(Newswire.net — December 5, 2016) Wheelers Hill, Victoria — Australia’s treasurer, Scott Morrison was issued a warning this week. “The fact we are going to lose the triple-A credit rating is a foregone conclusion, it’s just a question of timing,” Hewson told Sky News on Sunday.
Hewson is a professor of economics and believes Australia’s financial quagmire is a long way off from becoming solvent and reputable. While governments slowly take action to button up their finances, local businesses need not wait to see what happens.
Independent analysis reports Australia’s budget will eclipse by about $24B over the next four years. The main reason for the shortfall is a steady decline in wages and an equal shortfall in tax revenue.
Small business, keen on staying in the black, may be forced to increase their expenses via wage hikes and increase in taxes to support the country’s mismanagement.
Chris Bowen, Australia’s “shadow treasurer”, said the government continues to put forth measures that have no chance of getting passed by parliament. These concepts are referred to as, “the zombie measures.”
Some lawmakers continue to ignore structural changes like Labor’s plan to reform negative gearing. Other government lawmakers firmly resolve that altering negative gearing will damage the economy, but Liberals like NSW premier Mike Baird said, “Now it is time for a review of the concession.”
The concept of concessions and restructuring tax rolls to reduce debt, of course, may only delay, not solve the problem. Small businesses, unlike lawmakers, have to balance their books in order to remain in business. Amazon #1 Best Selling author and Financial consultant Chinmay Anada said, “When anyone goes into debt, their only solution is to reduce expenses or raise revenues. For businesses, streamlining operations and increasing sales is a constant process.”
Governments, on the other hand, rarely reduce their expenses. Increasing or shuffling revenues is much more common. “Businesses, especially small ones, have an additional problem,” Anada continued. “Most business owners don’t have a CFO or comprehensive understanding of their numbers. It is only with a thorough understanding of what the numbers mean, can they make the critical decision on where to focus their efforts.”
The government continues to advance a 10-year plan to cut company taxes, which they hope would reduce the cost of doing business and lead to jobs growth.
“Who can wait 10 years?” Anada said. “Businesses don’t have the luxury of time. The sooner one understands and can adapt to the political winds of change, the more likely they will not only survive, but thrive.”
About Finance Academy
Chinmay Ananda B.E. (Civil), MBA, international speaker, financial educator and pricing strategist is the proud owner of six failed businesses. He’s proud to have failed so many times, as it spurred him to find out the reasons ‘why’. Researching hundreds of businesses and understanding what caused them to fail, he soon launched his Finance Academy.