They say that when everyone in the room agrees with you, you need to find a new room. Try telling that to President Xi. On Saturday, Chinese President Xi won the presidential election 2,970 to 0 (Vladimir Putin, eat your heart out). It’s not often in life you find unanimous support for anything, from what to have for dinner to which movie should we watch. But no, in China, the world’s second-biggest economy with 1.4 billion citizens, they have found unanimous support for the man affectionately knows as Xi Dada. Unfortunately, history has a large repertoire of evidence to suggest that when a country is placed in a ‘stranglehold’ of power, it rarely goes well. And Since China is Australia’s largest trading partner, we should really sit up and pay attention.
So it probably goes without saying that now is not the time to overhaul the Australian taxation and franking credit system. After all, markets hate big surprises. Particularly the Australian market, which has two keystones: lucrative Chinese trade deals and a franking credit system which is the envy of the world! Bill Shorten’s proposed changes to franking credits have created the risk of Australia entering a tit-for-tat political grudge match. Since Paul Keating first introduced franking credits in 1987 (they were modified in the early 2000s) they have become an integral part of Australian’s investment and retirement planning. Changes need to be slow.
It may not be the rosiest global outlook for a Monday morning, but it can nudge us into gear for one thing: diversify, diversify, diversify. Don’t let your retirements savings be subject to a taxation shake-up, nor Chinese irregularities.