So first to some breaking news.

Announced late last week, our Director of Financial Services, Troy Theobald has made the Barons’ Top 50 list.  This is in recognition of the success of Troy and the firm compared to all other advice businesses nationally.  There are some big institutional firms in the mix and it is a credit to Troy and RFS, that a privately owned practice can mix it successfully with the corporate advice groups.

We are yet to hear on the Power 50 result which is pending and thank you for all those voted.  We had a few clients frustrated with the Power 50 process and querying why they could not register their vote. Thank you for trying, but this year their system is only recognising business email addresses. We should hear those results in the next few weeks.

News from abroad.

Having spent the last two weeks in the United Kingdom with international fund managers, IT companies and fellow practices, I can confirm a number of things:

  1. We want to avoid an inheritance tax similar to England’s, at all costs;
  2. Brexit is starting to significantly impact freedom of movement, costs of trade goods and labour supply on Britain;
  3. Australia has some catching up to do with the digital advice solutions; and
  4. Government debt will have an impact on growth into the future and the Covid bill is catching up with us.

While here ‘The Voice’ is taking up a lot of the news cycle, there are a few things I think we need to pay a little more attention to.

  • I am going to spend a little bit of time on the voice further into this blog and I would stress these are my views, not RFS’s.  The team may have very different views to me, and we are happy to support them.

So, what is going on in the world and why the title of this blog.

The media is easily distracted and topics like social justice and climate change can grab a headline but can be used to take attention away from deeper and more troubling concerns.

There are definitely some things we should be considering and planning around.  There are political undercurrents we need to be pay attention to and the world, economically, has its challenges. 

China and Xi Jinping.

If a country is stockpiling resources, reducing its exposure to financial sanctions, rapidly building up its military capabilities and replacing dovish members of its government with far more militant leaning members then we should have a few concerns.

If the leader of that country in October 2022 stated that China has a “Laser like focus on reacquiring the Taiwanese separatists” and in his last six major speeches stressed the need to prepare for war and the 90 million members of the Communist Party to ready themselves for the “Great Struggle”, then we should probably take him at his word.

If that countries military had recently conducted two invasion simulations (August 2022, Operation Joint-Fire-Strike and April 2023, Operation Joint Sword where they blockaded Taiwan) and has another ‘simulation’ pending then this may be far more than rhetoric.

If that country is our number one export trading partner and we are reliant on that country for a range of essential goods and that country might be able to impact the shipping lanes we rely on for everything else, then we might foresee some significant economic headwinds?

This really should be a very important part of our economic backdrop and it would be a little more reassuring if our government was considering things like beefing up our fuel reserves, investing in refineries and shoring up essential pharmaceutical supplies through local manufacturing?

The government is trying to re-engage with China on some historical trade restrictions, but these priorities would change if China decided to invade Taiwan.

Pragmatically, despite the human tragedy, in a similar vein to Russia’s attempted invasion of Ukraine, investment markets would see some impact but historically it may be short lived. 

Slowing Economies and possible recessions.

While China is eyeing off ‘reacquiring’ Taiwan, there are other financial concerns around the globe.


European prosperity has slowed in response to increasing interest rates and many analysts are forecasting a recession especially for Germany in the coming quarters.  At best the forecast is zero Gross Domestic Product (GDP) growth which make asset selection a key driver for performance.

The United Kingdom

The UK is seeing the fruits of both interest rate rises and extended inflation, cost of living increases AS WELL AS the impacts of Brexit. The financial community is definitely concerned about negative real GPD growth and the longer-term impacts on unemployment and the economy.

The United States

In the US, the judiciary and legislature are focused on indicting both sitting and past presidents but behind the scenes the huge federal government debt is likely to be an anchor that slows any future administrations.

  • The interest cost to service this debt is huge and the US debt to GDP ratio is likely to be higher than Italy’s within three years.  Italy has long been seen as a very distressed economy so this does not bode well for the US.  US debt including households, companies and the government is 257 percent of their annual output (GDP).
  • The US might avoid a recession as they have full employment and similar to here, a housing shortage, but growth, if any, will be low.


Interestingly China’s debt problem, when you look at the same metric as above, including all debt – household, company, government and local government – could be as high as 282 percent of GDP.  The data, unfortunately, is not as reliable but this is JPMorgan Chase’ analysis.

  • The Covid shutdown significantly impacted on productivity and general wealth as they did not provide the sort of support to small businesses we did in Australia.  Longer shutdowns and minimal support have had severe consequences. 
  • The property market is still dealing with bankruptcies and defaulting on loans to overseas banks as well as aggressive ‘wealth redistribution’ strategies on listed companies (demanding listed companies provide a large portion of their profits to the government over and above normal taxation) has stymied foreign investment.
  • Trade has not returned to pre pandemic levels as countries have sourced or built domestic solutions; and
  • The aggression towards Taiwan has potential trading partners very concerned.

China has restricted economic data flow to only government sources which reportedly has the world community very sceptical about the provided verses actual data. The data analysts can source independently, from foreign companies trading in China, would indicate the general population has significantly reduced spending and has many believing the domestic economy is already in recession.


Cost of living is having a real impact on Australian households and the pressure will continue into the 23_24 financial year.

  • Small businesses (businesses with less than 20 employees) employ approximately 41% of the Australian workforce.  From 1 July 2023, the minimum award wage was lifted by 5.75% which businesses will have to pass through to consumers.
  • The world runs on diesel and oil prices have increased as Russia and Organization of the Petroleum Exporting Countries (OPEC) have restricted supply.
    • From 26 June 2023 to September 25, 2023, the cost per barrel is up by over 31% (US$68.93 to US$90.47).
    • This is being passed through to just about everything you buy.
  • As discussed in July, electricity prices from 1 July 2023 increased by between 20.5% to 29.8%.
  • Health care costs continue to increase despite the increase in subsidies and some of this continues to be supply issues.
  • Industrial Relations Reforms by the government, that were attempted to be rushed through parliament in August and early September have thankfully been deferred by the cross benches.  By the governments own modelling, these reforms would have increased costs to consumers by over $9 billion.  These are only deferred and could still be passed as early as February 2024.
  • The housing shortage continues and apparently, we welcomed 454,400 new immigrants in the year to March 2023 (this was 362,500 more than the March 2022 year which was dampened by Covid). To put this in perspective, the population of Canberra on 30 June 2022 was 456,692.  The rental crisis is not getting any easier.

Interest rates have steadied but given the other inflationary pressures above, are unlikely to soften in the near term. 

In Summary

So, all of this news is in the market and investments have retreated since July.  Not dramatically but given up some of the recent gains.  The gains were in large part to easing inflationary fears and the interest rates steadying.

For clients in our Core and Growth portfolios we took profits on 31 July which was fortuitous as the top of the market in the recent quarter was 27 July.  Those profits would have been redistributed to more defensive assets which would have assisted in this recent downturn.

Interest rates are unlikely to drop in the near term but in the immediate term central banks would seem to be adopting a wait and see policy as they assess the impacts of the rate increases to date.

The era of accessing easy money through very low interest rates would appear to be over and for many in the investment world, this return to growth driven performance is what they prefer.

Investment analysts are much happier when fundamentals such as increasing earnings growth, product innovation and cost control become the drivers for performance. 

There is a lot of uncertainty in the market and yes, that often brings opportunity but there is no rush at the moment.

As always if you have any concerns, please do not hesitate to contact us.

The Voice

Just to re-iterate this is my opinion only and the links are to help access the information relevant to this referendum. If this discussion does not interest you, the formal part of the blog is over.

Australians will go to a referendum on a ‘Voice to Parliament’ on the 14th of October.  You can’t avoid this topic in the news cycle so all parties are recommending you read what it entails.

This link takes you to the Uluru statement and its supporting documents.

Full Uluru Statement as provided to the Govt

  • The first page would seem to be an executive summary outlining the ‘vision’ of the Voice.  The next 25 pages are the mechanics of how it could work and then the balance of the 120 pages are minutes and notes from the working groups.

On the night of winning government back in May 2022, Mr Albanese stated in his victory speech that “On behalf of the Australian Labor Party, I commit to the Uluru statement from the heart in full”.

Our Prime Minister, Mr Albanese, dismisses anything but the first page and actually admitted, to Neil Mitchell from 3AW in Melbourne (14th August 2023), that he has only read that page, none of the accompanying documentation and notes that build it. I frankly find that very disappointing.

The Uluru statement was provided to all parties in the government on the 26th of May 2017.  There has been ample time to read the documentation.

Anyone who has ever read a research paper or a legal document would know that ‘the devil is in the detail’.  The executive summary merely describes the result of the underlying clauses within the paper.

The clauses are the things you need to understand as they build the solution you are committing to.

I have been reading and signing legal docs for some thirty years and yes, they are dry and those are many hours of my life I won’t get back, but I have avoided any number of unexpected consequences by reading the detail and a good contract works to protect both parties.

When you actually get into the clauses that drive the Executive Summary it seems to challenge the narrative, that this is simply good manners? 

  • It is very strong on being far more than an ‘advisory’ body.  In fact, it specifically rejects that and if you read the minutes of the various working groups, they reinforce this again and again.  (Voice to Parliament, Page 17).
  • It is definitely about Treaty and according to this document, that is what ‘Makarrata’ means ‘another word for Treaty or agreement making’.  (Page 7).
  • It involves ‘substantive, structural reform’ and this is reinforced throughout the paper. (No 2, Page 9) We have heard any number of commentators argue that this is ‘a simple proposition that is consistent with good manners’.  Obviously, there are different interpretations, so it is definitely worth reviewing the document for yourselves.
  • Future Advancement (No.7, Page 12) talks to even further reform with separate states and territories for the indigenous.
  • The Makarrata or Treaty post the constitutional voice ‘could include a proper say in decision making, the establishment of a truth commission, reparations, a financial settlement (such as seeking a percentage of GDP)’ (Page 19).

All sides are asking the Australian public to read and understand this proposal before voting on it.

What has happened since 2017?

A working group was put together, and that group gives you some idea of how this proposal could be utilised to provide ideological change versus better outcomes for some of our most disadvantaged. 

The working group is heavily weighted with politically motivated members, who have a long history of activism in regards to indigenous affairs.  Probably not surprisingly, these are academics and lobbyists who are most engaged with this topic. The result is, arguably, an echo chamber of views that would not necessarily be supported by the broader Australian Community as the non-indigenous population does not seem to have a voice in this working group.

Some of these members are self-declared communists (people like Thomas Mayo and Teela Reid) and therefore espouse sentiments that are very much in opposition to the Australian democratic process.  Communism dogma is still alive and well in our universities despite the enormous body of evidence that shows why it has failed in the past and the enormous human cost.  The current examples of regimes like China, Russia, Venezuela and North Korea should be an obvious warning?

Regardless of why the voice is being proposed and yes, treaty and reparations are very likely the next step, the concern for me is how this voice will fundamentally change our political process.

It will provide a small group of twenty four or so advocates, a platform to ‘advise’ on all Australian policy relating to the indigenous… which is really everything.

  • What could start out as a well-intentioned group, could easily be transformed into militant ideological wing and all future governments would have to ‘consider’ their agenda.  Very likely any government who chooses to ignore this groups input will end up in the High Court and yes, the Australian taxpayer will be funding both sides of the argument. Very good for lawyers’ incomes but serious consequences for the ability to govern for all Australians.  We can see how this has played out in the New Zealand and the Treaty of Waitangi.
  • There is a real possibility that over time, 3% of the Australian population will have political control over the balance and even with the most benign beginnings, the likelihood is that this process will be corrupted and used for personal agendas.  That is very tempting access to money, power and influence.

The counter argument to the voice, is that Australia already has a successful democratic process with eleven indigenous members of parliament representing their community’s views, and many well-funded advisory bodies working to support any initiatives.  Over $33 billion (approx. 6.1% of state and federal government spending) a year is spent in this area, according to the Productivity Commission. Reporting would suggest that only $5-6 billion of that actually filters down to supporting our indigenous at a personal level and this discussion has shone a light on the need for more accountability.

In addition to this, royalties are collected through businesses like mining companies for Aboriginal benefit – the Aboriginal Benefit Account (ABA) – and distributed to impacted communities. In 20-21FY this was $407mil of which $294mil was distributed to aboriginal land councils.

Aust Govt ABA Reporting.

Essentially it looks like the will and funding is there.  Many ‘no’ advocates would argue, it just isn’t getting to the right hands?   

Would most Australians agree with constitutional recognition?  I would think, yes, and that has been proposed in the past as a change to the preamble in the constitution.  The supporters of the no case would suggest ‘the voice’ is something entirely different.

Paul Forbes
RFS Advice CEO