Political risk in Australia!Five risks to watch in 2013! November 2012! www.politicalmonitor.com.au!
!This presentation provides a brief overview of the top 5 political risksconfronting investors in Australia. It presents summary views and should betaken as such.!!The information is taken in part from our ‘Investing in an election year’ report,which examines the political risks confronting investors in the Australian marketover the next 12 months.!!More information is available @ www.politicalmonitor.com.au ! Top 5 political risks for Australia! November 2012!
1. !TRIUMPH OF POLITICS OVER POLICY!!With no more than a year until the next federal election (no later thanNovember 2013) Australia is entering the political silly season.!!Policy making will be buffeted by political calculations and short termopportunism as both major parties apply their policy judgments within theframework of marginal seat politics.!!Political risk: ! ! !Uncertainty & inconsistency!! Top 5 political risks for Australia! November 2012!
2. !CHANGE OF LEADERSHIP AT THE TOP!While a leadership change within the Government is looking increasinglyunlikely both the Government and the Prime Minister remain in a precariousposition.!Labor will need to maintain a primary vote in opinion polls of at least 35% toensure leadership speculation does not again assume centre stage in thepolitical discourse.!Any change in leadership would most likely occur in the ﬁrst parliamentarysitting weeks of 2013.!!Political risk: ! ! !Uncertainty & signiﬁcant policy changes as result of any ! ! ! ! !leadership transition!! Top 5 political risks for Australia! November 2012!
3. !EARLY ELECTION – BUDGET DEFICIT!The Government’s political identity is wedded to delivering a budget surplus. !!However, with opinion polls improving slightly for the Government andconsiderable doubt emerging about its capacity to deliver a surplus in thecurrent ﬁscal year the Government may opt for an early election to avoid havingto reveal a budget deﬁcit before a poll in the second half of 2013.!!Such an outcome imposes short-term risks as government decision-making willgrind to a halt. However, an election may produce a majority governmentallowing business to beneﬁt from a ‘stability dividend’ post the election.!!Political risk: ! ! !Short-term uncertainty & decision-making paralysis!!! Top 5 political risks for Australia! November 2012!
4. !NEW BUSINESS TAXES TO FUND BUDGET SURPLUS!If the Government decides an early election is not credible then it will revert toits pursuit of delivering a budget surplus.!!Investors should note that a surplus is a political, rather than economic,imperative and the Government will strive to deliver a surplus by hook or bycrook.!!In addition to a range of accounting mechanisms the Government will give fullconsideration to new business taxes and the removal of rebates and loopholesto fund a surplus.!!Political risk: ! !Increased risk of new taxes!! Top 5 political risks for Australia! November 2012!
5. !WA ELECTION & URANIUM MINING!!Labor has a better chance of victory than many expect at the forthcomingelection in the resource rich state of Western Australia.!!Labor will go to the election promising no new uranium mining approvals.Existing licenses will be honoured.!!Political risk: ! ! !Investors run the risk of being locked out of the industry ! ! ! ! !if approvals are not submitted in time!! Top 5 political risks for Australia! November 2012!
Detailed analysis on these and other political risks confronting investors in theAustralian market can be found @ www.politicalmonitor.com.au!!About Political Monitor!Political Monitor is a political risk research and advisory ﬁrm. Our analysisprovides insight into the implications of political risk for commercial valuations,asset selection, investment decisions, strategic planning and operationaldecisions. !! Top 5 political risks for Australia! November 2012!