Warning - Election Time


It has been a busy time indeed. We have had the budget released, a change of Prime Minister and now an election announced. The final instalment of the “blueprint” to reshape the delivery of financial services was delivered to the government and several European countries have announced that they actually do have a problem with their debt and budget.




Over the next several weeks we are going to be hearing all about who is the most frugal and how they will cut the wasteful spending of the ‘other’ side.  Unfortunately everything that is said from all sides is coming from a very short term political agenda and is not based on economic or financial fundamentals.


So turn on those BS meters now!

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Why do we still have such high volatility in the markets? Australia is looking at a returning resources boom with low unemployment and good growth. We are being held up as a textbook economic example or the ‘golden child’ of how to deal with a GFC with the stimulus packages and economic management. Of course with all this positive news and growth there is pressure on inflation – and if needed the Reserve Bank will increase rates to try and slow the economy (This is actually good news and shows how well we are doing.). 


While we and much of Asia are going well, many European governments have extreme levels and debt AND are running large deficits with a stagnant economy. Some were in strife before the GFC and fibbed to hide the figures. After staying too long at the party they now have to deal with cleaning up – with a hangover.


Could it be that if Greece borrowed too much, spent too much and had too much Ouzo along the way, it doesn’t really affect us or the profits for BHP or Commbank?


When the markets are in the mood, all news is catastrophic and this nervousness is one reason that we are still seeing the big swings in the daily market and sentiment. The headlines may read ”China growth slumps!” suggesting mining growth has stopped.  In actual fact China has tried to stop an emerging property bubble by intentionally slowing growth – from 11% to 10%!


Europe is unlikely to show much growth but our profits are more aligned with not just China and India, but developing Asia.  So in the long term we are unlikely to be troubled too much by Europe.


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With the current political landscape the proposed changes may not see light of day, however there are a few worth mentioning. 


  • Super co-contribution will remain at $1000 if you are eligible.
  • Low tax offset will increase to $1500 for 2010/2011
  • Retaining the ‘temporary’ $50,000 cap on super contributions for people OVER 50 with a balance under $500,000.


 There were plenty of other proposed changes that are planned to commence over the next 8 years – but of course that may change.


The main opportunity will be for some forward planning regarding super funds to be balanced between spouses via super splitting to maximise the $50k cap. If you are over 45, have a spouse and there is a large difference between super balances, give me a call for a chat.

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The start of the year is the ideal time to plan for the new financial year. Revisit your wealth creation strategy –


  • Are you on track to achieve your objectives or what changes need to me made?
  • Are you taking advantage of any taxation concessions (salary sacrifice)? Don’t pay more tax than you need to.
  • Are the objectives for the strategy clear?


So get in control - or stay in control. Look ahead, keep a balance with what is important and try not to worry about the small stuff.


Kind regards,



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