The trade deficit continues to balloon and the state of Australian manufacturing continues to decline. The Howard Government has not done enough to counter this issue by encouraging Australian consumers to buy Australian made.
The Senate Inquiry into Possible Links Between Household Debt, Demand for Imported Goods and Australia’s Current Account Deficit heard yesterday that Australian consumer debt has blown out to $230 billion. This figure is an exponential increase from 1996 when it was $60 billion. The average household debt has risen from $40,029 to $71,243 over the same period.
Household debt today represents 140% of disposable income, which means it will take every cent an individual earns over one year and three months to pay off the average debt.
What are Australians spending all this extra borrowed money on? The inquiry heard that consumers have driven up the level of imported goods which has risen by 133.5% over the last 8 years. Household income has not risen anywhere near that amount hence the rise in debt.
In addition the inquiry heard that the expenditure on imports has shifted over time towards consumer items over goods necessary to fuel capital growth.
This is an unsustainable position. The first and most obvious step the Government must take to reduce the trade deficit is to encourage Australians to purchase locally produced goods over imported goods.
The lack of leadership by the Howard Government on both promoting Australian manufactured products and infrastructure needs has directly contributed to the unsustainable growth in the trade deficit.
Contact: Taryn Langdon – 0417 148 059 or 02 6277 3334
