Billionaire Gerry Harvey has predicted Australia is heading towards a ‘great black hole’ of debt, with high inflation and no major falls in interest rates over the next 12 months.
The Harvey Norman co-founder, 84, made the comments on Wednesday after the retail group’s annual shareholders meeting.
“Debt is a huge problem going forward because the way we’re traveling right now we’re heading towards a big, big black hole,” he told the Australian.
‘That’s not going to happen tomorrow. But if you try to find out in five years’ time where Australia will be with the way we’re behaving at the moment, we’ll be in a much, much worse position than we are today, because of the cost of all the things the government wants – healthcare, aged care, NDIS and social services – they don’t have all that money they need.
“Where are they going to get the (money) from? Are they going to borrow it, what are they going to do?’
Mr Harvey described Australia’s economy as “okay” but hampered by high inflation, exacerbated by high government spending.
“Governments can’t spend all this money and throw money into the economy and expect interest rates to fall and inflation to fall. It can’t happen,” he said.
“And interest rates won’t fall, or if they do, it will be very minimal. We could be sitting here this time next year, and our interest rates might not be much different from what they are now, or might be a little lower, but it won’t be the 2 or 3 percent it was.”
Billionaire Gerry Harvey has predicted Australia is heading towards a ‘great black hole’ of debt, with high inflation and no major falls in interest rates over the next 12 months.
Mr Harvey has previously criticized the Albanian government, accusing it of playing politics with its “irresponsible” budget released in May.
He said his energy bills have doubled in the past two years as the government has pushed renewable energy – labeling Australia and New Zealand as the worst of the eight countries where Harvey Norman operates.
‘When I look at what it costs me now to run my warehouses, compared to a few years ago, it is 100 percent more.
‘Everything you do at the moment in terms of development costs is so high and the government is doing nothing to reduce that.’
But despite Mr Harvey’s gloom about the economy, Harvey Norman reported at Wednesday’s general meeting that total sales rose 1.7 percent between July and October, while same-store sales rose 1.4 percent.
In Australian stores, total sales increased by 3.2 percent, while same-store sales increased by 3.1 percent.
Harvey Norman CEO Katie Page told shareholders that online shopping does not pose a threat to the retailer, but simply gives customers more flexibility to browse, order and pick up items.
Harvey Norman, co-founded by Harvey and Ian Norman in Auburn, NSW in 1982, now has 198 franchised complexes and 120 company-owned stores in eight countries.