The Experts

Peter Switzer
+ About Peter Switzer

About Peter Switzer

Peter Switzer is one of Australia’s leading business and financial commentators, launching his own business 20 years ago. The Switzer Group has since grown into three successful companies spanning media and publishing, financial services and business coaching.

Peter is an award-winning broadcaster, twice runner-up for the Best Current Affairs Commentator award for radio, behind broadcaster Alan Jones. A former lecturer in economics at the University of NSW, Peter is currently:

• weekly columnist for Yahoo!7 Finance
• a regular contributor to The Australian newspaper and ABC radio
• host of his own TV show, Switzer and Grow Your Business, on SKY News Business
• regular host of the Super Show on 2GB radio.


Dear Peter, What fun! You are really very good at what you do. I appreciated our time together and wish you continued success in all you do. Have fun (I know you will).

Jack Welch, former CEO, GE, and ‘Manager of the Century’ (Fortune magazine)

Peter, It was great to have worked with you – you really made the event come alive. I hope you enjoyed yourself. I know Steve Ballmer [CEO, Microsoft Corporation] did.

John Galligan, Director of Corporate Affairs & Citizenship, Microsoft Australia

Here’s a home truth, my only real education – or teacher who I actually ever listen to – is your interviews on Qantas. So thank you with sincere respect.

Sean Ashby, Co-Founder, AussieBum

Peter did a wonderful job on the night; keeping the program moving, working around changes to the run sheet, and ensuring each award recipient, and our sponsors, were made to feel welcome and important.
The feedback received from those attending has all been extremely positive.

Peter Mace, General Manager NSW, Australian Institute of Export

Peter, We would like to congratulate you for performing your master of ceremonies role in such a professional, entertaining and informative manner. We were impressed by your ability to tease out each winner’s story so that the audience gained maximum benefit from their collective business experiences.

Greg Evans and Nicolle Flint, Directors, Australian Chamber of Commerce and Industry

Hi Peter, I listened to you speak this morning and thought you were amazing. I am an accountant and in risk management and have never thought about doing a SWOT on myself – thanks for the tip!

Serife Ibrahim, Stockland Corporation Ltd

Dear Peter, Thank you for your valuable contribution to this year’s forum. Ninety-two per cent of delegates rated your presentation highly, commenting on its useful and topical content.

Catherine Batch, Head of Marketing and Communications, Indue

Peter has facilitated our CEO and CFO symposiums over the last three years. A true professional, he takes away the stresses of hosting and organising an event.

Justine Goss, Strategy Group

Abbott can't save the Libs or the economy! So who can?

Wednesday, June 28, 2017

By Peter Switzer

I like Tony Abbott, but the ‘new and improved’ Tony won’t rescue the Libs in Government and Malcolm Turnbull, who’s also a good guy, doesn’t look like he can pull off the double play either!

In fact, the now full re-creation of the Abbott-Turnbull leadership battle, following Tony’s Brisbane speech this week, doesn’t augur well for the Government, let alone the economy. However, it really does make Bill Shorten’s path to the Lodge at the next election more certain.

Let me be upfront on Bill. He’s another good guy, but I don’t think he is the leader this economy needs either. That said, with the current disunity with the Coalition, despite Bill’s somewhat anti-business policies, his unity with his party is an economic plus.

I’ve shown on countless occasions that before Malcolm became PM, both consumer and business confidence were dropping like Wallabies off All Black wingers!

Consumer confidence is still pretty weak with the Westpac/Melbourne Institute survey of consumer sentiment falling by 1.8% in June to a 14-month low of 96.2. A reading below 100 denotes pessimism.

Business confidence is around four-year highs but has eased back a tad recently. This is the NAB’s take on their survey of the business sector:

Business conditions eased slightly in May, but are holding up at elevated levels. The business conditions index fell 1 point, to +12 index points, which is well above the long-run average (+5). In contrast, business confidence is looking less buoyant, although it has remained above long-run average levels. The confidence index dropped six points in May, to +7 index points – compared to a long-run average of +6 for the series."

 “The business sector is looking quite upbeat, maintaining the apparent disconnect with a rather melancholy household sector,” said Alan Oster, NAB’s Chief economist. “It is good to see that the strength has been quite broad-based, and even at the state level we have seen some significant improvements in Western Australia, which signals that the worst of the mining sector drag is probably behind us”.

Falling unemployment and this good business health reading is Malcolm’s strongest argument against Tony’s challenge.

But let’s look at what Tony wants to dangle in front of us, and see if it will be good for the economy that lacks demand, enthusiastic consumers who want to spend and businesses that are mad keen to invest large amounts of money because they believe in our rosy economic outlook.

This is what Tony wants for us:

  • Lower power prices via a moratorium on new wind farms, a freeze on the renewable energy target at its current level of 15% and the construction of another “big coal-fired power station”.
  • Subsidies stopped for renewable power alternatives.
  • Immigration controls to help wages growth and to take the pressure off house price rises. But it’s not all economic, with talk about the banning of organisations that “make excuses for terrorists” to make sure that jihadis “aren’t free on our streets”.
  • Budget repair, which means government spending cuts. The Australian captured his view on this subject with: “The best way to get federal spending under control, and to end the intergenerational theft of sustained deficits is to avoid all new spending other than on national security or economic infrastructure,” he says. “It can be done. In two elections 2010, 2013, the Liberal National coalition made big gains promising spending cuts, tax cuts and regulation cuts.”
  • Senate reform to stop it being the place that says “No” to policy initiatives.
  • Better national security.

Tony invoked the image of the Lib’s last valuable leader John Howard, quoting him saying: “As John Howard recently observed, while compromise is necessary in politics, conviction is the foundation of success”.

Tony is a conviction pollie but he’s running with an agenda, which is like the bizarro-world of the Greens (which is a mythical world where the opposites prevail).

Sure, he’s articulating a more right-wing version of his last manifesto but it’s the kind of marketing message that maybe will excite 10% of Australia, which is like the numbers that love The Greens and Pauline Hanson.

If Tony splits the right with this pitch (as he’s now doing), Labor plus the Greens and those lefty Liberals who have doubts about climate change as well as climate change deniers could easily make it a saloon passage for Bill Shorten, PM, by 2019!

Tony might be running an agenda that sounds like what my old mate Alan Jones on 2GB and Sky News would sign up for, but Tony can’t sell or connect with his potential audience like Alan.

Watching him when he was PM repeating points for so-called effect was embarrassingly bad. In fact, what we saw publicly was never the guy many of us know can communicate very effectively on a one-to-one basis.

Malcolm is not cutting it in the connection caper and that’s why the polls are against him. He too can engage on a one-to-one basis but his public connection/communication is uninspiring.

And that’s the issue. We need an inspirational leader to nullify the splinter/narrow interest groups who have crept into parliament, rendering it useless and a threat to our economic future.

I don't think Tony can re-invent himself and I’m doubting if Malcolm can change enough to get us all inspired and ready to sign up to a man with a vision.

This leaves Bill in the box seat, ready to reinstate penalty rates, raise taxes on business, change negative gearing and the capital gains tax to give disincentives to property investors and so on.

These might be nice, leftish policies, which won’t hurt the economy much, but they won’t be great stimulants for businesses to invest, for employers to create jobs, for the economy to grow faster to reduce the Budget Deficit.

It won’t be Malcolm’s ‘Labor Lite’ but full on Labor.

Somehow we need an inspirational leader — be it from the Coalition or Labor — who can inspire business, consumers and foreign investors to take this already great country into the great economy class.

And it ain’t going to be achieved by plonkers! 

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Time and a place for bank bashing but maybe now isn't the time!

Tuesday, June 27, 2017

By Peter Switzer

The one big economic benefit of taking an overseas holiday is to put into perspective just how important we are in the grand scheme of things. This is not to say that we are not important — we are as a member of the top 20 countries of the world — but there are so many things going on outside of our borders, which are actually heading in the right direction right now, and they should be good for us as well.

If this continues, it adds to my general optimism that stocks can go higher, our economy can pick up its growth rate, and jobs can be created. Of course if that happens, then tax receipts should increase and government spending can be pared back, which is good news for those who need to worry about our budget deficit and rising debt levels.

Those who would change the world for the social good often are a little too close to cloud cuckoo land when it comes to the economic implications of righting the wrongs of capitalism too fast and at the wrong time. 

Bank bashing and coal cursing are cases in point, and while better behaving banks and a reduced reliance on the coal that pollutes the atmosphere are worthy causes, so is creating a healthy economy that provides jobs.

There is a lot of happiness that comes out of people being employed, being able to pay off a home loan, and ensuring their kids don’t have to live with a mum or dad out of work.

I’m currently in Italy, where the debt to GDP ratio is 132% and a couple of regional banks were this week bailed out by a deal with the European Commission and the country’s second largest bank — Intesa Sanpaolo.

Those who do criticism as a life imperative often whinge about the taxpayer implications of bank bail outs, but they never seem to think seriously and deeply about the alternative scenario.

We’ve had similar arguments here and the recent bank levy and the South Australian Government’s tax on banks is starting to split the commentators on what looks like politically ideological lines.

Mind you, I think our banks can endure these left-field levies, but they are not economically ideal. However, as we have a Senate that says no and a Turnbull Government that has a slimmest of slim majorities in the House of Reps, slugging banks looks like the least politically harmful trick for those running the place out of Canberra.

The point I need to make is that the overall vibe from the three key areas that drive stocks prices — economic growth, earnings and future positive policies — remains good right now. And that’s despite the disappointment about Donald Trump’s tax plans, which look like they could be delayed longer than the market would like.

Ultimately these three key drivers of stock prices are also a guide for economic optimism, economic potential and the related happiness that can stem from these.

So my argument gets down to this: with the good stories outpointing the bad stories right now, stock markets are fighting gravity bravely and that’s despite an unbelievable amount of political instability from the UK to the USA to France and to our own Australia.

Yet optimism is winning such that CNBC ran with this headline overnight: “Stock markets buoyed by Italian banks rescue…”

Want more good news headlines? Well try this from CNBC as well overnight: “Greek yields hit lowest level since 2009…”

In case you don’t understand bond talk, when yields fall for bonds like those of the Greeks, it says lenders are less worried about the good old Greeks. It's also a plus for the European economic outlook and in turn it’s a positive for global growth, which is good for an economy like ours that sells a lot of exports to the world economy.

So the Italians and the Greeks are now being positives for stocks and that represents progress from where we were during the GFC and even compared to two years ago when Grexit was spooking the hell out of stock markets.

If I had my way, I would prefer the enemies of capitalist economies to hold back on vindictive, economically-inhibiting policies until we are totally out of the woods.

I can imagine a time in the not too distant future, say when Mr Trump’s tax policies get the thumbs up, stock markets are spiking higher, the European economy is continuing its comeback trail and China is still looking strong, where tougher policies on banks, for example, could be coped with better because the economy is stronger.

I only wish someone in Parliament would make this reasonable case more often. If they did, voters might actually think the country’s leaders are making such sensible arguments that they might be worth voting for!

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Could small businesses be to blame for slow wage rises?

Monday, June 26, 2017

By Peter Switzer

One problem that gets regular attention is the poor state of wage rises since the GFC and the latest National Accounts figures actually shows the share of income going to wage-earners is significantly low.

Jessica Irvine writing in the Fairfax press explained the situation this way: “The share of 'total factor income' going to workers as wages, fell to 51.5 per cent in the March quarter – a sharp 3 percentage point fall over the year. Meanwhile, the profit share – or the percent going to capital – rose by a similar amount.”

To be provocative, Jessica asked: “So, are bosses just getting better at screwing over the workers?”

But could there be other reasons? Let’s look at the usual suspects to see who’s to blame. Try these:

  • Globalisation — you know, the Filipino IT person creates a website cheaper and faster than the local geek.
  • New technology — Uber’s bank worker, who drives between 6pm and 12pm on Saturday and Sunday to pay for the huge mortgage, is taking taxi-driver jobs.
  • Robots and other hi-tech processes have simply taken jobs.
  • No guts to ask for a pay rise, which was a point the RBA boss made recently.
  • The economy is not growing as strongly as it has in the past and the ending of the mining boom certainly reduced the income paid to workers in the sector.

I think all these factors partly explain why wages growth is slower than it has been and the GFC effect cannot be left out of the story. The chart below is instructive as it shows the high wage rise before 2008 and the GFC, which was followed by a rebound during the mining boom but, since then, the economy has been subdued and so have wage rises.

But there's one other trend that might explain why less workers gets less wage rises and national income and that could be the spectacular rise in self-employed entrepreneurs, contractors and people such as mums at home, who create a part-time business, as well as those young people who aspire to be Mark Zuckerberg!

What I’m arguing is that people who once were paid wages might now be taking profit as business owners. They might be paying themselves lower wages to create profits to justify getting loans to expand their business, employ others, and so on.

Sure, I get it that wages are rising more slowly but the economy is not doing so well and it seems the whingeing class doesn’t want to recognise that we didn’t go into recession, our unemployment rate didn’t breach 6% and if the price we have to pay is slower pay rises, a surge of jobs, more self-employed entrepreneurs and historically-low interest rates, so be it.

The irony is that this trend of a lot more Aussies giving up being an employee to become an entrepreneur/employer means that these are the people who’ll help create the economic growth in the future, which will underpin the overdue spike in pay-rises.

That chart above shows how significant the pay rise drop has been but anyone who is surprised didn’t really understand how lucky we were to avoid the GFC recession and have never employed anyone using their own money!

And finally, let me assure you, when you have good people working for you and you know how hard/costly it is to find these human assets, you give them pay rises when your business can afford it.

That’s business 101. 

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No one knows what's going on with stocks, but I'm not worried!

Friday, June 23, 2017

By Peter Switzer

The story doing the rounds to fill up media space was that stock lovers were turning their attention northward - to Asia - and that’s why our stock market had the worst day this year, losing 1.6% on Wednesday.

And it was the worst day since Donald Trump shocked the world with his election win last year.

For good measure, the weaker Aussie dollar was thrown in as an excuse, but it’s still over 75 US cents.

One of my old students now at Citi, Tony Brennan, is selling this Asia-is-better-than-us story, while some fund managers are supporting the lower-dollar thesis, saying it’s being driven by offshore sellers.

But in truth, no one really knows what’s going on right now, though it seems apparent there’s not a big appetite to sell off.

So let’s do a wrap of what is explaining this stock market that doesn’t want to go up, but is not keen to jump on board a possible Trump dump.

Here goes:

  • Trump’s tax plan offers both hope to drive stock prices higher, but the delays are worrying some sectors of the market. That said, I reckon this tax plan is a good chance this year. Trump needs a real win and the Treasury Secretary, Steve Mnuchin, this week said he’s hopeful of a yes vote this year! That’s a positive.
  • The US economy has had some mixed economic messages, but this is what AMP’s chief economist, Shane Oliver, thought last week: “US data was a bit messy but consistent with reasonable growth and continuing low inflation. May retail sales were soft, but this was countered by an upwards revision to already solid April sales and in any case the New York & Philadelphia Fed manufacturing conditions surveys were strong in June, small business optimism remains very high, home builder conditions remain strong and unemployment claims remain around their lowest since the early 1970s. Against this core CPI inflation was weaker than expected in May at 1.7% year on year. The US economy continues to look good but the lack of inflation pressure means the Fed can afford to remain gradual.” Call that a positive.
  • The European economy is doing better than expected and even Italy, where I am writing this, is performing better than expected. Positive.
  • Chinese economic data is coming in better than expected and so is Japan’s. Positive and positive!
  • Iron ore prices and oil prices are giving into gravity. Double negative, but who knows what happens in the mining world?
  • The bank levy did not help the banks and the SA special levy is another curve ball for our most important sector within the S&P/ASX 200 Index. Negative.
  • Local earnings are not as optimistic as they were, but they are still expected to be better than last year. Neutral.
  • We made 133,500 jobs in the three months to May after a 42,300 gain in the previous three months and unemployment has dropped from 5.9% to 5.5% over the past few months. Positive.
  • Business confidence is near seven-year highs, but consumer confidence says pessimists outnumber optimists. Positive, plus a negative.
  • Meanwhile, we seem to live in perpetual high anxiety about Amazon, but smart fund managers like Ben Griffiths from Eley Griffiths argues we’re overreacting and many retail stocks look like good value right now. One stock he likes is Noni B. Perceived negative, but could turn positive when the Amazon threat is downgraded - and it will be.

The only conclusion the data I’ve presented shows is that there are no compelling reasons to buy madly but you’d have to be a very negative person to want to dump stocks right now.

The simple fact is we’re waiting for a Trump pump or a Trump dump of stocks if Congress stumps the Trump tax plan.

Donald Trump. Source: AAP

Underpinning all of this is a virtual army of dip-buyers out there who rush in every time the market overreacts.

I’ve noticed every time my SWTZ dividend growth fund has a bad day, the inflow of support the next day is actually very solid.

You might not like him but if Donnie is impeached it will hurt stocks and if he gets his tax plan up our S&P/ASX 200 Index will beat the 6000-level, so that would be a 5.2% gain plus about 2.5% for half a year of dividends - and then throw in some franking credits.

As I’ve implied, if the market wants to concentrate on the negatives and ignore the considerable positives, then I’m up for making some money.

The ASX is typically responsive to global recoveries, such as the one happening now. 

But the Australian market is currently showing few signs of a synchronised up-swing, Citi's analysis noted.

Economic indicators like strong business conditions and employment growth are being balanced by weak household sentiment and spending in Australia, providing a relatively complex local picture for global investors to digest. 

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We need an Italian Stallion solution to our economic problems

Thursday, June 22, 2017

By Peter Switzer

The other day I talked about how the PM’s poll results showed he had a loser tag similar to our once-great Wallabies. I made the point that it was a leadership problem that has created problems for Malcolm Turnbull’s team and the country’s top rugby outfit.

And if poor leadership is the problem, then great leadership is the solution. This is significant, as I’m currently in Bologna, Italy and the Wallabies play the Italian team on Saturday. I believe the Italian story has much to offer us in working out what we have to do going forward.

It’s my belief that we, as a country, are too happy to rush to the negative when our history says we should be strongly confident about our economic past and our economic future.

Let’s face it, we regularly get rated as having some of the best and most livable cities in the world. Desperate refugees risk their lives and their children’s lives to live here!

We were the only Western economy to avoid a GFC-created recession and our unemployment rate didn’t go over 6% with that damn GFC. The USA saw a 10% jobless rate, France had over 10% and the UK around 8% — and they all went into recession.

Malcolm needs to point to the scoreboard and have the confidence to invoke Rocky-like morale boosters in all of us. Fans of the movie would recall Rocky — the Italian stallion — didn’t have self-belief but his trainer, Mickey, did.

Sylvester Stallone as "Rocky". Source: AAP

If the media wants to talk us down, then Malcolm has to talk us up. He has to believe it and needs to call out any negative influence that isn’t helping us be the great economy and country we surely are!

Significantly, as I walk around Italy and marvel at the city architecture of Milan, Turin, Modena and Bologna but listen to the negativity from Italian friends about their country, you understand the power of negativity.

For centuries, Italy was a country full of rival city states and unity hasn’t come easily. And as the old saying goes, “disunity is death”.

Seriously, as the Italian economy starts to improve, (its latest economic stats tell us this and so do the trucks on the roads, which numerically seem staggering to me as a driver here), what hangs over this country is poor national leadership. This country has had more PMs since World War II than most of us have had lasagnes! I make it 46 and it makes our revolving door of leaders look a slow-motion replay of a snail!

Seriously, Italy isn’t a basket case but too many Italians think it is. It’s the 8th biggest economy in the world and has huge brand names like Fiat, Ferrari, Maserati, Benetton, Versace, Gucci, Zegna, Prada, Armani, Fendi, and more and more and more!

Its tourist products are world best, with over 50 million travellers heading to the country each year!

Versace boutique, Milan. 

There’s nothing wrong with this country that a good, strong leader couldn’t help fix so that the Italians start believing how good they are and how great they could be, if they were positive about their achievements rather than negative about their future. 

And the same applies to the greatest place on earth — Australia. I know it sounds jingoistic and very parochial but I think it’s time our national leaders started talking a more positive game.

The Australian rugby halfback, Will Genia, said he was disappointed with his own game when our team lost to the brave Scotts last Saturday 24-19. But he talked about what his coach, Michael Cheika, said to them after the disappointment.

“Cheika probably touched on it in the sheds when he said: ‘you can say you have trained well and prepared well but you don’t win games in training, you win it on the field’”.

This reminded me of what one of the best political leaders of all time — Teddy Roosevelt once said:

“It is not the critic who counts; not the man who points out how the strong man stumbles, or where the doer of deeds could have done them better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood; who strives valiantly; who errs, who comes short again and again, because there is no effort without error and shortcoming; but who does actually strive to do the deeds; who knows great enthusiasms, the great devotions; who spends himself in a worthy cause; who at the best knows in the end the triumph of high achievement, and who at the worst, if he fails, at least fails while daring greatly, so that his place shall never be with those cold and timid souls who neither know victory nor defeat.”

Imagine if Malcolm could talk to us like that. Imagine if the Italians had someone telling them to believe in themselves.

Muhammad Ali nailed it and this is what the PM needs to be telling all of us: "It's the repetition of affirmations that leads to belief. And once that belief becomes a deep conviction, things begin to happen."

Muhammad Ali. Source: AAP

Maybe I’m homesick or maybe I’m sick of being lectured to by negative no ones who achieved a lot less than someone like Malcolm Turnbull and who are undermining the potential of the Aussie economy by always telling us what’s wrong with us, rather than praising us for what’s right with us!

Malcolm as the Italian Stallion? I like that positive picture.

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The most important story for your hip pocket this year!

Wednesday, June 21, 2017

By Peter Switzer

I know many of my media mates think Malcolm Turnbull’s battles with energy prices, the crazy Senate, the always-opposing Opposition leader Bill Shorten and some of his drongo MP colleagues, who really need to be frog-marched into political oblivion, are all really important stories. 

Yes, I get that all this seems important to political gossip columnists but, late yesterday, as I stood outside Zara in the Italian town of Modena — the home of cars such as Maserati and Ferrari — I stumbled across a far more important story involving arguably the second most important man in the world — Steve Mnuchin!

No, this is not a misprint and no, I haven’t got stuck into the Italian wine (yet) but Mr Mnuchin is pretty well unknown to most smart people in Australia. For their information, he is the Treasury Secretary of the USA, which, of course, is the most important economy in the world. And yes, his name is not Munchin but Mnuchin and, right now, he’s deep into the minutia of President Donald Trump’s tax plan. On that subject, Steve has stuck his neck out to tell us that he's confident the massive tax reform has a damn good chance of getting up this year!

Treasury Secretary, Steve Mnuchin. Source: AAP

This is huge news and its importance cannot be underestimated. If it does happen then:

  • The President will have offset some of his un-presidential public statements and tweets;
  • It would help his public opinion polls, which look a bit like our PM’s, with the latest Rasmussen poll showing 47% of likely U.S. voters approve of President Trump’s job performance, while 53% disapprove;
  • It would be a big plus for the US economy, which is not rocketing along as many of us expected. It’s doing OK but not quite as strongly as was tipped;
  • Importantly, it would justify the high valuations for US companies on Wall Street and, in all likelihood, push US stocks much higher; and
  • This would be a great plus for our stock market, which just can’t seem to beat the 6000 level of the important S&P/ASX 200 index.

And these latter points underline how crucial it is that Donald Trump can deliver a key plank in his promising political platform, which helped push our stock market index up over 12% after the US election.

With Donald’s agenda looking wobbly and oil, as well as iron ore prices, coming off the boil, we need a big, positive circuit breaker and tax cuts in the USA would be exactly what the economic doctors advising big institutional fund managers have ordered.

This year could finish with a great, optimistic flourish for stock markets, if the US can lower its company tax rates along with other personal tax rates. This will have a demonstration effect for other economies, including ours, and will not only send share prices and our super fund returns higher but also encourage business investment, job creation and, eventually, higher wages.

Until Mr Trump’s number one money man made this big call that the tax plan has a good chance of being passed by Congress before the end of the year, a lot of experts were writing off the tax cuts.

This was building in more and more negativity, which could have sparked what some doomsday merchant market commentators say is an overdue correction.

Talking to CNBC, Mr Mnuchin said: "We're 100 percent committed to getting it done this year. It's critical to the economy.

“We have a unique opportunity to do this. It's been 30 years. We have to fix the system and our teams are meeting daily.

We couldn't be more focused on getting this done.”

I know tax stories are about as interesting as superannuation, documentaries on sedimentary rocks and croquet but in 2017, with Donald under pressure, with stock markets needing something concrete to keep fighting gravity when it comes to share prices, this big call by the hitherto, pretty unknown Steve Mnuchin, is about the best news I’ve read in a long time.

But of course, as many of you know, I’m the kind of guy who agrees with Sophie Tucker, who confessed that she has been rich and she had been poor but she concluded: “Rich is better.”

I also often argue that if anything is worth doing, it’s worth doing for money and what Steve and Donald want to do with US taxes will have serious money consequences worldwide, and definitely here in the land of Oz.

Go Steve Mnuchin and the US Congress!

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Turnbull's Government is like Australian Rugby - they look like losers!

Tuesday, June 20, 2017

By Peter Switzer

Malcolm Turnbull’s Government seems to have the same problems that dog Australian rugby — both look like losers, both have potential but their leaders are out of touch and need a new game plan.

On both fronts, my concerns are not just political. They’re also economic. The failures of the respective leaderships are hurting their economic performances and, in turn, weakening their leadership and undermining what they want to achieve.

I’d like to see the vicious cycle of losses turn into a virtuous cycle of wins.

On Monday, Newspoll delivered the 14th disappointing result for the Government, with Labor more popular to the tune of 53% to 47% on a two-party preferred basis. Meanwhile, the Wallabies endured a loss to Scotland over the weekend and it comes as no local Super Rugby team has beaten a Kiwi side in the competition this year! 

Scotland team captain John Barclay and players with the Hopetoun Cup trophy after their international rugby union test match victory against Australia at Allianz Stadium in Sydney, Saturday, June 17, 2017. (AAP Image).

This is happening as the All Black cloud hovers for the Bledisloe Cup. If something new doesn’t materialise soon, this could be another year to forget for Australian Rugby.

Sporting experts say the poor results are linked to the leadership ignoring the grass roots, while the boss of the ARU, Bill Pulver has offered to fall on his sword.

The reality is that the grassroots have been ignored for a hell of a long time, but so has the recruitment process at the highest level. And much of that is linked to the failure of leadership to muster the loyal business supporters, who might have helped with the funding that might have been used to keep great local players here. The money could even have been used to woo top rugby league players, who could have helped raise the standard of our national team.

We could certainly use a Lote Tuquiri right now!

It’s the greatest irony that a game like rugby, which attracts the big end of town, captains of industry and finance can’t raise the dough to be the best wheelers and dealers in the business of sport.

As someone who has coached rugby at the school and club grassroots level, I know how removed the leadership of rugby is from the clubs, the players and also the sponsors, who put their hand up each year to support club rugby.

My business — the Switzer Financial Group — has been a sponsor for maybe a decade of Easts Rugby Union Club and I’ve never been contacted by anyone from the ARU or New South Wales Rugby.

Years ago, I was invited to a Waratahs game but that came from IBM, which was a sponsor. Unlike the people who run rugby in this country, a business-thinking leadership would try to collect all the lower level of sponsors, firstly to thank them but secondly to see if they want to get behind the state or national teams.

The leadership doesn’t think in a business-like way and there are parallels with the players in Canberra under coach Turnbull.

Prime Minister Malcolm Turnbull during Question Time at Parliament House in Canberra, Monday, June 19, 2017. (AAP Image).

Rugby leadership looks like a bunch of good blokes out for a good time but they also look like amateurs and the results show it. And the irony is that the national coach, Michael Cheika, actually can coach but I suspect he even needs some help from the leadership but they’re out of touch and out to lunch and have nothing to add to his competitive advantage.

The same story looks to be operating in Canberra. Malcolm, who I like to think is a mate, doesn’t seem to have a professional game plan to be close to business, while at the same time getting up close and personal with the average Australian, who looks set to punish him and his Government at the next election unless things change and fast.

I find it weird that Malcolm isn’t cultivating the business leaders who’d then directly or indirectly influence many of the media commentators who seem committed to waving him goodbye.

I find it weird that he has never come on my TV show, which is the most watched business program on the Sky Business Channel.

I find it weird that Malcolm isn’t out there talking up the economy, when the info is pretty damn good, with unemployment at a four-year low and business confidence at near seven-year levels!

And we’re now the best growing economy of all time but the Government’s crowing seems so low key. What kind of coach doesn’t refer to the scoreboard to build up confidence?

Malcolm needs to start talking up our economy, our future and what the vision is for us all.

Right now, consumer confidence, wage rises and business investment all need to be bolstered and it’s time the man at the top stepped up and started bringing his people along for a positive ride.

At times, I look like one in only a few public people who’s prepared to back my country’s economy, my fellow Australians and what we’re capable of.

As Albert Einstein allegedly said: "Insanity is doing the same thing over and over again and expecting different results."

Unlike the Wallabies, who actually have to play formidable opponents such as the All Blacks and the Springboks, Malcolm has only Bill Shorten and Tony Abbott to see off the pitch.

However, at the moment, I suspect the PM is having a bigger battle in beating himself and what he thinks looks like being good ideas, which clearly are not.

And why would you trust journalists to hide snide remarks about the US President? This looks like amateur hour and has to change.

One of the greatest lines I’ve heard from many wonderful entrepreneurs when they explain their success is: “Just about everything you want in life is just outside your comfort zone!”

Malcolm and the ARU have to get out of their losing comfort zones and start getting in touch with the people who could make or break them both. Ironically, these are the people they’re supposed to serve.

John Maxwell, author of the US best-seller book, The 21 Irrefutable Laws of Leadership says “if you think you are a leader but you turn around and no one is following you, then you are not a leader — you’re just going for a walk!

If they can do this, they might give up being losers and become winners.

If they can’t, we will ask Malcolm and those running the ARU to go take a walk.

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How do we put Fitzy's anti-sugar crusade into perspective?

Monday, June 19, 2017

By Peter Switzer 

Fairfax commentator, ex-Wallaby, Republic agitator and the country’s number one red bandana wearer, Peter FitzSimons, has picked up a new worthy cause of informing us about the evils of sugar.

He’s petitioning the Federal Government’s relevant Ministers to get off their butts and do something about the ridiculous situation about foods laced with sugar and what’s called the Health Star Rating System.

“Last week the government announced it would be conducting a review of its Health Star Rating System on food products, which, as you know, is meant to be the official guide as to just how healthy a product is, by virtue of the number of stars it displays on the package,” he wrote recently. “If it gets five out of five stars, it's top of the pops and, you'd assume, so healthy you'll be dangerous. Half a star, though, and drop it like poison.”

Fitzy is so peeved about this that he reached for an emotional fact, crying out that “our country has lost fewer people to terrorism since September 11 than we lose in a day to the ravages of obesity-related conditions.”

The star's idea really looks like the dopey thing a Government comes up with when it’s advised by “Big Food and Big Sugar”, as Fitzy puts it.

In case you missed it, you might be wondering why this great-writing rugger bugger (his books are surprisingly good!) is jumping up and down about sugar. You see, last year, he revealed how he had lost a third of his considerable weight by quitting sugar.

He wrote a book about it — The Great Aussie Bloke Slim-Down — which told how he went from 152kg to 112 kg after dropping his usual two bottles of wine and dessert each night!

To be fair, Fitzy has been a late convert to the anti-sugar brigade. David Gillespie wrote a book, Sweet Poison: Why Sugar Makes Us Fat, in 2009. He opened the eyes of the former star economist on my TV show, Rory Robertson (then of Macquarie Bank), who was the economist who won the bet against Professor Steve Keen about a house price collapse, which saw the academic have to walk from Canberra to Mount Kosciuszko for getting his economic call “hopelessly wrong.”

Rory left Macquarie and went to Westpac, gave up media commentating but publicly went after Sydney University’s relevant department for suggesting that sugar was not the fat problem people think it is.

In a nutshell, Rory has argued that “My shortest critique is that the University of Sydney’s claimed “paradox” – sugar intake down, obesity up – merely reflects eye-popping negligence.”

Rory’s battle has got so heated that the Uni has threatened to ban him from the campus!

His reaction to the threat is typically Rory.

“Rather than threatening to ban me from campus, Dr Spence [the Vice-Chancellor] should simply fix (the issues),” he said, referring to a 2011 research paper, The Australian Paradox, written by the university’s top nutritionist, Jennie Brand-Miller, which finds a negative relationship between Australian obesity and sugar consumption.

As you can see, sugar is controversial and as an economist I do worry about the economic implications of the country and the world going anti-sugar.

Mad mates of mine like Fitzy and Rory are doing the country a service, underlining how we are exposed to excessive amounts of sugar and men and kids are probably the least informed but I reckon a lot of shopping mums could benefit from knowing about how much sugar is OK for you each day and how much we actually take in.

Nine teaspoons of sugar in a can of coke and 11 in a bottle of ginger beer makes you worry. And given that medical authorities suggest kids should not have much more than five-seven teaspoons of sugar a day, it looks like Fitzy and Rory are doing the work that governments and medical authorities should be doing.

Nothing is ever achieved by reasonable men or women, so I back my mad mates. Big Food needs to get on the front foot looking for alternatives to the products that now are overloaded with sugar, which causes obesity, diabetes and other medical problems that we help pay for via our taxes.

The ABS thought the average Aussie took in 14 grams of sugar a day in 2011-12. By last year, the number had grown to 28 teaspoons but that was the average. There are too many of us in the 40-plus category and these people and the kids they influence are slowly walking down death row.

I know Fitzy can be terribly annoying when he’s trying to win you over to his point of view and Rory is like a dog with a bone on any issue he cares about. But these two mad mates are making an issue that has been kept quiet for too long by people who should know better.

The problem of too much sugar needs to be flagged publicly and Big Food needs to start producing products that don’t shorten the lives of their customers and add to the Government’s Budget Deficit.

I’m a great believer in the value of the invisible hand of the market but when that hand is hurting people, it needs to be checked by Government. Stopping that hurt, like it does with pollution, is a government’s proper role.

Go Fitzy — you mad, big, thin bastard!

By the way, if you don’t believe me on sugar, have a look at That Sugar Film made by Damon Gameau. I saw the film and interviewed the guy on my TV show and it’s eye opening.

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Are we missing something with our wage whinge? Jobs!

Friday, June 16, 2017

By Peter Switzer

One of the oldest taunts of the right-wing fraternity in the 1970s and the 1980s was that wage rises were killing jobs.

Nowadays, unions are less influential on wage outcomes, except for some key industries such as construction, teaching, nursing and the public service, and this comes when there is a constant outcry that wage rises are too low.

However, while this unwanted trend is often portrayed as an injustice, akin to the dismissal of Gough back in 1975 and the lack of fresh water for third world countries, maybe with all the whinging about slow wage rises we’re forgetting a few things.

Let me list them:

  1. Interest rates are historically low, so anyone with a mortgage really is living in a real wage bonus land. And anyone who has lived through the 8-9% rates we saw not that many years after the GFC and 17% in the 1980s would have to agree with me on this point.
  2. This low-wage story hasn’t been helped by the end of the mining boom, which pushed up mining wages and also national average wages.
  3. We have seen tax cuts over the past decade, which means our after-tax incomes are miles better than those of yesteryear.
  4. While we know power bills are expensive because of the Internet and globalisation which has brought the likes of Zara, H&M, Amazon, discount airlines, etc. to local consumers, the real wage (what you can buy with your dough) is still OK, without being fantastic. For the record, CommSec’s Craig James has this to say on the subject: “Wages grew by around 2% over the past year with underlying inflation up around 1.7%. And while wage growth is modest, it still is running faster than inflation and thus represents real wage growth. Some analysts will use headline inflation as a gauge on real wages, however that is boosted by a temporary lift in fuel prices, which should be more subdued in the coming quarter.”
  5. We’re actually getting a lot of jobs and I wonder if the low wages growth could be helping. Do you think? In case you missed it, we got job numbers and this is what happened: “Employment rose by 42,000 in May after rising by 46,200 in April (previously reported as a rise of 37,400 jobs). Full-time jobs rose by 52,000, while part-time jobs fell by 10,100. Economists had tipped a near 10,000 increase in jobs.” (CommSec) And we’ve created around 155,000 jobs this year! Hours worked rose by 1.9% in May (the biggest rise in 11 years) and were up by 2.3% over the year (strongest annual growth in 17 months). The unemployment rate fell from 5.7% to 5.5%, which is a four-year low!

Office workers, Brisbane. Source: AAP

But I hear you ask — can we trust these numbers from the Australian Bureau of Statistics (ABS)? Well, this is what Craig James says and I agree: “One strong economic result is viewed with suspicion. Two strong results are viewed with cautious optimism. Three strong job results are viewed as confirmation of a very positive trend.”

Business confidence and conditions readings have been well over their long-term averages lately and job ads have been sensational and are at six-year highs!

Sure, it would be great if wages were rising more quickly but inflation would take off and then interest rates as well. And then our doomsday merchants would be worrying about rising inflation as well as spiking interest rates, mortgage stress and then a possible recession and rising joblessness.

Maybe what we have is not great but it’s OK, and let’s hope economic growth picks up over the next couple of years to help wages trend higher.

So for the moment, put a lid on your wage whingeing because they won’t be rising slowly forever.

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The Yanks raised interest rates overnight! Does it hurt or help us?

Thursday, June 15, 2017

By Peter Switzer

The US central bank, better known as the Fed, raised interest rates for the second time this year and its boss, Janet Yellen, made it clear she expects to go one more time this year. But what does this mean to us here in Australia?

This kind of thing is always a bit of guesswork and you can live to regret trying to work out the strange thinking of the big influencers of financial markets. But let’s have a crack at it.

On net, this should be a plus for us and here’s why:

  • The Oz dollar dropped about half a cent after the decision and a lower dollar is a plus for our economic growth.
  • The Fed is still positive about the outlook for the US economy, with 12 out of 16 Fed members expecting another rate rise this year.
  • As a group, the Fed is not buying the US economy is in trouble, though they are watching the inflation rate.
  • Their relatively positive view on the US economy adds to the better outlook for the Eurozone and comes as Chinese economic data out yesterday came in better than expected.
  • Putting this all together, it makes a good case against a recession scenario that could lead to a stock market crash. 

There are market experts starting to talk about a correction — a substantial market sell off. And as US market indexes did not react with convulsions, it suggests that the optimists continue to outnumber the pessimists, despite the higher official interest rate, up 0.25% to a range between 1% and 1.25%.

Recall this got as low as 0% to 2.5% at the worst for the Yanks and this is another step towards normalising monetary policy and a more normal economy.

The Fed’s action also says, even without Donald Trump’s troika of policies (lower taxes, infrastructure spending and less regulation), the US economy is getting better, not worse.

If we throw in the possibility that Trump surprises and pulls off his tax measures before year’s end (which is something I think our stock market will need to crack the 6000 level), then 2017 could end up finishing on a high.

Yesterday, the Westpac measure of consumer confidence came in as a disappointment and not as positive as the ANZ/Roy Morgan weekly measure.

The Westpac/Melbourne Institute survey of consumer sentiment fell by 1.8% in June to a 14-month low of 96.2. A reading below 100 denotes pessimism outweighs optimism when it comes to consumers and the last thing we need is a serious stock market rout.

But for those looking for a good omen, the NAB’s business conditions and confidence numbers make better reading, with the latter near seven-year highs!

We need a lot to go right to make consumers more positive because wage rises don’t look set to spike any time soon. But if Canberra can start showing some positive leadership signs, Donald pulls off a big tax play and business investment follows the very good business confidence readings, then we just might end on a high come Christmas and New Year.

If the Fed had shown it was too scared to raise interest rates, Wall Street could have really sold off, generating the kind of negativity we really don’t need right now.

Well done, Janet. I hope you are on the money when it comes to your assessment of the world’s most important economy.

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