Mangled Thoughts

Business investment falls27may04

BUSINESS investment slid 2.5 per cent in the first three months of the year, figures show today, the first fall in a year.

The Australian Bureau of Statistics (ABS) said new capital spending fell to $13.83 billion in the March quarter, dragged down by investment in equipment, plant and machinery.
But spending remained 3.9 per cent higher than the same time last year, allowing for seasonal influences.
The figures also showed businesses had ramped up their expectations for spending next financial year.

The estimate of $45.1 billion capital expenditure for 2004-05 was 8.2 per cent higher than the last ABS survey, although it was 1.7 per cent weaker than the same estimate for 2003-04.

Point: capital is savings: govt consuption and taxation and regulation and other matters like subsidising sectors, cobine to reduce savings. Taxing profits eliminates more. Wages and salaries are profit participation. And each tier of govt has increased their exactions, some exponentially.

Is this the beginning of that which Brookesnews has pointed out often enough: those actions by govt entail capital is reoded in order to pay for that present burden . In other words, the price of govt’s spending spree is declining investment, with all that that entails for paying jobs , living standards and split of pay between income and savings.

Worth stressing, there is no distinction between profit returns to capital investments and wages and salaries.

In any case ,the Spring St. Spivs are taking Vic into economic recession.

Too early to venture too much and the data, at least as reported is inconclusive, noting the contradictions betwwen statements. This, however, might be the first set of data confirming what sound theory predicts. In that case, bury your money in the garden or,if you have enough to rub together, a Swiss bank account.

Not much solace for the ALP which has been trying to bash the govt over economic recklessness, high taxation and bribery for votes: since their record in the 80’s was far from Prudence’s ways, that the policies they have announced to date amount to even larger absolute increases in govt. consumption .