Could a Pauline Hanson election victory make your super fund significantly more valuable? It sounds like a strange question, but it may be one of the most important investment debates Australians aren’t paying attention to.
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This week, Pauline Hanson used her National Press Club address to outline a vision for Australia centred on more mining, more energy production, faster project approvals and less regulation. While the political debate will focus on immigration, culture and social issues, investors may be looking at something entirely different. Their superannuation balances.
Most Australians don’t realise that some of the largest holdings inside their super funds are mining and energy companies. Giants like BHP and Rio Tinto feature heavily across the industry, meaning the fortunes of millions of Australians are directly linked to the performance of the resources sector, whether they actively invest or not. That is what makes Hanson’s economic message so interesting.
She argues that Australia has spent too long increasing regulation and focusing on redistribution, while productivity growth has stalled.
Instead, she wants to make it easier for companies to invest, build projects, employ workers and develop Australia’s vast natural resources.
That is one reason Hanson has developed a close relationship with mining billionaire Gina Rinehart, whom she has publicly acknowledged as a source of policy ideas. The bigger issue, however, is productivity.
Australia’s productivity growth has been weak for years, yet productivity remains one of the most important drivers of rising wages, company profits and long-term living standards. Hanson is tapping into a growing belief that Australia needs to focus less on dividing wealth and more on creating it by producing more, building more and extracting greater value from the resources it already owns.
For investors, the question is simple. What happens if governments become more supportive of the industries that generate some of Australia’s largest profits? Historically, the answer has been higher share prices.
The reality is markets don’t care whether a policy is popular. They care whether it increases profits and if a more mining-friendly and business-friendly Australia leads to higher earnings for some of the country’s largest companies, investors will likely reward them accordingly, and because those same companies are major holdings in Australia’s superannuation system, the benefits could extend far beyond shareholders and into the retirement savings of millions of Australians.
Good luck and good trading.
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Dale Gillham is Chief Analyst at Wealth Within and an international bestselling author of How to Beat the Managed Funds by 20%. He is also the author of Accelerate Your Wealth—It’s Your Money, Your Choice, which is available in bookstores and online at www.wealthwithin.com.au.
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