The 2010 election will go down in history for many reasons, when the results are eventually known! As things are unfolding, what should expect as property investors?

As analysts and punters alike try to work out what happened over the election period and the fascinating changes that have come about, it’s only natural that as investors our thoughts project forward as we ask ourselves, “what will these changes mean for me?”

In my view, the election outcome will change the way the government has worked for the past few decades, where the ‘winner takes all’ approach meant that the party with the majority of seats could pursue their policies regardless of the opposition’s views, and basically railroad their way through due to their numbers, momentum, and hold onto power.

Things have now changed, and whatever the final outcome, the major parties will have about the same number of seats (they are almost equal), and the independents and one Green member will now be decisive in deciding the outcome of policy decisions.

Maybe it will see the start of a more mature process, where there will be more consultation, and cooperation, with the parties working together in areas where they agree, rather than simply opposing everything because that is what oppositions are meant to do.

Imagine the amount of time saved in Parliament! Can you recall the days and days of endless posturing and cat-calling and heckling and repetition from both sides on issue like boat people, health reform, “Utegate” and the like?

Is it possible that we will see politicians proposing policies that will serve the interests of Australians, rather than the interests of the political parties? That would be refreshing indeed!

Aside from the policy dynamics and how the business of government and legislation will change, there are a few pointers for us as investors about what we can expect:

1. Economic policy – although the major parties do a lot of posturing, there is probably not much to choose between their mainstream line of thinking and approach. That’s why the share market hasn’t been too bothered about the uncertainty of the election outcome. Most people feel it will be pretty much ‘business as usual.’
   
2. Population – although an issue at the election, with talk of a ‘Small Australia’ being used for political gain, the reality is that we only have 5% unemployment, a skills shortage, a mining boom that demands labour to help fuel it, and the need for population growth to support economic growth.
   
3. Immigration – as a result of 2) above, we should expect to see a continuation of the relatively high numbers of immigrants of recent years, but perhaps not quite the record highs. This bodes well for housing demand, as on average every three immigrants means an additional family unit needing accommodation.
   
4. Negative gearing – both major parties ruled out any changes to negative gearing during a debate at the National Press Club in the lead up to the election. The REIA President David Airey welcomed this and reminded Australians that when the Hawke Government abolished negative gearing in 1985, it was quickly reinstated in 1987 after huge increases in rentals, and a big drop in housing approvals. You can bank on no repetition of this move!
   
5. Interest rates – these will be driven by the economic fundamentals of supply and demand, rather than by the effects of one party or the other’s spending policies. They remain low by historical standards, and in any event, are set independently by the RBA, and used largely to either tighten pressure on inflation, or to ease it. Expect no big surprises in this regard.
   
6. Housing policy – it’s possible that with the major parties more cooperative at the national level, that the government could develop a policy that would break the logjam and backlog that has developed in recent years. The combination of a lack of an effective vision and policy at the national level, and poor government at the state level, have led to a drop in housing approvals despite growing demand.
   
7. Superannuation – both major parties want to address this issue. We are sure to see some developments in terms of increased contributions (to 12%, and maybe more). However, even that is too little to address the shortfall that most retirees will face, largely due to the extent of fees and deductions along the way. Instead of relying on an improved super, you could consider a strategy that lets you take matters into your own hands, through a Self Managed Super Fund.
   
8. Retirement planning – again, because of the fact of our aging population, and increased longevity, and the ever-greater burden to be borne by a shrinking percentage of workers, no matter how the policy is made, you can expect to work for far longer than you would have planned, and have to survive on far less than you would have hoped for. That’s the reality, and again, far better to not trust to a new government to pull a rabbit out of the hat. Instead, you need to take your retirement planning into your own hands, and do something about it now.

As for the political high jinks? Yes, they are certain to continue, and with such an even contest between the major parties, and with the power that four independents and a Green will have to sway policy, we’re certain to see lots of fun and games along the way, and never a dull moment!