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2019 Election Series: Australia's economic future up in the air

Australians are faced with a very difficult choice this Saturday. Both major parties are rallying hard to convince us that they each have the policies to navigate a tricky economic future.  Battle lines have been drawn on tax, climate change, education and health.

Most commentators will tell you that the Government is selling a ‘steady as she goes’ conservative plan for the future, unwilling to commit huge sums of money in any area, such as schools, health or climate change. Come 2020, they are projecting Australia’s first surplus in more than a decade.

Some may say that this is sound economic management given the economic uncertainty in the short term. That said, the Government plans to give back what it’s saved by way of tax cuts. By 2024-25, they predict 94% of Australians will pay 30% tax or less.

The Labor opposition is selling a more aggressive approach to spending, focusing on the areas that they feel have been neglected by the Government in its pursuit to tighten the purse strings of our nation.

Labor's plan to fund their spending comes mainly via the proposed abolition of:

  • Franking credit refunds to those of zero tax rates (retirees)
  • Negative gearing
  • Restricting non-concessional super contributions

While unemployment is low, wage growth has been virtually non-existent while energy costs have skyrocketed. Essentially, the economy needs to be stimulated one way or another to improve conditions for workers.

Labor’s negative gearing policy is a hotly contested topic, this would restrict negative gearing to new properties only. Labor’s belief is that this will curb the rise of property prices and make it more affordable for new entrants. The Government believes that this will, in fact, make property prices fall, couple this with an already softening housing marketing in major cities and we may see a huge dent put in the wealth of Australian property owners. Plus, there’s also an already slowing economy to throw in the mix as well.

What isn’t slowing down is our population growth and the resulting transport congestion that Australians face. The Government has outlined an ambitious $100b investment into transport infrastructure, while Labor has committed around $20b.

Unfortunately, I can’t help with which party will deliver on their promises and create a better future for Australia. Toss of the coin perhaps?

My one wish for the winner of this weekend’s election is a clear majority. It’s time for the elected Government to govern without constant interference from minorities. The elected party needs the opportunity to implement their plans and begin to get things done!

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.au

Please 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.