The chart above represents over five years of the four interest rates that I record weekly. As stated in previous blogs, the 5-year swap rate (in red) is the most interesting, because it is a pretty good indicator of what rate to expect for Medical Equipment and other finance. The swap rate last Friday was 2.54%, to which we add at least 2% for margin and risk, resulting in rates to my clients in the mid to high 4s.
My analysis of the trend remains down, because we continue to record lower lows and lower highs. But, if you need to invest in income-producing equipment, now would be a good time to lock in a really low 5-year rate. You may also want to consider bringing forward planned investments, such as equipment replacement or major upgrades.
In view of the accelerating advances in technologies, I’m encouraged by articles in this weekend’s Financial Review. It starts with an interview with Australia’s Chief Scientist, Professor Ian Chubb, in which he “hammers home” the importance of STEM (Science, Technology, Engineering, and Maths). In addition to developing Australia’s Science Policy, Chubb also advocates a focus on improving education with more support for teachers at all levels to attain continuing professional development.
I’m also encouraged by the government’s identification of business sectors in which Australia has competitive strengths:
- Food and Agribusiness,
- Mining Equipment,
- Technology and Services,
- Medical Technologies and Pharmaceuticals,
- Oil, Gas, and Energy Resources, and
- Advanced Manufacturing.
Add this to the new Prime Minister’s embrace of volatility and disruption, and we have a potentially game-changing opportunity.
Another article highlights the optimism of youthful politician Wyatt Roy, “a passionate believer in the power of entrepreneurs to transform the economy, particularly in information technology and telecommunications.” Based on his several visits to Israel’s powerful Office of the Chief Scientist of the Ministry of Industry and Trade, he wrote a white paper for policy reform in terms of centralising all government spending on commercialisation and distribution of seed funding.
The same article includes research by Mark Cully in the Department of Industry and Science that “includes many upbeat and positive conclusions about the country’s entrepreneurial culture”. It also identifies young, small businesses as more innovative and as the source of a disproportionate percentage of job creation. Let’s hope that the change at the top will result in more government support for start-ups, along the lines of the SBIR and STTR programs in the U.S.