FEDERAL ELECTION – WHAT HAPPENS NOW?

INTRODUCTION

With Liberal holding their position in government, many now may be wondering what will happen to government policies and how the markets will react. This week’s edition goes through some of these changes and some potential reasons why Labor had lost by a considerable margin.

PROPERTY INVESTORS

Property developers and investors were hesitant in investing further in the housing market due to potential major tax changes under a Labor government. The proposed changes by Labor coupled with difficult hurdles in obtaining finance can be seen as a reason why the property market dropped off. If Labor won, we may have seen increased investors activity as they to try to purchase as quick as possible in order to grandfather their properties with negative gearing and capital gains tax before the deadline in January.

Investors can now be certain that these changes won’t occur and can further finance properties with the help of negative gearing and capital gains exemptions. Although Labor had attacked the property investors, majority only hold 1 investment property and losing those kinds of benefits outweighed the benefits they would have received under a Labor government.

SMALL BUSINESSES

Small business owners were also holding on to more cash, hesitant to spend in case Labor won. Business owners would be liable for more tax paid including a $3,000 cap on deductible accounting fees. The Liberal government provides more certainty that business owners can receive more incentives in operating their business, they can focus on further investments instead of holding on to their cash and provide more employment opportunities for Australians.

WHY LABOR DIDN’T WIN

It’s clear now that the country in its majority, will not support a government that specifically targets property investors, small businesses owners and even accountants claiming they are the ones who benefit from the tax system at an unfair advantage. Many of the statistics they provided in regard to this unfair advantage had been proven to be incorrectly calculated.

Their propositions sent a message out to taxpayers that if you wanted to earn more money, you would get penalised with more taxes and will be stripped from tax benefits you previously had.

ENVIRONMENTAL FACTORS

The realisation has moved Labor to set aside their tax propositions and focus more heavily in environmental changes. Their previous environmental changes although, for the benefit of the world, left individuals backed against the wall with no real solution to their personal circumstances. Some are brought up running family businesses that may be harmful for the environment but have no support in regards to moving away from these practices.

Further Labor developments could may well be how they can transition business’ that harm the environment into one that seeks to benefit. Considerations will also need to be made on how they can continue sustaining their income.