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Hewison Insights

Don’t believe the hype – Australia remains the land of opportunity

Andrew Hewison
Managing Director
2 May 2016

Australia has not had a recession for approximately 27 years, a long time by any country’s standards and no doubt making us the envy of many. We were actually due for a recession during the GFC however, the Rudd government’s generous handouts to everyone from multi-millionaires to the deceased, coupled with the pre-existing strength of the Australian government’s finances, steered us into the clear.

I am beginning to wonder though, had we gone through a recession in 2008, would Australians be still be scare mongered into believing that our economy is weak and that we need, and are on track, to a recession now? Or is this all a political tactic to have us believe things are so bad that we’ll embrace sub-optimal budgeting and tax hikes?

By continuing to tell the Australian people that times are tough, they will in fact begin acting like it. Once a recession mentality sets in, the response is swift with businesses moving into survival mode, shifting focus away from long-term growth and individuals stop spending. Not because there’s no money in the bank, but for fear that the money will be required for a rainy day that may never come.

Take for example the continued threat of the property bubble bursting. Not a day goes by without a new headline however, CoreLogic RP Data’s latest Home Value Index shows dwelling values in Melbourne have risen 10.1 per cent over the past 12 months, with Sydney seeing an annual improvement of 8.9 per cent.

This is despite the government making foreign property investment increasingly difficult and the banks reducing investor lending.

There are plenty of reasons to be confident

In my opinion, performance stems from confidence in any walk of life. Australian’s need confidence and certainty that the future is bright. Such confidence comes from leadership in government. The mining boom is over, let’s move on and start looking towards the new growth areas for our economy – IT, infrastructure, healthcare and agriculture. Australia leads the world in these areas and it is high time we reinstated some optimism.

And I, like the rest of the nation, will be watching with interest tomorrow to see what Treasurer Scott Morrison presents in his first budget, and how it’ll be sold to us.

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.