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Consumer confidence continues to rise -

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Consumer confidence continues to rise

Sue Lannin reported this story on Wednesday, August 12, 2009 12:46:00

ELEANOR HALL: The latest survey from Westpac and the Melbourne Institute shows that Australian
consumers are more optimistic and are hopeful that the worst of the economic crisis is over. But
it's not all good news, the property group Stockland, has posted a $1.8 billion loss for the 2009
financial year.

It had to make big writedowns to the value of its investments, as finance reporter Sue Lannin,

SUE LANNIN: It seems nothing can shake the optimism of Australians. Consumer confidence rose again
in August according to the Westpac-Melbourne Institute consumer sentiment index.

The index rose by 3.7 per cent in August to 113.4, to a two-year high. It stood at just at 86.2
this time last year. Westpac senior economist, Matthew Hassan says people are resilient.

MATTHEW HASSAN: Two main developments seem to have helped sentiment in the month, the first was
official confirmation that house prices were recovering from the ground lost last year, and the
other was the surprisingly strong labour market result for July.

SUE LANNIN: Confidence about the next 12 months when unemployment is expected to peak also rose.

MATTHEW HASSAN: There's a fairly unambiguous signal here - consumer sentiment is rising strongly,
we're now back at optimistic levels. Just in terms of comparison, 2007 was a very strong year for
consumers so we're back into quite a buoyant mode as far as the sector's concerned.

SUE LANNIN: But are they living in a fool's paradise? Unemployment is predicted to rise.

MATTHEW HASSAN: You sort of have to take the sentiment measures at face value and they're telling
you that consumers are feeling much more comfortable about the current situation.

SUE LANNIN: The least optimistic were those who are really being hit by the downturn, young people,
low income earners and tenants. And people remain worried about their family finances.

Matthew Hassan says are uncertainties ahead.

MATTHEW HASSAN: There are some negatives short terms without a doubt, we have significant fiscal
stimulus sort of unwinding for the consumer sector, and we do expect to see unemployment continue
to creep up, but for now at least our consumers are quite happy with the outlook.

SUE LANNIN: The downturn has also hit property group, Stockland. It made a huge loss of $1.8
billion in the 2009 financial year thanks to the global financial crisis. The company had to make
big writedowns to the value of its investments, which includes shopping centres and residential

It's also cut its payouts to investors. But managing director Matthew Quinn was putting a good spin
on things.

MATTHEW QUINN: It was a tough year we all know that. We've dusted ourselves down after what was a
very challenging year for us but I do feel the worst is behind us, not only is that reflected in
the public consumer business confidence numbers, it's also reflected in the results that we're
seeing at the coalface of our business as well.

SUE LANNIN: Stockland has spent the past year paying off debt and raising money, nearly $3 billion
in fact. It says while the first half was bad, the second half was strong, and Matthew Quinn is
optimistic about the future.

MATTHEW QUINN: Certainly we in the business are much more confident than we were six months ago. We
have a very strong balance sheet. I'd go as far as saying that we're bullet proof, 16 per cent
gearing is a very low number by industry standards and even by our standards. But I should stress
that we're in no rush to invest our surplus funds.

SUE LANNIN: Matthew Quinn urges caution when it comes to hailing the end of the global downturn.

MATTHEW QUINN: We are in a strong position, but we do remain cautious about the speed of recovery,
we've gone from zero to hero in terms of business and consumer confidence over the space of three
months, the same in the US, there's been big growth in the Chinese stock exchange. A lot of people
are acting as if it's all over, you can easily have false dawns with these things, and history has
shown that to be the case.

ELEANOR HALL: That's the managing director of Stockland, Matthew Quinn, ending that report by Sue