Donald Trump – thumbs up, or thumbs down?

Us Melbournians, we love to talk about the weather. It’s too hot. It’s too cold. The sun’s going down too early. But before the weather report, there’s another season that’s really heating up, both here and abroad, and that’s the political season.

The US election continues to peak my interest, and the “love him or hate him” Donald J Trump provides endless conversation – that’s much more interesting than the weather!

In Australia, we might well look on feeling smug about the fact that at least we don’t have “A Trump” to deal with, but the US presidential candidate race is showing us that people are becoming increasingly disillusioned with our political leaders and the political system itself. One of the reasons Trump is performing so well in this race, in my opinion, is because the public is sick of the same old same old.

They see Trump as a breath of fresh hair (sorry I had to slip that one in) and it’s similar in other parts of the world with political outsiders like Marine Le Pen in France and Jeremy Corbyn in Britain rocking the establishment, often with extreme views. And when we see extreme views we start seeing extreme reactions with Trump’s campaigns now starting to look like an episode of Jerry Springer with brawls erupting and Trump calling for his supporters to “punch them in the face”. The thing for me is that I think Trump could actually be good for politics in as much as he could shake things up. He brings to the system an uncensored point of view that many Americans find both refreshing and, like his hair, somewhat disturbing (sorry that is the last hair pun I promise…).

Putting this into context, growth rates in the US, Europe & Japan are all now at their lowest levels since World War II. If the system was doing its job, things would be better. There would be more jobs, people would feel better off, their quality of living would be improving. But it’s not, and that is why the entrenched politicians – both the Republicans and Democrats – are scared stiff of Trump, and the changes that he may bring to the political arena.

Meanwhile, back at home and in the run up to the next federal election I predict we are likely to see more of the same inept leadership of recent times, political mud-slinging, back-room dealings, and unfortunately very little in the way of true economic reform or major progress for our great nation. My prediction is that the current government will eventually release its economic policies with the release of the next federal budget and with the exceptions of a few peripheral tweaks the longer term outlook will largely remain unchanged.

Of course, the Government is right to call for policies that will lead to economic growth and jobs. But how well they will be able to deliver on those goals with an obstructionist Senate, as well as vested interest groups, and the people to appease? Plus what appears to be internal divisions within their own party as how best to achieve those targets, leaves me questioning their political will and ability to pull off anything meaningful any time soon.

Mind you the opposition has been swinging for the fences recently, looking to rebuild credibility after a tough Royal Commission into Labor’s links to Trade Union corruption. They are playing a strong political game offering everything to everyone offering increased spending on schools and tafes, protecting penalty rates, making housing more affordable, making same sex marriage legal, to increased infrastructure spending, and to have 50% renewable energy by 2030. The problem is, in an election campaign it is easy and popular to offer all of these big ticket items – the trick is paying for them. Especially when we have budget deficits, low GDP growth, and falling terms of trade.

So apart from Opposition Treasurer Chris Bowen sporting a new beard, I am afraid I don’t see much of anything new or achievable coming from the Labor side of the political debate either.

So where do I stand on politics?
Well I am a bit cynical I am afraid. Unless we can actually change the stranglehold the two-party preferred system has here on Australian politics; or until we at least have a charismatic and popular leader of a party, that is not a mere puppet to the back-room power brokers, a leader who can eloquently and articulately tell us what needs to change for Australia to continue to be a world-leading economy and have their full support – we are all condemned to the current results and standards.

But without wanting to sound defeatist here are a few controversial ideas that could really shake up the system.

  • Cut the overly generous pay and conditions our politicians currently enjoy. I mean why should politicians receive superannuation contributions of 15.4% which is 70% higher than most Australians. And after Bronwyn Bishop’s $5,000 helicopter ride from Melbourne to Geelong making news it’s curious that the other $7M per year in politicians travel allowances was hardly mentioned. I am not saying that politicians should not be rewarded, but with salaries of $507,338 for the Prime Minister, $336,599 for cabinet members and $195,130 for backbenchers in 2014-15 I would argue they are well compensated. Oh, and don’t forget the additional $46,000 annually for a MP’s electorate allowance.
  • So what if politicians were paid a basic wage of say $150,000 p.a plus bonuses for generating greater efficiencies in government (i.e saving money), or increasing GDP growth (i.e. making more money for Australia)? And not just annual bonuses but bonuses that also get paid out also over 5, 10 or even 20 year periods of time? This would discourage the short-term policies that are designed to keep a party in power than to actually build the nation. Some people have even gone as far as to recommend removing the ability to spend government money out of politicians’ hands and into an independent board like a company run board of directors. An interesting idea.
  • Make Australia more globally competitive. In the modern world, geography and borders have been replaced by the internet and global trade. We should be better able to take advantage of our knowledge based economy. Things we could do immediately is look at reducing the company tax rate which in conjunction with using technology to streamline government efficiency could be fully costed. Whilst most Australian companies are taxed at 30%, many economies around the world have corporate tax rates that are lower. Our closest neighbours, New Zealand (28%), Indonesia (25%), as well as Singapore(17%) or the United Kingdom (20%) all have a corporate advantage due to lower tax rates. I am not even suggesting you drop rates across the board but the introduction of a tiered corporate tax rate based on business turnover could have real merit. Small businesses (which make up as much of 70% of employers), with assessable income of say less than $250,000 could pay less company tax than businesses earning in excess of say $100M for example. Obviously, looking at ways to make big corporates pay their fair share of taxes for income generated in Australia should also be fully investigated.
  • Do something positive to curb Australia’s impending welfare dependency challenges. About half of all households do not pay income tax in net terms after taking government benefits into account, according to estimates from the National Centre for ­Social and Economic Modelling. Consulting firm PwC has predicted that Australia’s annual welfare bill will jump from $154bn this year to $270bn in 2026, outstripping inflation and population growth combined. This is a tough challenge, but I am sure that we can find a better balance between the required financial assistance required to give Aussie’s a hand up not just a hand out!
  • Or how about instead of politicians simply voting along party lines, why not allow all of our elected officials to vote according to the will of their electorates. Or with modern technology there is no reason why the people themselves could not vote on significant issues online. Perhaps we should also allow for non-compulsory voting, or a compulsory educational system surrounding how to vote before people cast their votes?
  • Develop a “not-for-profit” national banking system to fund infrastructure projects. That is have a nationally-run bank to sit alongside the current banking system, where all profits from the national banking system are funnelled back into either nationally significant infrastructure projects, or the establishment of a national wealth fund. Consumers then have a choice as to how they wish to bank, and where they would want to see their funds invested in the future.

I am sure there are millions of things that you’d like to see changed in politics. In fact I would love to hear what changes you would like to see in the Australian political system! Leave a comment, or contact The Property Mentors and I will compile a list of all the best responses in a future blog post.

By | 2017-11-26T02:49:51+00:00 April 12th, 2016|Property Investment|Comments Off on Donald Trump – thumbs up, or thumbs down?

About the Author:

Matt has had a long and varied career which has led him to become a highly sought after Property Mentor. Matt and his team currently have over $150 million worth of property under development, and have successfully taught hundreds of clients how to build a large property portfolio to suit their lifestyle.