By Cliona O’Dowd
Wilson Asset Management chairman Geoff Wilson has blasted Jim Chalmers for making “pathetic and disappointing” comments about the Reserve Bank’s efforts to tame inflation.
Speaking to The Australian on Tuesday, Mr Wilson said the treasurer’s move to declare the RBA was “smashing the economy” with higher rates was “appalling behaviour”, with the central bank’s job made harder by the federal government’s stimulatory budgets.
“It’s exceptionally disappointing and pathetic, and totally uncalled for. It’s just really unbecoming behaviour by Albanese and Chalmers. Appalling behaviour by what are meant to be our political leaders. They should be supporting the Reserve Bank,” Mr Wilson said.
Dr Chalmers this week looked to shift blame on to the central bank and governor Michele Bullock ahead of GDP figures, due Wednesday, expected to show slowing growth.
Taking aim at the treasurer, Mr Wilson said stimulus measures in the past two budgets had hindered the RBA’s efforts.
“If (the government) weren’t running expansionary budgets, then (the RBA) wouldn’t have that problem,” Mr Wilson added.
“They’ve lined the RBA up (and said) you try to keep inflation under control, and we’re going to run budgets that are stimulatory. So we’re not going to help you at all, we’re not going to work with you, instead we’re going to work against you, and then we’re going to blame you for the problem and make you the scapegoat.”
Mr Wilson, who runs a suite of listed investment companies including WAM Capital, WAM Leaders and WAM Strategic Value and manages about $5bn for 130,000 retail investors, said rates in Australia would be on hold for longer following stimulus measures from both federal and state governments.
“The government’s made it bloody hard for them. And state governments too. The political game is to blame the Reserve Bank and then keep pumping money into the system,” he said.
It is not the first time Mr Wilson has laid into the federal government. The fund manager has been fiercly critical of Labor’s move to tax unrealised gains on superannuation balances above $3m, warning it would negatively affect investment in local businesses.
He doggedly pursued Labor and former leader Bill Shorten in 2019, campaigning heavily against its policy to ban excess franking credit refunds. The disastrous policy was blamed for Labor losing the so-called unlosable election.
He also campaigned in 2023 against the goverment’s move to restrict franking credits and on Tuesday said the changes were already having a negative impact on listed companies.
“Being listed on the stockmarket is now a disadvantage because you’re at risk of losing franking credits,” Mr Wilson told shareholders in a fund update.
“(Labor has) done some things that have negatively impacted the efficient formation of capital in Australia. Let’s hope that there is a change of government at some point and that those various things that effectively make listed companies less competitive get wound back.”
Wilson chief financial officer Jesse Hamilton said investors in companies that restructured, such as peer Ellerston Asian Investments, were now faced with the unintended consequences of the legislation.
“It actually can put companies in a situation where not only do they lose the franking they have, it can force them into a franking deficit, and then they have to pay tax to the ATO, which is probably the most illogical thing I’ve seen the government put forward for a number of years,” Mr Hamilton said.
Predicting the RBA would likely cut rates in the first half of next year, Mr Wilson said from a markets perspective the downward move would be good for small and medium-sized listed businesses, with both having a greater exposure to the domestic economy than big listed companies.
“The passive money going to the large end of town, that’s really made a big differential. In the last three years, there’s been about a 25 per cent difference in performance between large caps and small and medium-sized companies.
“So (rate cuts) would be very positive for that end of the market, but unfortunately we’ll have to wait until the early part of next year.”
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