31 March 2020
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Bill messed with too many great Aussie dreams and lost!

Peter Switzer
21 May 2019

Overnight US stocks were down, with another Trump trade bomb being thrown at China, with further crackdown on Chinese telecom giant Huawei. Australians who prefer to get richer rather than poorer have had to deal with five significant threats to our stock prices, our super, our jobs, our profits and the value of our homes. And deep down, apart from specific issues that might have riled those who didn’t vote for Bill Shorten, I do believe the economic threat he posed worked against him.

Before looking at the economic reasons Labor lost on the weekend, remember our wealth over the past year has been threatened by:

• The Fed wanting to raise interest rates in the US, which might have caused a recession. (That’s not going to happen now.)

• The Trump-China trade war threat that still hangs over us and is linked to the Huawei controversy.

• The impact of the Royal Commission and the APRA assault on banks and lending, which is still a problem but with a Coalition win should become less of a threat. Yesterday Westpac’s share price rose 9%, which says the stock market thinks there’ll be less persecution of banks under Scomo.

See our Switzer TV stock market wrap:

• The above has worsened the house price falls and worked to slow down the economy. The election result and probable improvement in confidence and investment by business will help lift growth. The 104-point gain in the All Ords yesterday reflects a belief that stock market players agree with me.

• The threat of the election was the final challenge to building wealth.

Four out of five of these headwinds to wealth improvement have turned from negative to positive, which explains why the stock market is now at an all-time high. CMC’s Michael McCarthy told my Switzer Show podcast yesterday that he thinks we’re seeing a possible stock market breakout that could catapult us through our all-time high on the S&P/ASX 200 Index of  6828.70, which in November 2007 ahead of the GFC!

Back to Bill and why he lost.

Let’s face it, if you were someone who feared your house’s future price would be lower because of Labor’s negative gearing changes, you might have voted for Scomo. And if you were a property investor as well, you would have been doubly scared of Bill.

If you were a self-funded retiree who was going to lose your franking credits and was going to see your income drop by say $10,000, when you’re on limited income, you would’ve wanted Bill’s guts for garters.

And maybe these people’s families were worried about their loved one’s position after the election and some might have thought “Bill’s shrinking my inheritance!”

Small business owners had to be worried about Bill’s plan for a living wage, specifically, and his plans for higher wages generally. This is how the ABC website reported Bill’s wage plans: “Bill Shorten pledges to lift minimum wage, but businesses are warning job cuts could follow. Labor leader Bill Shorten has pledged to lift the minimum wage, claiming that the statutory $18.93 per hour is “too low” for the average adult to look after their family.”

The problem with this caring idea is that since the GFC and the growth of the Internet, e-commerce, globalisation of our markets (where we buy stuff) and digital disruption, lots of businesses can’t easily raise prices. And that in part explains why wage rises are harder to come by nowadays.

Small business owners and even some of their staff might have got it that a secure job is better than one threatened by general pay rises. There’s over 2 million small and medium-size businesses in Australia. And then you have to throw in the ‘cranky franky’ self-funded retirees. And homeowners, who number about 30% of the 8.4 million households, means that over 2.5 million Aussies watched TV on Saturday night in suburbs where they’ve just seen some of the biggest falls in house prices ever!

If you throw in the rural community, which is historically anti-Labor, the sales of baseball bats in recent weeks had to be the best indicator of what was going to happen to Labor and Bill on Saturday!

No one should doubt Bill’s good intent but it was a plan for an imagined or minority Aussie, where he unwisely thought he could easily tell some that they would have to pay for his dreams for others.

The great entrepreneurs like Richard Branson and Jeff Bezos of Amazon understood what their constituency wanted because they understood the individuals who make up the numbers. The next Labor leader has to stop being driven by the party powerbrokers and more by what those people they hope to lead want.

Sure, they have to do it differently from the Coalition but it has to be what can be sold to the voters of Australia. And the way to do that is to know what these people dream about.

Bill messed with too many Aussies’ great Australian dreams — the value of their house, the success of their business, their ‘worked for and built’ retirement nest eggs and their plans to progressively get wealthier to make sure they can look after their loved ones.

Why Scott Morrison won was captured in his ‘thank you’ speech on Saturday night that showed he was more in touch with Aussie voters. Like a lot of entrepreneurs, his secret of success was that he listened hard to the silent majority.

Hell, there’s a lesson in that for everyone. In politics, as in business, you have to be a dream-giver not a dream-taker!

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