Gee, why won’t anyone invest?

I was quoted in the AFR earlier in the week:

RMIT economics professor Sinclair Davidson suggests criticisms of the government could go further, saying that sluggishness in the economy should be fully placed at the feet of Canberra. He sees the anti-business sentiment, and lack of control over various government agencies, including ATO, ASIC, ACCC and APRA, as driving the lack of investment. Taxes are too high and red tape too constraining. Moreover “the rule of law is being eroded by rolling protests and protesters who are not being adequately policed”.

This morning I read this:

“Overseas institutions do not want to invest in Australian financial services due to the regulatory environment,” said one person briefed on the meetings.

“There were lots of questions about ASIC and APRA and the royal commission, and views that regulators are populist. Several investors said they liked the company but asked why should they take the regulatory risk and they are not close enough to Australia to assess it.”

That is a problem – “views that regulators are populist” – we saw earlier this week Josh Frydenberg engaging in populist bank bashing.  Our friends in Canberra need to start getting serious about the economy. There is a lot of work that needs to be done if they want to secure our economic prosperity. Right now all this talk about eleventy zillion quarters of uninterrupted growth smacks of complacency.

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31 Responses to Gee, why won’t anyone invest?

  1. stackja

    CBA not helping with latest IT issue.
    Banks created many problems for themselves. If business concentrated on business, investment would not be a problem.

  2. C.L.

    Depends what’s meant by “populist.” Bowing to Twitter is not really popular. You could argue some regulators are not populist enough.

  3. Dr Fred Lenin

    The lack of investment wouldnt have anything to the low interest rates on investment and government interference?

  4. Mark M

    ‘This thing is in trouble’: future of Alcoa’s energy-hungry smelter looks bleak

    “The fate of Alcoa’s aluminium smelter in Victoria’s west is under a cloud, threatening the jobs of hundreds of workers and major disruption to the power grid, as Alcoa considers shuttering or selling its worst-performing operations.

    US-based Alcoa on Wednesday cast doubt over the future of the Portland smelter when it unveiled plans to investors to sell up to $1 billion of assets as well as closures of facilities around the world in a drive to boost its bottom line and cut greenhouse gas emissions.”

    https://www.theage.com.au/business/companies/this-thing-is-in-trouble-future-of-alcoa-s-energy-hungry-smelter-looks-bleak-20191017-p531nr.html

    Sigh.

  5. Rohan

    Well the Chinese are building lots of belts and roads, so there is that.

  6. Howard Hill

    lol, who is John Galt?
    But the freeshit gene lives strong in the Australian landscape, how to get rid of it?

  7. EJ.

    Invest? How’s this for news I received today….W T F..how the hell do I get out of this con called Superannuation!

    There’s some exciting news from the team at First State Super that we believe will be great for our members and the wider community.

    Our CEO, Deanne Stewart, is in New York today where the United Nations Secretary-General Antonio Guterres has launched the Global Investors for Sustainable Development (GISD) Alliance.

    This Alliance brings together 30 global businesses including asset owners, asset managers, banks and non-financial organisations, with the aim of working collaboratively to support the delivery of the United Nation’s Sustainable Development Goals (SDGs). We were honoured to be invited by Mr Guterres to participate in the GISD Alliance and represent Australia on this group.

    In 2015 all United Nations Member States, including Australia, agreed to adopt the 17 SDGs, which are intended to help alleviate poverty, tackle climate change and achieve a more sustainable way of living.

    While our primary purpose at First State Super is to deliver the best long-term investment returns for our members, we know that our members care about how we deliver these returns. Through our global investments, advocacy and corporate activity, much of what we do is aligned to the delivery of the SDGs.

    For example, earlier this year, we made our first pilot investment in affordable housing in Epping in NSW. Since then we have added two more sites in Hurstbridge and Waterloo in NSW and, will shortly announce a similar investment in Victoria.

    Through these investments, we are providing safe, comfortable and affordable rental housing to key workers in our community; while also delivering strong investment returns for our members.

    We were also recently featured in the Climate Action 100+ Progress Report for our engagement activity with organisations such as Origin Energy, AGL and Santos and, were recognised for our ESG integration approach at the PRI Awards in Paris.

    While these activities go some way to supporting the delivery of the SDGs, there is more to do.

    In September we reached a major investment milestone of $100bn in funds under management, and as our fund grows in size and scale, it is important that we stay true to our purpose and meet our obligations to our members and their community as a responsible owner.

  8. RobK

    Gee, why won’t anyone invest?
    From my perspective; energy, water and environment policy, have been usurped by the feds from the states to the detriment of all Australians. All those areas need freeing up and decentralising so that competition between the states can show the way. Other areas of policy could benefit as well.
    Australia could easily be a powerhouse of western democracy with the ability to achieve great things. If only.

  9. Diogenes

    EJ ,
    did that come as an email ?

    Looks I will be looking for a new super fund. Anybody know of one that doesn’t buy into all this bullshit & seeks to maximise returns ?

  10. EJ.

    @ Diogenes..yes by email this morning. I’m furious, how can we stop this!

  11. @Sinc

    Our friends in Canberra need to start getting serious about the economy.

    The problem is that “our friends” in Canberra are serious about the economy. “Our friends” in Canberra, most of whom would not know what the term private sector means, let alone what wealth creation looks like, believe the way to drive an economy is to tax and spend and to stimulate consumption.

    TAFKAS is aware of many, too many mid size businesses, who refuse to invest in Australia.

    And follow the money. Why does Australian have a current account surplus now? Because the superfunds know that the better investment opportunities (risk adjusted returns) are overseas.

    That Harvard Hausman study that said Australia has low economic complexity. Well it has been well balanced by high regulatory complexity.

    This week ASIC threw out the regulatory framework that underpins the Australian financial system – a system based on disclosure. This framework came out of an extensive inquiry led by Stan Wallis and that was legislated. ASIC’s assessment? Based on a study with the Dutch regulator.

    Any submissions? Don’t think so.

    But now that our lazy parliamentary friends in Canberra have given quasi legislative powers to the regulators – who needs laws?

    We don’t want friends in Canberra. We don’t want anyone in Canberra.

  12. New South Holland

    Fact: 44 years ago I purchased my first small business in my area of expertise, it involved 4 entities and cost about $80 all up and over the intervening years I bought and sold 7 others exactly the same the red tape and costs increased each time.
    Four years ago I transferred 15% to a junior partner, it involved 12 government and quasi authorities and the stamp duty and legal fees were $35,000 and it took a year of messing around and it was a cash sale.
    That is why people now avoid setting up their own small businesses.
    They ain’t stupid.

  13. Crossie

    Dr Fred Lenin
    #3187259, posted on October 18, 2019 at 12:29 pm
    The lack of investment wouldnt have anything to the low interest rates on investment and government interference?

    You would think so but apparently not our best and brightest in the financial sector who think the best way to increase profits is to charge their customers more for “financial services”.

  14. Boambee John

    C.L.
    #3187249, posted on October 18, 2019 at 12:10 pm
    Depends what’s meant by “populist.” Bowing to Twitter is not really popular. You could argue some regulators are not populist enough.

    When the polls support whatever is the latest “progressive” fad, that is the “will of the people”.

    When the polls oppose whatever is the latest “progressive” fad, that is “cheap populism”!

  15. nb

    1) EJ.#3187279, posted on October 18, 2019 at 1:05 pm

    W T F..how the hell do I get out of this con called Superannuation!

    Next year’s email:
    ‘You will be delighted we have given all your money to the Extinction Rebellion to help them fight climate change. We know you are looking for a great return on your investment. Saving the planet brings the greatest benefit for you and future generations.

    2) Statism is our greatest foe. Over-regulation, of which New South Holland’s tale is indicative, is the greatest enemy of prosperity in this nation. The next greatest threat is the state’s absurd devotion to the climate religion.

    3) The state wants to depower you. That includes depriving you of electricity.

  16. EJ re super. You should run your own. When I started mine I did all the accounts in Quickbooks and got a CPA friend to do an audit. Very little cost. Unfortunately ATO took over SMSF but it still can be done cheaply.
    I used Etrade (now ANZ Investing) to buy and sell shares. It has been proven that investing in Woke stocks gives a lower return. I sold BHP at top price when they announced they are going climate friendly. Since the price a dropped by about 15%. I am tipping that soon BHP will be taken over by a smart Equity crowd, split up and disappear. Both BHP & ESSO are looking to get out of Bass Strait, Gina might buy the iron ore. Then not much of BHP left in Australia.

  17. Howard Hill

    I sold my business 20 years ago to a company that moved it offshore for the very reasons in the article. It was exporting and bringing in money to our country. I could start it again tomorrow and begin employing people and bringing in money again, my products are still in use my name is still known and our reputation is still intact. But I won’t, they can get fucked. Soon as you become even remotely successful, you’ll have the parasites hound you looking for something they can leach out of you, they had my wife in tears several times for nothing more than doing the correct thing. This country is fucked and the sooner it becomes venezstralia the better!

  18. Squirrel

    Two striking points relevant to this in a recent interview of Rob Millner by Ticky Fullerton on the Sunday morning business show on Sky –

    1. Power prices in Australia are now so high that it would be cheaper for Brickworks to import bricks from the US rather than make them here.

    2. The “what can we do to help” atttitude of the Pennsylvania state government after a Brickworks acquisition in that state – apparently a stark contrast to what happens here in Straya.

    Rhetoric aside, the nation, and most of the people currently running it, take real wealth creation and entrepreneurship for granted – the true preference is for lazy speculation and faddish regulation.

    The old fable of killing the goose that laid the golden egg remains very relevant.

  19. Nob

    What New South Holland and Howard Hill said.

    They could have told you this years ago Sinc.

    Speak to any successful businessperson about why they don’t set up in Australia, or why they did but stopped. All but the out and out leftist apologists will tell you about the red tape and other ridiculous imposed costs.

    Meanwhile the general public think that “deregulation” is an extreme far right white supremacist meme that causes buildings to crack and electricity prices to go up.

  20. Roger

    Taxes are too high and red tape too constraining.

    What we need is a Liberal government.

  21. Atoms for Peace

    Just for giggles, some state should open a special economic zone with minimal red tape agreed by investors and workers. Boom!

  22. Howard Hill

    You made me laugh, Roger, but you’re dead wrong! The Liberal’s are zacery the same as they are referred to in America; a bunch of parasitical, spineless, left tucking, cocksuckers.
    And no I won’t tell you what I really think!

  23. Roger

    You made me laugh, Roger, but you’re dead wrong! The Liberal’s are zacery the same as they are referred to in America; a bunch of parasitical, spineless, left tucking…

    Well, that was my point, Howard.

    There’s a few glimmers of light among them, though.

  24. Howard Hill

    No, Roger. What you’re seeing is the sun bouncing of solar panels and reflecting off their arseholes! There is not one and I mean ONE! Politician in Australia worth following. We need a clean sweep! How that comes about, I don’t really care. If we need to kill them all then so be it, but I can’t see pain and misery being avoided, if you want to see some semblance of balance. First though, we need to utterly destroy and ensure their ALPBC can never rise again!

  25. feelthebern

    Sinc, in the last 24 hours, APRA decided not to appeal its loss to IOOF & Crown settled with the ATO for an amount that Crown described as not having any meaningful impact on earnings.
    Further demonstrates your points.

  26. Win

    Ask Wayne Swan why the industrial estates in his. Electorate have fully equiped factories with no employees to operate the silent machines.

  27. John A

    RMIT economics professor Sinclair Davidson suggests criticisms of the government could go further, saying that sluggishness in the economy should be fully placed at the feet of Canberra.

    Oh, the language!

    Following on from the previous post, it seems that journalists no longer learn how to use the English language correctly.

    “…the entire blame for sluggishness in the economy should be laid at the feet of the government in Canberra.”

    And they have the chutzpah to blame readers and viewers for the lack of communication!

  28. Eyrie

    Australia used to have an aviation industry. We have a couple of manufacturers making very small light aircraft even including engines. A few years ago CASA did its best to end the industry by cooking up some bogus statistics about the engines. They also took action which resulted in hundreds of ultralight aircraft being grounded for an alleged paperwork issue by the RAAus (Recreational Aviation Australia). Numerous flying school businesses were grounded for months too. The aircraft owners had done nothing wrong.
    As we have huge distances, poor roads, ridiculous speed limits on the few good ones and generally good flying weather, small aircraft should exist in the tens of thousands with a large vibrant industry designed, making , training and maintaining them with many thousands of jobs created.

    Repeat this for the rest of Australian industry. Trump showed that all you need to do is cut red tape and show that you are getting out of the way.

  29. Percy Popinjay

    If Australians’ investment options are limited now, just wait until we’re gifted with the next labore/greenfilth kakistocracy.

  30. Elderly White Man From Skipton

    Sinc, you need to get out more. Outside Australia our financial system is viewed as high risk. My impression from my own interaction is that few large investors hold our bank stocks today. At some point that doubt is likely to make its way to the securitisation rating of bank financing. Contrary to the local views and rhetoric I don’t find foreigners commenting on royal commissions but on household debt levels in an economy with considerable exposure downside on domestic asset prices and international commodity prices. In Asia, we are seen as a hot money economy – one where spec cash is parked in notionally safe assets. Informed Asian investors think we missed the pojnt of 97.

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