Barrenjoey bank analyst Jonathan Mott says investment returns are under threat from ‘values-based capitalism’
“He makes it clear that after a period of policy ‘drift’ over the previous decade, it is time to ‘rethink capitalism’, as you ‘shouldn’t assume that what worked in the past will necessarily work in the present. not’.
“This was already seen in the prices of the energy market, where complaints from businesses were largely ignored.”
Barrenjoey analyst Jonathan Mott: investors should pay attention.
Mr Mott speculated that after rebuilding their community reputations during the pandemic following the royal commission, banks could come under regulatory pressure if the government tried to close the gap between cheaper mortgages for new customers and more expensive loans for existing borrowers.
‘Indispensable role’ for business
The local stock market gave a subdued reaction to Dr Chalmers’ economic policy philosophy outlined in the essay, falling 0.2 percent on Monday.
Dr Chalmers sought to reassure businesses that he wanted a “robust role for business in the new economy”, in a follow-up article written for The Australian Financial Review.
“I believe business has an indispensable role to play, not only in strengthening our economy, but in strengthening our society,” Dr Chalmers wrote.
“And that we give ourselves a much better chance of prosperity and success if the private and public sectors work together – not at cross purposes – to create national wealth and generate more opportunities for more people.
Dr Chalmers at the Australian Open men’s final on Sunday night with his wife Laura, right. Aaron Francis
“As the essay makes clear, I see well-designed and well-informed markets as a powerful and positive tool capable of efficiently and effectively allocating resources to deliver private and public value.
“Government has a leadership role to play, but that doesn’t mean picking winners – it’s about finding the priorities and opportunities that capital can respond to, in ways that align our economic and national goals.
“And it’s about recognizing the power of market-based discipline to help deliver social outcomes – moving away from the ‘spray and pray approach’ and towards targeted investment.
“Better markets and capital flowing to its most productive purposes, governments and businesses working together to create prosperity and opportunity, and modernizing our economy to raise living standards should create significant areas of common ground, common sense and the common good. be.”
Dr Chalmers flagged plans for the government to partner and co-invest with business and investment funds – including pension funds – to address the clean energy transition, housing affordability, disability support, aged care and education.
He is working on plans to persuade banks and pension funds to set up a social impact investment fund in the May federal budget to tackle “entrenched disadvantage”.
A social impact investment fund will aim to deliver social benefits and financial returns to investors.
The Australian Chamber of Commerce and Industry said in a pre-budget submission that fiscal recovery should be the overriding priority of the budget.
“The overriding priority for the government in the May Budget must be to rein in spending to sustainable levels rather than raising taxes,” ACCI chief executive Andrew McKellar said.
“It is essential to build business confidence and thus unlock private investment.”