More politics to drive markets. Brexit, a bumbling US admin, Italy … time to add Australia in to the list.
Australian Federal elections have recently not seen too much difference between the major two parties (oh ps. If any political nerds want to argue with me on the nuances please call 1800-tellsomeonewhocares) but this time around there are some differences to be aware of, with importance to the economy and hence to traders.
OK, where are at:
- Prime Minister Scott Morrison leads one side, the conservatives (Liberal Party)
- Bill Shorten is Leader of the Opposition (Labor Party)
- Labour is ahead in the polls (May 18 is a political eternity away so this can change)
The government released a pre-election budget last week
- with tax cuts for low- and middle-income earners
- more spending on health and education
- promising a budget surplus
The Labor opposition has
- promised to match the government's tax cuts for the middle income earners
- and further concessions for the lower-paid
- spending promises funded by taxing multinational firms & banks
- will reduce capital gains tax discounts
- And remove a favourable tax arrangement for investment property owners
TD wrote a piece a few weeks ago that I posted on, drawing parallels with the NZ experience. I'll refer you to this:
Something, however, to be aware of in the Australian campaign is the Labor Party to "remove a favourable tax arrangement for investment property owners" (quote from me a few lines above). In an already weak housing market this may have a negative impact further and is a key issue to be aware of.
The argument being that weak housing sector leads to lower consumer confidence, lower consumer spending, and hence a negative impact on the economy. True, false? You be the judge. If yes, after that its a question of the magnitude of the impact.
May the best man win! Anyone seen one?
