Federal election 2019—preparing for change

OBSERVATIONS | MARCH 2019

Australia heads to the polls this year for a federal election, and current voting intentions suggest there will be a change in government, which may bring a host of policy changes with likely implications for the economy, markets and individual investors.


Current voting intentions suggest there will be a change in government this year from the Liberal National Coalition (LNP) to the Australian Labor Party (ALP).

The opposition party (the ALP) has a policy agenda that has the potential to significantly impact both the economy and markets. Moreover, the details around the party’s key flagship policies are materially better formed, in some cases in draft policy format, which has not often been the case for opposition parties.

 

Key points are:

  • We anticipate the economy may well garner some support in the year ahead as the recently improved fiscal war chest is opened by both sides of politics to garner votes.
  • Globally-focused companies will be comparative safe-havens relative to domestic-orientated businesses.
  • The ALP’s plan to abolish cash refunds for excess franking credits is likely to see companies respond by releasing credits ahead of reform, either through buybacks or dividends.
  • The ALP’s proposals are expected to result in considerable superannuation and tax changes which would have a wide-ranging impact on some clients. While there is no single or obvious strategy that would deal with the changes being proposed by the ALP, investors are advised to use this as an opportunity to review their current strategy with their investment adviser.