image credit: ABC Open Wide Bay on flickr

2011 was a year of highs and lows that will live long in the memory of many Queenslanders. It was a record breaking year for our sporting teams, with our State of Origin side recording a sixth straight series win, the Brisbane Roar soccer side breaking an Australian record for consecutive unbeaten games and the Queensland Reds rugby team victorious in the Super rugby.

Our female athletes also did us proud, with the Firebirds winning the national netball championship and Sally Pearson winning a World hurdles Championship.

While the feats of our sporting teams brought us much pride during the year, the memories of 2011 for many Queenslanders will still focus on the natural disasters that marred the start of the year, when one of the worst summer storm seasons in recent memory left many people either homeless or with significant bills to repair damaged homes.

When I think of the contrast in fortunes of Queensland residents during the course of last year, I can’t help but draw an analogy to the current economic situation.

Domestically, there is much to celebrate with our economy the envy of most nations around the world. We have a strong, well regulated banking system, low unemployment and our dollar remains at historically high levels.

image credit: Anonymous Account on flickr

While we continue to perform soundly domestically, the health of our economy in 2012 will largely be shaped by the ability of the European Union to resolve the sovereign debt issues of Portugal, Italy, Greece and Spain.

One anticipated effect of the current international turmoil on the Australian economy is the possibility of a “credit crunch” similar to the one experienced in 2008.

As the economic situation in Europe worsens, it will be harder for Australian financial institutions that rely on international money markets to raise funds globally. This is likely to result in significantly higher interest rates on savings and investment accounts in Australia as banks scramble to make up for the shortfall from their overseas sources.

At Queenslanders we are fortunate to be approaching this period of uncertainty and increased competition with good reserves of cash and in a position to offer our members the added security that comes from the permanent deposit guarantee scheme recently confirmed by the Federal Government.

We are very confident in our range of products and services and encourage any member with a loan or savings account at another financial institution to consider switching to Queenslanders to take advantage of the savings that may be available.

As always we remain committed to helping all our members with their financial needs and my staff and I look forward to helping you achieve your goals throughout the coming year.

Commsec’s Chief Economist Craig James, who is a regular on Channel Seven’s Sunrise program, believes that Australia is weathering the financial storm and during a recent interview with business commentator David Koch he listed the following five reasons to prove his point:

1. Australia’s unemployment rate of 5.1% is one of the best of the major countries, well ahead of the USA (9.1%), UK (7.7%) and China (6.1%);
2. While Australia’s growth may have slowed during the Global Financial Crises we have been recession-free for the past 20 years;
3. Our Government debt will rise modestly…But Australian debt is lowest amongst the major countries – Australia’s debt is 7% of GDP, the average for OECD Countries is 50%;
4. China is the biggest buyer of our goods …And it is on track to become the World’s biggest economy; and
5. Personal wealth is at record highs. The value of our homes, savings, shares etc is at record highs.

Craig James’ full interview with David Koch and the statistics to back up his comments can be found here.

Despite these positive signs for our economy, there is no denying that consumer confidence is low at the moment and we have seen this first hand as our Credit Union members are saving more than ever and demand for loans has slowed somewhat. Big department stores and retailers such as Harvey Norman are reportedly doing it tough as consumers aren’t spending but are saving their money for that rainy day.

All of this is confirmed by the Reserve Bank who recently stated that households were saving 11.5% of their disposable income, the highest proportion since the mid-1980s, and the rate is expected to climb.

There has also been some recent bad news for the economy with iconic companies such as Qantas and Blue Scope Steel announcing major restructures including staff redundancies as they try to compete in the global markets.

As such, we have a significant contrast between the positive economic signs highlighted by experts such as Craig James and the negative signs exhibited by consumers and businesses in the ‘real world’. This contrast is intriguing and prompts me to ask, are you concerned enough with the economic outlook to postpone your plans to update the family car, renovate or upgrade your home or go on that family holiday you had been planning?

I am interested in hearing your comments.

Treasurer Wayne Swan said in his December 2010 banking policy statement:

“We’ll put our mutual credit unions and building societies, together with our regional and other smaller banks, right at the centre of this awareness campaign, to properly inform consumers about the safe and competitive alternatives they offer to the big banks. This will include the introduction of a new ‘Government Protected Deposits’ symbol, which will help consumers easily identify that their deposits are secure.”

This announcement was a direct result of the major Banks increasing home loan rates over and above the Reserve Bank increase.

Well the Federal Government has delivered by including in last week’s Budget details of a $15 million fund that will be used for a public awareness and education campaign aimed at facilitating competition in banking “by raising awareness about the range of banking options available.”

This announcement is great news for the 120 credit unions and mutual building societies in Australia and their 4.5 million members or customers who are also shareholders. More importantly, it’s great news for the wider community in general as many bank customers should become more aware (hopefully) of the advantages of being a member or a customer of a credit union or mutual building society as a result of the Government’s awareness campaign.

Over the next month and a half, Queenslanders Credit Union will do our bit to profile the credit union industry through an awareness campaign aimed at highlighting the difference between credit unions and banks. Titled Define the Difference, the competition will challenge members of the general public to make a short video explaining their perception of how banks and credit unions differ. The best videos will be profiled on our Facebook page and the Facebook community will vote to determine the best video, with the winner taking home the $1,000 prize.

We’re anticipating a wide range of answers to our question but, in my mind, the key difference is that, if you’re a member of a mutual, you become an owner of that organisation.

Our customers are our owners, so we focus on what’s best for our members – not share price movements. As mutuals, we are not under pressure to maximise record returns for shareholders. We put the interests of our members (or customers) first.

I’m really looking forward to seeing the level of interest generated by Government campaign and our own efforts to raise awareness of the credit union difference through social media.

This is somewhat the reverse of what you would expect given that government stimulus measures are traditionally designed to encourage us to spend more money, thus helping the economy to grow. However, according to Mr Makin, we as consumers tend to cut back on our spending when the budget is in deficit because we fear that taxes will need to be increased to pay for the Government’s excess spending.

In summary, we know the extra money spent by the Government will need to be paid back one day and that it is us, through our taxes, who will (eventually) bare the cost of the current spending. Our understanding of this cycle means we make ourselves save more money to prepare ourselves for the pain to come.

It seems though that it is not just Government stimulus spending that is encouraging us to save more and spend less. World events such as the Global Financial Crisis (GFC), natural disasters and concern about the availability and price of petrol due to the current turmoil in the Arab world are all combining to make us more careful with our money and encouraging us to lead a thriftier lifestyle.

In fact, a Reserve Bank of Australia Statement on Monetary Policy, released in early March, says the household savings ratio has staged a ”significant turnaround” to be at its highest level in more than 20 years. Household savings have now stood at close to 10 per cent of disposable income for the past two quarters, up from around 3 per cent before the global financial crisis.

In summary, as a nation we are tightening our belts, saving more and spending less – traits that Credit Unions and our members have traditionally been very good at.

As a long term Ipswich local it gives me great pleasure to see and hear the many positive reports in recent times about the future of my city. While many locals suffered in the recent floods it is comforting to know that, once homes have been repaired and lives return to normal, the economic outlook for Ipswich is a positive one. 

One of the positive reports highlighting Ipswich’s growth potential came in the Australian Property Investor magazine’s March edition, where Ipswich was named as one of 20 property hotspots that are ready to benefit from major infrastructure projects.

In particular Springfield & Springfield Lakes look set to be a winner following the announcement last week that TrackStar Alliance has been contracted to build two railway stations – one at Springfield opposite the Orion Shopping Centre and the other at Springfield Lakes, near Woodcrest College.

Better public transport and the completion of the series of upgrades to the Ipswich Motorway by 2012 are tipped to lead to higher demand for property in the area. With initial estimates suggesting the commute from Springfield to Brisbane via train will be about 40 minutes, living in new, affordable suburbs such as Springfield and working in the Brisbane CBD is likely to become a very attractive alternative for many young families. Given that Ipswich is already the fastest growing local government area in Queensland, the State Government’s investment in infrastructure to service the western corridor appears a wise one.

I’m glad my organisation is committed to helping the Ipswich region grow well into the future.

Despite all this the great Aussie spirit rises to the occasion yet again, witnessed by all of us who saw so many helping out our mates in need and truly showing that we love this country, we are proud of this country and the bigger the crisis the stronger the spirit.

A number of our staff got involved with the volunteer work and each one commented on how great it was to look at the person next to you, covered in mud, doing their bit to help out someone they didn’t know who had been an unfortunate victim of the flood.  The greatest reward each of these people received was to see a smile on the faces of those that had been affected, as if knowing that the great Aussie spirit would conquer all!

As I drove around yesterday on a beautiful sunny Australia Day, I felt an amazing sense of pride in this great country of ours and the people that inhabit it.  The full force of the great Aussie spirit was out once again in numbers with countless Aussie flags flying proudly atop our cars, Aussie shirts and shorts being proudly worn by so many.  So much pride despite so much adversity really helps you to understand that we do live in the lucky country with a spirit that will never be broken.

Regards

John Weier

Now that the Christmas/New Year festivities are behind us we have the new working year to look forward to. It’s also the time of year when many people stop and reflect on the previous 12 months. How many people made New Year resolutions to improve their health, general well being and lifestyle? There would have been the usual resolutions – losing weight, getting fit, planning a family holiday or maybe even looking for a new job. I wonder how many New Year resolutions are broken in the first week?

I’m looking forward to the new working year as I’m very optimistic about the future. It’s been two years since the worst of the Global Financial Crisis and the Australian economy seems to be headed for continued growth. I’m also very optimistic about Queenslanders Credit Union. Credit Unions in general have received a great deal of positive media exposure since the last Reserve Bank interest rate increase.

Over the Christmas/New Year break it was reported in national newspapers that one million Australians with mortgages have started looking for a new financial institution as dissatisfaction with the major banks peaks.

Here is an extract from the Herald Sun website on Boxing Day.

“A study of more than 15,000 people with mortgages shows a widespread belief the big banks have profited unreasonably since last month’s Reserve Bank 0.25 per cent interest rate rise by raising their mortgage rates by up to 80 per cent more. And those people are increasingly looking at credit unions as an alternative to the “Big Four” banks – which dominate the mortgage market – for their home loans.”

In light of these media comments there may have been a few unfamiliar New Year resolutions made such as looking for a better housing loan. I wonder how many of these New Year resolutions will be broken before the end of the first week?

I am interested in your comments.

Regards

John Weier

Blogging has been around for a number of years so I thought it was time I started making regular comment about some of the issues that affect our Credit Union, our economy or the well being of our members. I will try to keep my blogs very informal in a conversational style that will encourage a response from both Members and potential Members. 

Lately, Credit Unions have been in the news particularly since the major Banks announced loan interest rates will be increased by more than the Reserve Bank Increase. As a result the Federal Government and media commentators alike, looked past the “big four” and suggested that “Mutuals” such as Building Societies and Credit Unions are a viable alternative. This was followed last Sunday by the Government’s announcement on banking competition, which promotes a range of initiatives including a commitment to “build a new pillar in banking” - a 5^th pillar - through support for the mutual Credit Union and Building Society sector.

Much of the detail of last Sunday’s announcement is yet to be finalised  but  the events of the past few weeks have gone a long way in increasing  the publics’ awareness of Credit Unions.  This is great news for our industry and great news for those consumers who are starting to realize that Credit Unions are a viable alternative to the Banks.

So, this concludes my first blog and I look forward to hearing from you.

Regards

John Weier