Australians need to curb spending habits

Australians are now one of the world’s largest spenders, due to the property market boom, but are continuing to outlay more than they are able to earn, according to director of Access Economics Chris Richardson.

Speaking at the Chartered Accountants Business Forum, Richardson said: “Australian wealth has reached a higher peak than that experienced by the US during the dot com boom.

“While it is not healthy for the nation’s wealth to be based on one element, the property market boom is considered to be more stable than the dot com economy, which the US wealth peak was based on six years ago.”

However, Richardson noted that commodity prices are likely to slow next year, which is likely to have a major impact on Australia’s economy.

He said: “Today’s record profits, record rates of investment, strong share markets, the robust Australian dollar and surging tax revenues are all due to the strong commodity prices Australia is experiencing.

“Australia went from a housing boom to a commodity price boom. But if that boom peters out before housing prices are closer to fair value, profits may be squeezed and the Australian dollar could fall.”

Richardson also said the recent Federal Budget income tax cuts would offer virtually no benefits to individuals living on the east coast of Australia.

He said: “While it was good to see the Budget produce tax cuts proportionally more for both low income earners and high earners, the Government should have considered further tax reforms for either end of the income scale to improve efficiency.”