Wages sap confidence

STAGNANT wages growth means workers are not as confident as their bosses about the future of the Australian economy.

Bank of Queensland chief economist Peter Munckton said there was an unusually large gap between business and consumer confidence because of recent shifts in the economy.

Mr Munckton said that business confidence had been boosted by rising commodity prices, more infrastructure spending and rainfall in agricultural regions. Workers meanwhile were being dragged down by slow wages growth and rising debt.

“It is not unusual to have a gap, but what is unusual is the size of the gap,” said Mr Munckton. “It is the combination of slow wage and employment growth as well as high household debt.”

Mr Munckton said Australia’s future was dependant on balanced growth given that consumer spending made up 60 per cent of the economy. There were signs of a turn-and around for consumer confidence but it would take time.

“In Queensland, the mining sector is stabilising and there has been growth in the tourism education sectors,” he said. “You can go to a place like Cairns and there is notable confidence.”

Super Retail Group chief executive Peter Birtles said rising household costs meant customers were more careful when it came to spending.

“There are still opportunities for good businesses to succeed,” Mr Birtles said. “We can continue to grow even when customers are choosing to be a bit more careful with their spending.”

Wolff Group managing director Terry Wolff said confidence was slowly returning to the mining services sector, but big firms such as BHP and Peabody remained cautious.

Mr Wolff, whose Toowoomba mining equipment business employs 250 people, is looking at putting on more trainees as things pick up.

“We have a full order book, but would like to see (contract) rates coming up,” Mr Wolff said. “I think in the future there will be a shortage of good quality operators.”

Mr Wolff added contracts were still not being offered on a long-term basis. “We are getting a lot of six-month contracts rather than two or three years,” Mr Wolff said.

Star Entertainment chief executive Matt Bekier said that while household wealth was rising, there was still some uncertainty. “People are looking at their homes and they are worth a lot more, but conversely they are a bit more cautious about whether things will stay like that,” said Mr Bekier.

Reserve Bank boss Philip Lowe said last week that slow wages growth was a common experience across most advanced economies.