The forgettable budget; ASX is losing its lustre

The forgettable budget

The ASX is losing its lustre

Time to stand up to Trump

Leadership lessons from Insignia's CEO

Want the best quick guide to the federal budget? Every year economist Stephen Koukoulas breaks down exactly what the budget means, what it tells us about the economy, and whether it tackles reform in a meaningful way (or at all). This analysis is not to be missed.

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- Sean Aylmer

There wasn’t much in last night’s budget that anyone will remember, at least not in terms of being a document on the country’s finances. Everything had a political overtone, which isn’t surprising given an election is less than two months away. Five dollar tax cuts that start in more than 12 months’ time might look good, but they don’t mean much. More energy rebates and lower prescription costs are all about winning votes. The budget said nothing about the big issues facing the economy – tax reform, productivity and Trump. In fact it avoided those topics. The government never wanted this budget, and it will be forgotten very quickly as the election campaign commences. That’s totally understandable but it is a shame that budgets aren’t used for reform. Deficits for years to come have to be repaid, eventually. Income tax being the main source of revenue for the government needs to change, eventually. Lower spending on healthcare, as a per cent of GDP, needs to occur, eventually. Let’s get the election over with and see if the new government, whoever that is, can get serious about making Australia a better place.

Building materials group James Hardie has made a $14 billion bid for US outdoor decking and railing company AZEK, and as part of it wants to shift its main listing to the New York Stock Exchange. James Hardie, at least until its 20 per cent sell-down after the announcement this week, was a top 25 company on the ASX. South African-based Gold Fields has bid $3.3 billion for ASX-listed Gold Road Resources. The local company has rejected the offer saying it's too low. But that doesn’t mean there won’t be another offer. Meanwhile gold leader Northern Star is trying to buy De Grey Mining for $5 billion, and Spartan Resources and Ramelius Resources have agreed to a $4.2 billion merger. Outside resources, US based CoStar is making a bid for online property group Domain. If all these deals go ahead, which is possible, that’s four significant names leaving the ASX this year. Add in Star Entertainment – who knows where that will land – and Perpetual, which seems to be under constant M&A speculation and you have even more companies potentially leaving the local bourse. (The exception is Virgin Australia, with its owner Bain Capital hoping to list the carrier at some point.) It is a problem for local investors and their biases to buy the ASX. The ASX can’t afford to keep losing listings.

Continuing our series of leadership lessons, Fear & Greed's Adam Lang highlights an article in the AFR with Scott Hartley, the Chief Executive of Insignia Financial. Scott Hartley was let go from NAB in his late 40s. It shocked him, but he used the experience to forge a different career path and spoke about it credibly and candidly. 

 

Scott Hartley: ”There are many aspects to building what I call a high-performance culture. It is the most important capability an organisation should have. …. Firstly, you need to be a purpose-led company. Have a clear purpose and values. … Values that talk to building trust with each other, talk to accountability and talk to candour and collaboration. … Purpose and values define who you are as a company, but it doesn't tell you anything about where you are going. People like to know who they are - the organisation they are working for - but they also need direction, so you need to have a vision for where you want the company to be in five years' time… The operating model is really important. How decisions are made. In what forums? Delegations. Clear accountabilities in roles. So, structure is really important. Having roles where there are really clear accountabilities, so accountabilities are not fuzzy, so you know what your job is.  Finally, rewarding performance, setting stretch goals... and celebrating momentum.”

It’s time leaders of nations, including Australia, say loudly that Donald Trump’s way of running the world’s greatest superpower is both shameless and shameful. It's shameless because it is barefaced and brazen, with little consideration for anyone else but America. Maybe that can be narrowed. The Trump Administration seems to have little consideration for anyone else but those that agree with it. It's shameful because dumping decades of accepted practices, of soft diplomacy, of respect for sovereign borders, of basic democratic tenets is a disgrace. Ironically, some of the policies Trump is instituting are reasonable. It’s just the way he is doing it. Until now, leaders of nations have mostly treated Trump with kid gloves, fearing his retribution. But that’s not going to save anyone. Mark Carney, the Canadian Prime Minister, called a snap poll this week and said: “We are facing the most significant crisis of our lifetimes because of President Trump’s unjustified trade actions and his threats to our sovereignty... President Trump claims that Canada isn’t a real country. He wants to break us so America can own us. We will not let that happen”. Trump is a bully, and Carney is standing up to him. Other global leaders, including from Australia, need to learn from that.

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AND ONE LAST THING...

Okay, this isn't very business-y. But it's a big week, with the federal budget, the threat of tariffs, and more uncertainty for investors. So consider this a thirty second brain break.

Everybody knows that the vast majority of an iceberg sits underwater. But have you ever considered how the shape of what's underwater changes the way the iceberg sits? No? Well, play this game anyway: draw an iceberg, and see how it floats. It takes about 10 seconds, and is both scientific and entertaining.