The General Election, Financial Markets, and What It Means for Your 2019

What Does the 2019 General Election Mean for You

Wondering when the next election period will be for the House of Representatives? How about the Federal Election? In 2019 we are facing a great deal of political unrest, including a half-senate election as well as a House of Representatives election, thanks to Turnbull’s double dissolution in 2016. It’s likely that the 2019 Budget will be delivered on 2 April 2019, which means that an upcoming Federal Election is likely to take place on either 11 May 2019 or 18 May 2019. Of course, these dates could fall sooner, and it depends on Prime Minister ScoMo’s decision making. While hot topic issues like immigration policy are set to dominate the election pre-campaigns, it’s likely that other areas like finance will feature heavily. We wanted to take a look at the general election and how it will impact on finance in Australia, while also exploring other critical factors in finance today. Read on to find out about how politics can impact on your finances in 2019, and more.

The Election

When an election takes place, there is anecdotal evidence that uncertainty causes households and businesses to halt spending decisions until the election is over. But other evidence points to the fact that there is no clear proof of uncertainty affecting economic growth. What is clear is that after elections there is no clear pattern for share behaviour and the financial markets, with global events a far more likely impacting factor. It is hard to discern any reliable effect on bond yields or cash after federal elections either, with party changes failing to provide concrete evidence for predictable results. That said, a change in government can have implications for your superannuation, personal tax, and your investments. This is through policy changes and government focus. For example, it is likely that during the upcoming federal election, the Morrison government will focus heavily on property, while the Labor party will be fixing to cover tax policy.

The Housing Market

In 2019, the key focus from Scott Morrison and Josh Frydenberg is the role of APRA in managing the currently flagging housing market through macroprudential tools. Bill Shorten and Chris Bowen, on the other hand, are looking to reduce negative gearing and capital gains tax (CGT) breaks. Labor’s focus is to make property investment less appealing, and so far, work from APRA has taken the heat off a very inflated housing market predominantly in Sydney and Melbourne. What we don’t want is a disorderly adjustment, and it is important that APRA, the reserve bank of Australia and our government ensure that a combination of macroprudential tools and tax policy are used in harmony. Indeed, the Bank for International Settlements argued in June that “macroprudential tools should be embedded in a broader macro-financial stability framework that includes tax policy” with “the tax code…used to influence credit and asset prices.” Our take on things is that our largest property markets have already seen some cooling, and it’s likely that there will be further changes made to manage the weakening property market. If you’re looking to invest or have a portfolio that you would like advice on, view our wealth management strategies or call us today on 1300 943 454.

The Banking Royal Commission

Have you been following the Banking Royal Commission? We have. It’s been a pretty wild ride so far with findings such as:
  • Lenders preferring pursuit of profits above all else
  • Commissions being awarded to advisors
  • Fees for no service being provided
  • Predatory funeral insurance providers
  • Difficulty in transactions and services provided to Aboriginal and Torres Strait Islanders peoples
The big (and obvious) takeaway from these (and so many more) findings is that the banks are being forced (and rightly so) to tighten up lending criteria and provide stricter service when approving people for credit. This is deeply beneficial because you know that people are going to be getting better service from their banks, but it also means that making an application for finance may be harder. We have been advising all of our clients about the importance of securing finance early — especially when buying a home — as the process may be severely delayed compared to earlier times. Our take is that the Royal Commission was long overdue, but that there will be some teething problems which we’ll all have to adjust to.

Volatility in the Markets Under World Conditions

Our world markets impact on local markets, and with rising inflation expectations and ongoing uncertainty in America, it is likely that the Australian market is going to experience some turbulence as well. Our resources and financial sectors will feel the impact of global changes, while strength of demand from China and US-China trade deals remain uncertain. Further afield, the uncertainty of the EU, the UK and Brexit remain topics that will surely send shockwaves across the globe as developments take place and decisions are reached. Despite all of this, the Australian equities market remains relatively attractive given dividend yields and the opportunities to invest and find value in shares and trades. Want a more in-depth look at what’s to come for post-election Australia in 2019? we thoroughly recommend this comprehensive economic survey by The Conversation.

Be Prepared for Anything in 2019 with Finpro

Our take on things is that there are going to be some changes and plenty of uncertainty as we navigate 2019. No matter the market you are investing in, it’s important to have a solid financial advisor in your corner. Contact us at Finpro Group today for an obligation-free discussion about your goals and where you want to be financially. Reach us on 1300 943 454 or contact us online for a free consultation.