July 2011 is shaping up as a pivotal moment for the Frankenstein Government (unrelated parts cobbled together) that has been installed in Australia. This is when the balance of power in the Senate will shift and the balance of power held by the Greens.
We have seen the Greens attempt at banking reform policy already which must have been taken from a text book from around the same era as their industrial relations policy.
On top of this we have witnessed the debacle surrounding the resources tax, the introduction of the notion of a carbon tax and of course the NBN which is becoming more and more intriguing with every resignation from senior NBN management.
Banking Reforms and the Telstra Bill are other examples of Government intervention over business. Robert Gottliebson recently wrote an article on how Australian business is being attacked by the Gillard Government which can be found at http://www.businessspectator.com.au/bs.nsf/Article/Gillard-government-business-reform-politics-pd20110404-FKT6M?OpenDocument&emcontent_Gottliebsen
Our point here is that the political landscape has changed materially in Australia and 2011 could well see the political risks of investing in Australia rising further. Business investment thrives on certainty. With the high Australian Dollar and the uncertainty of the political scene in Australia there are some signs that International investors are putting their money elsewhere rather than investing in Australia.
There are good reasons to have investments spread geographically outside of Australia given the current political environment, not to mention the high Australian Dollar which leads us to our view to invest part of an investment portfolio internationally. There are some excellent fund managers who are investing in leading global companies that are taking advantage of buoyant economies in emerging companies. On our website there is an excellent presentation from Magellan Financial Group outlining this in more detail – check it out at staging.gemcapital.com.au
Mark Draper CFP, Dip FP
GEM Capital Financial Advice