In retail forecasts to be released this morning Access says shop keepers in most of the country can expect “a corker of a christmas” thanks to strong wage growth, tax cuts and share prices at close to record highs.
But the document says spending growth in the ACT has “stalled”.
An Access director David Rumbens said yesterday ahead the report's release that spending in the Territory actually went backwards in the three months to September when adjusted for inflation. By contrast spending in the rest of mainland Australia grew strongly.
He blamed the ACT's accommodation shortage which he said had throttled employment growth.
“Quite literally the ACT has hit a supply side wall,” he told the Canberra Times...
“There are not enough people coming into the ACT to fill the jobs that are vacant. Your employment gains have gone from perhaps around 2 per cent a year to around 1 per cent - that's one percentage point off retail spending growth because you just don't have the extra population to do the spending.”
The latest Bureau of Statistics figures show that there has been no employment growth in the ACT over the last year. Nationwide, employment grew by 3 per cent. The ACT is the only state or territory in which there are more jobs vacant than unemployed people available to fill them.
Mr Rumbens said Canberra had enjoyed extraordinarily fast employment and spending growth in recent years “but the best growth is probably behind the ACT for this cycle”.
“The Chief Minister Mr Stanhope can help by releasing a bit more land,” he said. “Canberra housing prices are pretty close to those in other cities that are more than ten times its size. It's not something you would have expected given that the amount of land available.”
Steadily increasing housing prices and mortgage rates were also biting into retail spending in Canberra in a way that they were not in other cities.
“Home mortgage payments are relatively high even taking account of the higher incomes in Canberra,” Mr Rumbens said.
“I know the Chief Minister says Canberra's housing is the most affordable in Australia given the incomes but what he is missing is that there are more people with mortgages in the ACT than there are elsewhere. This means that mortgage increases eat into retail spending more than they would in other places.”
“In other cities there are a lot of people who have paid off their mortgage, paid it off generations ago, and are still in the same house. In the ACT people are exposed.”
Labor's promised razor gang set up to prune the public service was likely to dent retail spending further. “It is not a prospect that will encourage public servants back to the shops any time soon. For the foreseeable future the Territory's fastest growth is behind it,” Mr Rumbens said.
Access has forecast that retail spending growth in the ACT will fall from 4.0 per cent this financial year to 2.5 per cent in the next and 0.1 per cent in the one after - by far the slowest growth rate in the nation.
The Australian National Accounts released last week suggest that the Territory's economic growth slowed to zero in the September quarter. In trend terms the ACT's state rinal demand grew not at all after rounding. In every other state and territory the growth rate was positive.
