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I hope I’m wrong, but markets could get even with our unusual voting decisions that delivered us Pauline Hanson, Jacqui Lambie and Derryn Hinch in spades.

Forgive them Mal and Tony, for they know not what they do!

Peter Switzer
6 July 2016

By Peter Switzer

Thinking about how Saturday’s election was a great get-even by those Australians who have felt that their issues have been neglected by the political parties of Canberra, it took me back to Paul Keating’s most ironic, yet relevant jibes he threw people like this.

His words were: "This is a recession Australia had to have." And that could be our fate, if the people our disgruntled Aussies have elected to the Senate stop whatever Government eventually succeeds from fixing our Budget deficit and debt problems.

My concerns about our crazy election outcome have intensified, as stock markets are no longer acting as crazily as last week, where they headed up big time following the surprising Brexit vote. They’re now heading down!

I’d predicted that this would be the sort of thing that would mean the UK’s Chancellor of the Exchequer, George Osborne, might eventually have to do a Keating and say: “This a recession the UK had to have.”

But I wouldn’t blame George for any future recession. No, I’d blame the Brexit voters. They wanted their ‘old’ England back and this comes with consequences and recession could be one of them. George will try to fight it and he now proposes to cut the company tax rate from, wait for it, 20% to 15%! We were bellyaching about Malcolm trying to cut our company tax rate from 30% to 25% by 2026-27. Over that 10 years, the Poms would have a company tax rate 10% cheaper and do you reckon that might influence foreign companies on where they set themselves up?

The truth is the way we vote predetermines what our politicians do, unless they’re unbelievably courageous. But courage is hard when a tough, responsible action is portrayed by an Opposition leader as uncaring and out of touch with ordinary people. (Bill Shorten’s words, as I’ve never liked calling Australians ordinary people and I despise the way the Poms use the term “the common people.”)

Imagine if Malcolm Turnbull had taken power with all his post-Tony Abbott popularity and then campaigned on introducing a 15% GST on nearly all goods and services, like in New Zealand. Bill Shorten would’ve done a Sylvester the Cat line, that the ‘sufferin’ succotash’ feline reserves for Tweetie Pie: “Hello, breakfast!”

I really hope I’m wrong, and I seldom wish for that, but markets could get even with our unusual voting decisions that have delivered us Pauline Hanson, Jacqui Lambie, Derryn Hinch and Nick Xenophon in spades. Don’t get me wrong, democracy gives us permission to vote for who we think represents us — no matter how weird, unlikeable and selfish it might be — but this team could frustrate any government that wants to embrace tough but responsible economic policies.

So that’s where our voting and rejection of major parties could come back to bite us.

As I’ve implied, the pressure on our election decision is mounting, with stock markets now selling off. The German market was down 1.82%, the French CAC lost 1.69% and the Dow dropped 108 points or 0.61%, which was quite measured, but it might be naïve to be too complacent about what the Poms have put in play.

Prominent fund manager, Charlie Aitken of Aitken Investment Management, thinks Brexit is a 'black swan event' - which are very unexpected developments that can rock markets. Local legendary economist, Don Stammer, used to call these surprises ‘X-factors’. The worst one this century was how sub-prime loans created the GFC.

Possibly that’s part of Australia’s problem — maybe the GFC wasn’t as bad to us as it was to Americans, Europeans, the Brits, the Irish and any other country that faced the harsh realities of the 2008 crisis.

Our unemployment rate didn’t go past 6% during the GFC. In the US, it went to 10.8%, for the Poms it was 12.8% and Spain went to 26.4%! And this is why their official interest rates went to virtually zero, while ours remained at sensible levels that you’d reserve for damn good economies.

A few years back, our then RBA Governor Glenn Stevens implied the rest of the world is surprised that we were complaining about so much when we seemed so better off compared to most economies.

Let’s do a simple recap, so here goes;

  • Our wages are better than most, especially minimum pay rates.
  • Our interest rates are historically low.
  • Unemployment is 5.7% and at a two and a half year low.
  • We have arguably one of the best super/retirement systems in the world.
  • The returns on super over a long timeframe are very good, with a 5-6% p.a. over a 15-year period making most young people of today, who stay in super, millionaires on retirement.
  • Our social welfare system might not be the best in the world, but I’d rather be down and out here than in the US.

I could go on but I won’t. The bottom line is that even though our politicians can be disappointing, there’s an old saying attributed to Joseph-Marie, comte de Maistre, that says: “Every nation gets the government it deserves.”

I’d add that a lot of people fill their heads with so much garbage from the media that they’re not in a position to make great decisions for the nation. The decisions might suit them, given where they are on the aspirational pole, but they’re not great decisions for the collective good of a country.

And even though Malcolm Turnbull and Tony Abbott weren’t great in winning over the populace — Malcolm over the election campaign and Tony in the popularity polls — they’ve copped more punishment than they deserved.

That’s why I say: “Forgive them Mal and Tony for they, the voters, know not what they do!”

Though they might find out, if the Senate stops the Budget repair, we lose our AAA-rating as a consequence and this, as well as overseas stupidity such as Brexit, leaves us in a recession — a recession we had to have.

That will be a lesson I’d rather my fellow Aussies didn’t have to have.

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