Source : THE AGE NEWS
As the first major Australian company out of the blocks since Labor’s comprehensive election win at the weekend, it was up to Westpac’s boss to give us the good oil on big business’ verdict.
That whoosh you heard on Sunday, as Labor did its victory lap, was a collective exhale of relief from the big end of town. And Westpac chief executive Anthony Miller is clearly a fan of the three Cs that Labor’s win has delivered – consistency, certainty and continuity.
There’s good reason for Westpac to hope that Labor makes the most of its mandate – and that reason is US President Donald Trump.
Westpac chief executive Anthony Miller and Prime Minister Anthony Albanese in March.Credit: Alex Ellinghausen
Given the chaos unleashed by Trump’s upending of trade and diplomatic relations, Australia is starting to look like an island of stability. And with Labor within a shout of winning a third term, the federal government has the runway and mandate to get serious on policy reform.
As Miller sees it, Australia has jumped to the top of the league tables as an attractive place for international business to invest and international talent to make a new home.
Business leaders are generally loath to publicly support political parties, so it’s unsurprising that Miller didn’t pour scorn on the Coalition, its leader Peter Dutton or its policies in his comments.
There is nothing about Trump’s trade policies that is good for Australian businesses.
Rather, they were all about extolling the virtues of a sensible government and having a safe pair of hands at the helm amid uncertain global times.
Miller’s comments were also a clear repudiation of Trump and the disruption he was wreaked on world markets, and show what most of corporate Australia thinks of any local politician with even a whiff of Trump about them.
Of course, every rule has an exception, and in Australia’s case it’s the country’s richest person – Gina Rinehart – whose advice to a thoroughly whipped Liberal Party is to dive even deeper into Trump-style politics.
There is nothing about Trump’s trade policies that is good for Australian businesses. While our banks are still making plenty of money, Trump is a headache that’s here to stay.
Consumer sentiment has collapsed since Trump’s “Liberation Day” tariffs were announced, and business confidence has moved in the same direction, with markets whipsawing to create a debilitating lack of predictability.
Trump’s policies, widely expected to boost inflation, have also introduced the spectre of higher interest rates, further undermining the outlook for the global economy.
It all adds up to poor conditions for running a major bank, whose fortunes rely on economic growth and healthy wholesale funding markets.
While a lot of the funds used by banks to finance their lending come from our deposits, a fair chunk also needs to be sourced from offshore (mainly US) wholesale markets.
The wholesale market became expensive and almost impossible to access during the global financial crisis. And now, thanks to Trump, the market is again proving unpredictable and more expensive for our banks.
While Australia may be a haven from the current chaos, the interconnectedness of the global economy doesn’t allow us to escape fully.
Higher interest rates here and overseas, introduced to tame inflation, have been part of the Australian banking industry’s challenge to increase loans and deal with customers who are struggling to keep up with interest payments.
When you add greater lending competition into the banking industry’s cauldron of challenges, Westpac’s 1 per cent fall in net profit acquires some perspective.
The good news is that figures published by Westpac on Monday indicate the proportion of customers behind on mortgage repayments (by 30 and 90 days) is trending down, as is the number of people in the category of hardship.
But growth in the competitive banking market is difficult to come by. The mortgage market is swamped with players, and the business lending market is only becoming more contested. All of this increases the challenge of improving margins.
At the same time, there is pressure on banks to invest more in technology to improve their productivity and appeal to customers.
Which explains why some relief at the outcome of Australia’s federal election is just what business needs to offer hope that we will find a measure of immunity from the chaos beyond our shores.
The continuity, the consistency and the certainty that Labor’s thumping win delivers are quite profound and set us apart from many other countries around the world, given the uncertainty and volatility unleashed by the Trump administration.
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