Chris Mackay on currency and some political comments.
"We continued to move some liquidity to AUD. Most MFF expenses, taxes, dividends, and buybacks are paid in AUD, and we regarded this as prudent matching. In addition, the AUD has been rising in the short term with China’s COVID policy reversal being an important factor. Notwithstanding these changes, we remain very cautious about all currencies, and retain our negative views on the AUD over extended periods. Australia in January saw disproportionate anti-business, anti- growth activity and sentiment from politicians, state governments, regulators and in voter sentiment. Australia’s inflationary vulnerability is higher than many countries, including because the centralised wage and benefit fixing system (which has operated for decades) is no longer offset by fiscal and other policy conservatism at Federal or State levels. The Senate is not the policy/spending constraint it was for parts of the last century, and states decided in COVID that central taxation gives repeated scope to pressure the Federal Government for funding with the support of voters. High corporate and personal taxation takes, inflated uncompetitively by bracket creeps, and automatic excise and toll increases, are headwinds which help embed inflation, and are no longer as benign as they might have been when imposed by Treasury during the long period of imported consumer products deflation/disinflation. Centralisation and red tape increases are inevitable from politicians boasting about the broad-spectrum of legislative changes passed, along with growing unfunded commitments, and the impacts upon businesses, employers and entrepreneurs are rarely reversed. Australian businesses realistically do not have the opportunities that US businesses are exercising, to move from high tax, anti-business states to the business and population growth states with alternative policies."
