It isn’t often that Australians can be accused of a lack of confidence. However, when your leading trading partner of the last 20 years begins to slow, as China is now doing, and successive governments of both persuasions find themselves unable to deliver a narrative for the future, that is exactly what you get.

 

This week again Australia finds itself beset with questions over the Federal leadership. Malcolm Turnbull, having just deposed the incumbent Tony Abbot, is the country’s sixth Prime Minister in eight years. It is a case of recent history repeating itself. It is instability on an unprecedented level.

 

Yet, despite these bumbling efforts at the Federal level, business and consumer confidence, while fragile, has managed to improve over time. An all time low cash rate of 2% has boosted the housing and consumer sectors and this has, finally, managed to kick start business confidence. Employment has been resilient over the last 12 months, despite on-going expectations that unemployment will increase. Housing and a rebirth in manufacturing and exports due to the lower Australian dollar have been important here.

 

The New South Wales government provides a successful template in how things can get done and how economic activity can be supported. The current government has come into office with a clear vision on infrastructure and policy reform, and with an agenda around encouraging business to invest. The State is now growing at rates of near 5%, levels not seen for a decade. Clear, decisive leadership and structural reform has been the bedrock for building confidence and moving the State away from a dependence on Chinese growth. Confidence really is gold. Federal politicians should look long in the mirror and take note.

 

Marc Whittaker

Portfolio Manager

Disclaimer: This is intended to provide general information only. It does not take into account your investment needs or personal circumstances and so is not intended to be viewed as investment or financial advice. Should you require financial advice you should always speak to an Authorised Financial Adviser.