The Federal Election
Dr Shane Oliver, Head of Investment Strategy and Chief Economist, AMP Capital, shares his perspective on the upcoming Australian Federal Election.
Some might be forgiven for thinking the wheels have fallen off Australian politics over the past decade with the same number of PM changes as Italy, a fractured Senate and “minority government” at times making sensible visionary long-term policy making hard. With the May 18 Federal Election offering a starker than normal choice political uncertainty may see another leg up. Polls give Labor a clear lead, albeit it’s narrowed a bit.
- Australian elections tend to result in a period of uncertainty which have seen weak gains on average for shares followed by a bounce once it’s out of the way.
- With Labor promising higher taxes, larger government and more intervention in the economy the May election presents a starker choice than has been the case since the 1970s & so suggests greater uncertainty than usual.
- Labor’s higher tax and regulation agenda may be a negative for Australian assets, but this could be partly offset in the short term by more targeted fiscal stimulus.
- To return to decent wage gains requires a productivity enhancing reform agenda & much lower unemployment. This election is unlikely to deliver much on the former.
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