Well, well, well… Trump is being blamed for Canada, then Australia maintaining left-wing governments.
In Canada, it emerged that the second-most important election issue was ‘Dealing with Donald Trump’.
Source: The Redbaiter / X
This was led by democracy’s most engaged voters. Those aged 60+.
It wasn’t really a concern for younger voters at all.
So, did Trump make a strategic and shocking mistake in jesting that Canada should become the 51st state?
And in the case of Australia, was Dutton just too Trumpian for voters?
Let’s begin with Canada.
Source: Michael A. Arouet / X
I could show you many such graphs putting Canada’s serial underperformance in stark contrast. This has been at the hands of the left-leaning Liberal Party. First, under Justin Trudeau. Now quite possibly to be continued under Mark Carney. (Though there are signs he intends to move Canada back toward the centre.)
Some are blaming Trump’s inflammatory ‘51st state’ rhetoric for slamming the chances of the Canadian Conservative Party. Under Pierre Poilievre, Canada might have had a shot at cutting taxes, lowering costs, and unleashing its resources and business sector.
Perhaps with a new direction Canada could have moved beyond America’s poorest state?
But here’s the hard-nosed economic perspective
While Canada underperforms, its brightest, wealthiest, and most productive citizens move to the US in large numbers.
Over 126,000 Canadians moved to the US in 2022 alone. This was a 70% increase in the last decade. There are Facebook groups, some as large as 55,000, sharing tips on how to move out of Canada.
America has a labour shortage. For the past two decades, its scientific innovation has focused on ‘bytes’ (information technology). Or computer science, if you will.
But is computer science really science? I would argue that true innovation needs to focus again on ‘atoms’ (manufactured technology). The real science — physics, chemistry, and biology — that gave us flight, mobility, health, and much more.
Make no mistake; the US needs genius Canadians, particularly those qualified in STEM subjects. Remember, Elon Musk began in Canada.
Quixotically, it is in Trump’s interest to have a socialist, underperforming Canada.
The 51st state thing was no doubt facetious. The last thing that free-market Republicans need is another large voting bloc that acts like California. Though Alberta may be welcome.
What about Australia?
It’s déjà vu. Like Canada, the Australian economy has also been underperforming. Badly.
Source: Craig Kelly / X
Yet, just the other week, Australians returned Albo with a landslide victory.
According to the BBC:
Dutton was seen by many as Australia’s Trump, which appeared to go down badly with voters.
Other right-leaning media criticise Dutton for not putting up a bold, differentiated opposition. He was punished for a pussy-footed campaign.
Robert Muldoon once said that when a New Zealander moves to Australia, that increases the IQ of both countries. This Australian election might prove his point.
Like New Zealand and Canada, Australia also has a large diaspora. There are large numbers of Australians in the UK, US, and New Zealand.
Under the Australia-US Free Trade Agreement, Australian citizens have preferential access to the US. They are eligible for the E-3 visa designed specifically for Australians coming to America to work in specialty occupations. This is not available to New Zealanders.
Arguably, failure to reignite the Australian economy with more of the same will only spur Australia’s best and brightest to add to the diaspora.
But it gets worse.
Australia’s Labor Party now has a clear path for a new wealth-killing policy.
Taxing unrealised capital gains
According to Wilson Asset Management:
Labor wants to slap a 30 per cent tax on unrealised capital gains made in superannuation accounts worth $3m or more without any indexation.
While this might be damaging enough to shares and investments for people’s retirement, it could also act as a Trojan horse. Extending to second properties, farms, or business assets.
Incidentally, failed presidential candidate Kamala Harris was also proposing taxing unrealised capital gains.
It’s time to attract wealthy Australians (and Canadians) to New Zealand
Of course, New Zealand is a country that loses a lot of productive citizenry to Australia. Most heartbreakingly in shortage areas such as medicine and education.
What many Kiwis do not realise is that the traffic is not one-way.
Last year, I came across an investor based on the Gold Coast. Following a recent business sale, had he remained in Australia, he would have been subject to millions of dollars in capital-gains tax. Instead, he is in Auckland looking for investment opportunities.
This is a golden time to reach out to prosperous Australians to promote the benefits New Zealand offers
- No tax on capital gains — realised or unrealised.
- Lower top tax rate (39% vs 45% in Australia).
- No stamp duty on property purchases. On an A$1 million house in Victoria, this can be almost $60,000!
- No Medicare levy (2% in Australia).
- Less bureaucracy and a more business-friendly government in NZ.
- Australia has much higher government costs (A$597 to register a company, up to $1,567 a year to register a V8!)
- Auckland is materially cheaper to buy or rent housing compared with Sydney or Melbourne.
So, are you an investor or entrepreneur in Australia or Canada?
Are you sick of your efforts to build wealth and jobs being frustrated by left-leaning governments on repeat?
Well, for now, New Zealand offers a bastion of hope without excess of heat or frost.
It is not Trump’s fault that Australia and Canada voted to retain left-leaning governments. More likely, a threshold has been reached.
Enough people are now dependent on government programmes in one form or another that they have a vested interest in voting to maintain them. The opposition failed to call on an Argentina moment to point out the inevitable destruction.
And so the socialist slide begins.
Until someone comes along and attracts enough revolt to disrupt that.
Regards,
Simon Angelo
Editor, Wealth Morning
(This article is the author’s personal opinion and commentary only. It is general in nature and should not be construed as any financial or investment advice. Please contact a licensed Financial Advice Provider to discuss your personal situation. Wealth Morning offers Managed Account Services for Wholesale or Eligible investors as defined in the Financial Markets Conduct Act 2013.)