to have".
Without trying to turn this into a political blog, we should remember that Australia is just a small part of the world economy. The world economy has been quite good over the last 10yrs, and so has Australia. The world now has problems (eg the credit crunch and fuel prices) and so does Australia. Inflation is being caused mainly by the huge jumps in oil prices.
The previous govt simply had to roll along with the flow to make Australia grow and flourish, conversely it cannot be blamed for the inflation which is largely oil-driven and therefore out of its control.
Both sides of govt have made both good and bad decisions over the years. Whether the recession we had to have was correct, the floating of the dollar and the Accord were good for this country as was the deregulation of banking and other industries. The Libs great economic gift was the GST, which is also a plus (though it would've been better and cheaper to operate if the Dems hadn't forced so many exemptions!).
Of course the Libs sale of Tel$tra without first splitting it into network, wholesale & retail have put the country back many years, and we may never recover from this error especially if the FTTN isn't properly regulated.
Both sides of politics do good things. Both sides get power-hungry and get turfed out after staying too long (just look at NSW now as an example - and don't tell me Howard wouldn't've lost if it wasn't Latham he was up against!).
Maybe we should bring in fixed 4 yrs terms, and a maximum of 2 terms for any PM or Premier. It seems they all run into problems after that length of time, but a lack of opposition can often keep them there. Whilst this wouldn't change the party in power, it might at least bring in a bit of new blood occasionally!
In my time in Australia Labor governnents have been, without exception ,disastrous for me personally and just as often disastrous for Australia - without exception.
That was not my point.
Rudd IS a vacuous clown and the current tender is a ridiculous joke.
The only thing worse than a change in government is no change in government.
In this country the problem is that Labor is, quite without exception, completely unqualified for the task.
I, personally don't give a 'xxxx' for your views - I say what I believe to be the case - and 40 years in this country, dispassionately viewed, supports what I see.
Rudd is a vacuous, simple minded clown with a vacuous moon shaped grinning face and an intellect quite inadequate for the job a majority of Australians has entrusted to him and his ridiculous puppets.
Dame Edna was right - Australia is neither ready for a PM called Kevin nor for a PM whose closest resemblance is to your local dentist.
Please, if you take exception to my views - spare yourself that problem by making the most obvious decision available to you.
I wasn't critcising either you or your views. And I agree wholeheartedly re: the FTTN tender. And I think slowly we will all come to agree re Kevin and his "team".
Tuesday night will be very interesting ...
And I hope the AG does step in re: the FTTN tender. 13 weeks, while both the details and the future operating market are unknown, is absolutely farcical and quite scary to the economic and technologcal future of this country.
There is little to no doubt that the Labor 'government' will destroy the Australian economy within two years of being elected.
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