Australian Interest Rates Will Rise

A word of advice -fix your home loan today; election year or not, interest rates are going up. The reason? Companies simply cannot get staff : the spectre of wage stagflation is looming. For example, a transport company on the Northern Beaches has been advertising for the last 2 months for a delivery driver ( Salary in excess of $50,000 pa ) no-one is interested. Unemployment is zero, anyone that wants to work....can. These are the real 'Work Choices' a good worker can choose almost all the work he wants. Power for the worker receives a whole new meaning, each worker is not happy in their work simply vote with their feet. Have you ever tried a workman lately? The builder is charging the same hourly wage as the advocate of intellectual property - and the builder can not start work for another eight weeks.

Meanwhile, the rental market close call is an understatement. New employees can not afford to move into the area of North Sydney. The national policy can not understand why investors are abandoning investment property when they get a yield of only 3%, pay ridiculous stamp duty, pay 1.7% land tax every year, have ongoing rates and maintenance and have to deal with the Department of Fair Trading if a tenant is being awkward. Let's face it, it is much easier to put your money into BHP or RIO (and the yield will be similar)

So, it does not require a Harvard economist to realise that wages can only go one way, yes you guessed it - up. This wage pressure will, without doubt, force the reserve bank to tighten, and in my opinion soon, even before the election. ( God only knows what the wage inflation would be should Ms Gillard ever influence policy )

Some of the best workers in Australia are sitting there in Villawood Detention Centre awaiting deportation. Their crimes include such atrocities as working whilst on a holiday visa, or overstaying their working visa by a few weeks. Remember that these 'criminals' have been paying tax and contributing to Australian Superannuation funds, whilst they provide an essential service for employers and service to the local communities. I suppose though if it was not for these workers then that immigration official with the green hair and the piercings would be out of a job (perhaps these immigration officials could then be the waiters in that Bondi café they are about to raid)

In the meantime, sell those bonds, sell those shares that rely on the domestic economy, and fix those loans. Australia has hit full capacity - rates are going up.

Freddy Quinn

(Freddy Quinn is a business and property owner in Northern Sydney. Freddy has paid large amounts of stamp duty to the State Government. Freddy loves paying land tax at 1.7% every year to the State. Freddy pays large amounts of GST to the State Government every quarter. Freddy really does want to pay a bit more payroll tax at 6% , but poor old Freddy cannot get anymore staff. Freddy has just had his best pommy worker hauled of to Villawood for overstaying a working visa. Freddy is now cutting back production, cutting back on advertising and paying his staff more. Freddy is putting his prices up)

The writer holds commercial property and both BHP and RIO stock.