The big news story of yesterday looked like Government MP Julia Banks and her resignation but that was trumped by the PM’s decision to switch the Budget from the second Tuesday in May to April 2, so he can showcase a pre-election Budget before an election in late May.
So a largely economic event i.e. the Budget has been moved for political reasons. How do I know that? Well, the economy, (driven by my old economics student, Scott Morrison) is going really well, on most objective measures. If you’re a ScoMo fan, you’d be in high praise for the ex-Treasurer. But if you’re a more snakey but fair Labor supporter, you might say: “Well, at least he hasn’t got in the way of economic progress, but the economy could be better…”
If I was him, I’d change the budget date. I have to say this is a smart political step by a Coalition team, which has been better at economics than they’ve been at marketing. When it comes to marketing their policies and their unity, Labor has been wiping the floor with them!
I was recently asked on twitter why I had given up talking about sticks, (it was a tweeter typo and should have been ‘stocks’) to become a political commentator? The question made me think about why I’d got myself involved in the thorny area of politics, which brings out a lot tribal haters, whose one-eyed views generate a lot of negative feedback.
Let me say I understand that. As a young man, I drove around the Eastern Suburbs of Sydney with a huge megaphone on top of my old bomb playing a tape of “Shame, Fraser, Shame” after Gough Whitlam was kicked out. I was even seen handing out “How to Vote” cards for Labor! The French philosopher, Voltaire, was someone who preached the value of free speech and his ideas were captured in this great line: “I disapprove of what you say but I will defend to the death your right to say it.”
That experience and the insults I copped from people who really hated Whitlam, showed me that it’s a mistake to assume your unchallenged view of the world gets in the way of your understanding of the real world and the people you might seek to influence/educate with your ‘more enlightened’ insights.
Politics can and should get you emotional but it should never make you disrespectful, unless you’re immature, moronic, unthinking or just a plain grub.
When I reflected on the question, I realised that a lot of my work here, on TV, radio and in newspapers since 1985 had to be political because politicians and their policies affect the economy and the stock market.
I did a radio report on Tuesday and this is what I said: “Fear and loathing on Wall Street u-turned overnight, with the Dow up over 300 points. Of course, stock markets aren’t out of the woods yet, with question marks over the Trump trade war, which will be discussed at the G20 meeting in Argentina at week’s end. Then there’s Brexit fears, oil price falls (which actually rose overnight) and even concerns about US economic growth, along with rising interest rates in the States. That suggests market anxiety could easily return but I expect a good day for stocks here today. Ahead of the close, the Dow was up 309 points, or 1.28%...”
Most of the issues that have both economic and financial market implications mentioned in that report had political origins — Brexit, oil prices and OPEC, Trump-Xi at the G20 meeting, and you can throw in Italy and the EU. And when you think about the Hayne Royal Commission being a political play by Bill Shorten, the crackdowns on energy prices and the aged care sector were political moves by the PM, Scott Morrison.
It’s simply the case that a lot of economic decisions or non-decisions are political. Therefore, an economics and markets commentator/educator like yours truly has to make calls and these can really incite the tribal political supporters to get nasty or get others to ponder why I seem to be a political commentator.
Elections bring out more economic policies, driven by political manoeuvring by both sides of politics. That makes someone like me more political-looking.
Right now, our stock market, as assessed by the S&P/ASX 200 index, is at 5728 but if there’d been no Royal Commission, ScoMo hadn’t picked on energy companies and aged care businesses, our index would’ve been about 6000. And if President Trump hadn’t gone long tariffs and a trade war with China, I reckon our index would be closer to 7000!
And by the way, I always try to be objective about Trump but when I am, I cop criticisms from Trump-lovers, who are right-wing voters sick of political correctness, climate change believers and left-wingers who have enormous control of what media says nowadays.
On the other hand, if I recognise that Trump has helped the US economy and the stock market and that he has a right to take on China (which does steal IP, does behave like a sneaky Communist state behind Chinese businesses and uses protection that was OK when it was a smaller economy but inappropriate now), I get accused of being a Trump lover.
Did I imply earlier that politics brings out the nastiness in one-eyed amateur political observers?
I use the word “amateur” because I have been paid to comment for over three decades and, in the old days, I got the gig because I was teaching Applied Macroeconomics at UNSW, which meant I looked at how the economy worked in the real world. It clearly had to look at Government policy and how it affected the economy. As a teacher/lecturer and writer, I strive to be objective. It’s not easy but, as an academic, I knew it would open me to fair criticism if I let my bias drive my analysis. In my media work, I’ve always tried to separate what I might like politically to what my job is, which is to explain the quirkiness and the hidden nature of economics. I think of myself as an economics and markets educator but I know that my best efforts to be objective could be construed as being advice and influence by others.
The best example of me being economically objective but made me look political was when I looked at Labor’s negative gearing policy and concluded that the changes would help homebuyers rather than home sellers. That brought negative criticism. But my conclusion was obvious. Whatever the multiple goals of a ‘caring and sharing’ Labor, the changes not only save the Government money, they make it easier for first homebuyers and other household property buyers to be more competitive with potential landlords, who have a tax advantage when they go to an auction.
Similarly, when a self-funded retiree living on $50,000 a year loses a $10,000 tax refund, there will be an economic effect on those people. And when another of my old UNSW students, Labor’s Matt Thistlewaite, infers they’re cracking down on rich people, I do have to point out that a lot of ‘not so wealthy’ people have planned their retirement on prevailing rules and Labor’s changes will hit them hard.
It sounds political because it corrects what Labor is inferring but it’s simply economics. Someone has to call it out and I’m one of those someone’s.
Of course, I always argue that most threats do create opportunities. I argued yesterday that Bill’s banning of tax refunds based on franking credits for self-funded retirees might push those retirees or potential retirees into a negatively geared property instead of shares, which will have that status preserved until it’s sold.
This push to buy property might help slow down the fall in house prices, so Bill’s policy could have some other positives.
One final irony of Bill’s policies and how they have affected self-funded retirees gave me an opportunity to put on the Switzer Income Conference, which had a big roll up in Melbourne yesterday and is on at the Wesley Centre tomorrow morning in Sydney.
We showcased alternative ways to get income in retirement, other than just buying shares for franking credits and tax refunds. There are arguably safer investments than shares and getting investors to think about other products actually helps them be more diversified.
Who knows, one day someone like me might write that Bill’s policies helped retirees reduce their exposure to the stock market and saved them money when the stock market crash of 2020 or 2021 came along.
Now that’s me being objective and nice to Bill. Tribal haters, please note!
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