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Australian Government

Gillard triumphant, but what does it mean for the long term?

Andrew Hewison
Managing Director
27 Feb 2012

I am sorry to say, but not a great deal…

You see the current Government infighting only serves to fuel investor’s trepidation when it comes to investing in Australian companies. Regardless of your view toward policies involving a mining tax and carbon emissions, an undeniable fact is that both hurt investment into the companies these policies affect most.

But what hamstrings markets most is uncertainty. Uncertainty over leadership, uncertainty over our country’s plan for the future and uncertainty over policy. Ms Gillard is particularly unpopular with the Australian people at present because she and her party broke a pre-election promise not to impose a mining tax.

Imposing a mining tax on Australian miners was, amongst other things, a glaring example of short termism. Motivated by the Government’s desire to return the budget to surplus by 2013. Of course what we are now seeing are companies such as BHP, reducing their business development in Australia and looking offshore to generate profits. I question what will hurt our country more in the long term?

More to the point, the policy backflip created uncertainty amongst investors. If a Government is willing to change their policy direction on one issue, are they willing to do it again?

I myself would like to think this morning’s leadership vote may clear up the infighting and allow the Government to get on with running the country, but here is another piece to the puzzle: If we the people elect a local representative to represent our views in Parliament, which would include who leads the party, why then did the Labour Party re-elect Julia Gillard when public opinion polls clearly suggest, by a margin of around 25%, that we prefer Kevin Rudd as our Prime Minister? More confusion for investors as to what this Government is capable of doing.

In order to create certainty for Australian and international investors, what Australia needs is a Government, any Government, that is willing to unite, formulate and stick to a long term strategy for the benefit of the Australian people, not one who’s only interest is re-election.

Did this morning’s leadership battle ensure this? Time will tell…    


Hewison Private Wealth is a Melbourne based independent financial planning firm. Our financial advisers are highly qualified wealth managers and specialise in self managed super funds (SMSF), financial planning, retirement planning advice and investment portfolio management. If you would like to speak to a financial adviser on how you can secure your financial future please contact us 03 8548 4800, email info@hewison.com.au or visit www.hewison.com.auPlease note: The advice provided above is general information only and individuals should seek specialised advice from a qualified financial advisor. The views in this blog are those of the individual and may not represent the general opinion of the firm. Please contact Hewison Private Wealth for more information.