The election is over. The people have spoken and have decisively returned a coalition conservative government. Our first thoughts are as follows:
This is a win for investors across all age groups. In short Labor’s policy agenda was to make it more difficult for anyone to build long term wealth and financial independence across all assets classes both inside and outside superannuation. The tax grab was all encompassing across all assets via the halving of the 50% Capital Gains Tax discount and in property via negative gearing changes and in shares via proposed changes to franking credits.
It is a win for the SMSF industry and those Australian’s typified by you, our clients who want control over their financial future and seek to build long term wealth within a stable policy framework. The policy to remove franking credit refunds for retirees and reintroduce in effect double taxation on dividends was poorly conceived. It was policy on the run as evidenced by the almost immediate change to exclude those on the aged pension. Labor grossly underestimated the fear, frustration, and impact of breaking yet again the social contract of not changing the rules for fully and partly self-funded retirees. More sinister was the underlying agenda of concentrating more power in the hands of Industry Super Funds by reducing the attractiveness of running an SMSF.
The nation has rejected the high tax and big government agenda. This along with the coalition tax cuts should deliver stronger economic growth and higher living standards for all Australians.
The election result is a win for policy stability particularly within the superannuation and retirement space at least for three years and hopefully much longer. A very clear message has been sent to both parties that ordinary Australians demand and deserve policy stability particularly in areas like retirement planning. Investing and wealth building as we so often advise is a long-term game.
Our role is to help you stay the course and wherever possible ignore the noise and focus on facts and fundamentals. Examples abound where people have changed their strategy based on what many saw as an inevitable Labor win. Our advice was always to wait for the result both in the House of Reps and the Senate. Even if Labor had won the lower house there was every possibility some of the polices proposed would never make it to and/or through the Senate.
Here’s to three years of policy stability!
Please contact us if you have any questions. Best wishes, Royston Capital.