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Our ‘High Demand Economy’ which sees the price of goods and services rising across the board, creates inflation and is largely driven by migration. Recently released national migration numbers show a decline from 429,000 to 306,000 in 2024-25, but this remains high and well above sustainable levels.<\/p>\n
Each additional resident in Victoria increases demand on police, hospitals, housing and the wider economy, making it harder to manage inflation and maintain service delivery. This puts pressure on everything including house prices, and this combined with the Iran conflict and higher fuel costs means inflation is expected to peak at 4.5 to 5 per cent before slowly returning to an estimated 3.7 per cent \u2013 still above RBA targets.<\/p>\n
Which brings us to our zero-productivity growth. An economy with a strong private sector and strong productivity growth could trade itself out of slow economic conditions. Driven by weak support for the private sector and heavy taxation on property and business, productivity has stalled and the private sector is shrinking.<\/p>\n
This will make it very hard for us to trade out of our issues. Victoria is not a big miner, we will not have the benefits of an uplift in commodities to fix our bottom line, such is the good fortune of our federal government, or was that sheer dumb luck?<\/p>\n
Action will be needed. We need an immediate about-face of the property tax regime that our state government has relied upon to fund its Big Build. Business growth and productivity are driven by investment that has, for generations, been secured by property debt. Property has been the only source of security lenders are generally willing to accept and without it, we cannot borrow, invest or grow. This money grab from property has cost us our economic strength to endure.<\/p>\n
A storm is coming \u2013 and it’s one without rain. At least the Cats are performing well, which may provide some distraction as we look toward the distant dark clouds.<\/p>\n