The Economy Explained by Ray

Ray Dalio is an American billionaire investor, hedge fund manager, Ray is the founder of investment firm Bridgewater Associates, one of the world’s largest hedge funds. Bloomberg ranked him as the world’s 58th wealthiest person in the world on June 2019.

Here’s Ray explaining what the Economy is:

Australian Context 

Here is a report from the ABC that touches on the issues facing the Australian Economy, though it leaves out the main key issues – SEE Next Section for the main issues

Issues with Australia’s Economy

• Global Multinational companies, such as Amazon, Google & Facebook, are avoiding paying their fair share of corporate tax and shifting profits offshore, meaning the Australian Government takes in less income to pay for things like Health, Education and Public Services.
• Record low wage growth Figures of 2.2%, then once you adjust to CPI (inflation) of 1.7% (cost of living – Groceries, Transport, Fuel) that results as 0.5% in real terms. Meaning someone on the median wage of $65,577, will get an extra $327.88 per year, then taxed @ 32.5% (tax rate for the median wage), that person gets $221.32 in their pocket, though in practical terms most don’t see this unless they change jobs. 
• Australian personal debt is at record high levels, with Australians having some of the largest debt figures in the world 
• Approx 56% of Australia’s economy is consumer spending, minimal/flat growth has been seen once adjusted for immigration rates, with low real term wage growth and personal debt obligations also contributing

And we have not touched on housing affordability, one of Australia’s largest issues going into the 2019 federal election.

Government doesn’t want to tip over the cart, for these reasons:  

Federal Government – Needs to keep construction industry moving along,

• Large amounts of workers that worked in the mining boom migrated into building construction back in 2014.
• The positive economic impact of the “mining boom” was actually a construction boom, not the mining itself as most profits from the mining itself went overseas
• The government wants to keep this industry employed, as the government made an election pledge for a budget surplus, and need the tax revenue to do so. 

State Government

• Revenue from Stamp Duty in Victoria was $6 Billion & $7.4 Billion from NSW for 18/19, and is the reason for ridiculous building approvals (Poor planned mixed use/squeezing townhouses in/small land sizes in housing developments) More titles, more revenue. 
• Revenue in the form of Building Fees for construction workers and companies to construct the buildings themselves

Sources – ABS, APH, ATO, RBA, Vic SRO, NSW Gov, Wikipedia, ABC, SMH, Bloomberg