It is a bizarre system where we expect instant mastery of a major project and policy from someone overseeing a huge portfolio, when the individual may know next to nothing about it. A CEO might spend 20 years learning about an industry and climbing the corporate ladder but politics puts someone in the top job on short notice.
And then the lobbyists start knocking. The Register of Lobbyists in Australia lists 331 organisations who lobby clients (thousands of them). Thirty-eight per cent of the 692 registered lobbyists are former government representatives, all of whom are subject to a Lobbying Code of Conduct.
“That code helps ensure contact between lobbyists and Australian Government representatives is consistent with public expectations of transparency, integrity and honesty.”
Good luck with that. Lobbying is 'pay-to-play'. Integrity and honesty were two of the three biggest issues in the recent election.
The Code is intended to:
“... promote public sector integrity and encourage the strengthening of oversight, accountability and transparency measures in Australia’s public institutions.”
So let’s not get too warm and fuzzy about what lobbyists want to accomplish. They are hired guns who attempt to influence politicians on behalf of their clients. I have already described how a dominant lobbyist schooled me on how politics really works. After Sam Dastyari's unsavoury departure from politics, he said the following to the ABC TV documentary, Big Deal about lobbying and corporate donations:
“And what do you really believe these companies think they’re going to get for that money?” There’s no use in tiptoeing around this. Read as many euphemisms as you like. You can call it donations, you can call it contributing, you can call it participating in democracy. That's all bullshit. This is a single thing and a single thing only. It’s pay-to-play... how do I get a seat at this table?”
Available to us in October 2023, Australia now sits at 18th on the Transparencies International Corruption Perception Index, a steady decline over the past 10 years.
The new government’s challenge is to get the number for 2025 up again but there is no room for rose-coloured glasses on this subject. Like any political party, Labor depends on corporate donations, as the data below, released recently by the Australian Electoral Commission for the financial year 2021, shows. Deeping Red The energy and gas policies problems awaiting the new government look like a well-trodden path in the direction of Ministers Chris Bowen and Madeleine King. The Lobbyist Register lets you search by company name to find out who does the lobbying.
All in all a prescient hire by lobby firm, PremierNational, of former Labor power broker, Graham Richardson, what with Labor winning, only it’s not lobbying, it’s ‘government relations’:
“PremierNational is committed to continuing to enhance our bipartisan capability to ensure our clients’ interests reflect one of the most effective government relations offerings in the country.”
Not too many Labor politicians would turn down a call from ‘Whatever It Takes’ Richo.
The Reserve Bank’s 0.5% cash rate hike was bigger than the market had anticipated, and Governor Philip Lowe’s hawkish remark also spooked traders:
“The Board still proposes to take further steps in the process of normalising monetary conditions in Australia in the months ahead.”
Even Lowe must concede that the central bank has been all over the place in the past few months and not just with his prediction of “no rate rises until 2024”. As CBA’s Gareth Aird points out, the Board fundamentally changed its mind:
“The RBA’s reaction function has shifted. In a sort of ‘back to the future’, the RBA Board will now go back to being forward looking. Remember the Board’s reaction function to start normalising the cash rate was premised on actual inflation, not forecast inflation”
That’s not the only change, and this is an important distinction:
“Inflation is expected to rise further in the near term but to decline back towards the 2-3% range next year,” the RBA said. Last month the RBA saw inflation not returning to target until mid-2024.”
Here is the main wrinkle as the RBA frontloader hikes. CBA anticipates another 0.5% in July, then 0.25% in each of August, September and November, taking cash to 2.1% by end-2022. And this forecast:
“Now the RBA is expected to move the cash rate into a contractionary setting, we have pencilled in rate cuts for the second half of 2023.”
Big call cash rates may have to be cut in 2023, but they’ll only be cut if both inflation and GDP are trending downwards. It’s not what the market is pricing in with cash at 4% mid-year.
CBA wasn’t the only institution to see rate cuts ahead, with Bridgewater founder Ray Dalio this week telling The Australian Financial Review:
“We think we are in a tightening mode that can bring corrections or downward moves to all sorts of financial assets. And that’s going to make the pain of that great and that is going to force the central banks to ease again and the next gubernatorial elections in the 2024 setting that’s probably somewhere around there.”
Well, that’s a jam-packed edition as we head to EOFY.
On the subject of life on the inside, Marcus Padley takes us through the factors that give institutional investors an edge over smaller players, notably they have access to better placements, but small is on balance good for nimbleness, execution.
SMSF expert Meg Heffron then reveals her Top Five end-of-financial-year superannuation action items, with a focus on completing actions well ahead of 30 June and also some tricks.
Which hasn’t helped as the Reserve Bank tipped up interest rates 0.5 per cent this week against expectations and property assets have been tested by rising interest and inflation in recent months. In our interview with Steve Bennett, he details which sectors hold up the best and also have stronger pricing power.
Then two articles on the fallout in tech and online stocks. Roger Montgomery argues free money provided cover for the smoke and mirrors of companies that make no profits and millions of investors were suckered into the hype, while Ashley Owen alerts of the price action of dozens of tech companies and allows them to be heard and compares prices with big indexes and makes the case as to whether the coast is clear to re-enter.
Then a smart piece by Anthony Aboud and Sean Roger on when mergers could work. A checklist provides cues about future observations.
Inflation and its side effects the name of the investing game and Michael Collins worries about the future of European unity given these new threats.
Bitcoin has frequently been referred to as ‘digital gold’ but is it so? Sawan Tanna puts this theory to the test against some long-term data comparing the performance of gold and the crypto. Cryptocurrency miners are facing new legislative challenges over their energy use at a time of fossil fuel shortages.
Chris Cuffe returns with a few end-of-financial-year suggestions he’s shared previously, but with something short of common occurrence as people shift dollars about during June.
