The economics of the Federal election result

About the author:

Author name:

By Michael Knox

Job title:

Chief Economist and Director of Strategy

Date posted:

20 May 2019, 12:00 PM

Labor's policy of taxing capital to subsidise consumption would have resulted in permanently lower growth. I explain why in my presentation to the Morgans network this morning (featured below).

"If you spend $1 in investment, that adds about $3.80 to the Australian economy. If you spend $1 in consumption, that adds about $1.30 to the Australian economy. Investment is far more powerful as an influence on the Australian economy than consumption is. So if you are going to tax investment and spend the money on consumption, the result must be that over time, you are taking more out of growth than putting back into it."

View the full presentation below where I also highlight why I think fair value of the ASX200 will run up to 6500 points in the coming months.

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