Jurisdictional Risk Just Went Local

We’ve written a lot about jurisdictional risk in recent months.

But usually that’s been a topic surrounding things like mine nationalisation in far-off places like Mali or Niger.

Australia isn’t usually considered a risky destination for business… For decades, the country has been a prime location for everything resource-related: exploration, development, and processing.

We have the talent, we’ve built the infrastructure, and, most importantly, we hold the geological conditions that make mining viable.

But Something’s missing…

There’s a fair chance that you’ve had more than a passing glimpse at the latest rules being handed down in the Federal Budget.

Mundane issues like Capital Gain Tax and negative gearing have all of a sudden been thrust into the limelight for everyday conversations.

Just this weekend, I was out with my family for a Mother’s Day lunch, the table next to us, the table in front… It was all the same…

Just about every conversation was being overshadowed by the looming Federal Budget. This never happens!

A dull once-a-year government spill on how they intend to use your money. This usually sits well in the background for most. Only a handful of dedicated investors would pore over the Federal Budget details each year.

But not this time

Clearly, there was a lot of anxiety going into this year’s budget. And it delivered on every ounce of that anxiety.

With the verdict out, there’s a strong embedded element of disincentivising workers AWAY from financial independence.

The barrier to achieving what any hard-working Australian wants has just been raised. That’s what higher taxes on assets do…

It pushes back your ability to retire or retire comfortably. And the changes are just as relevant to those already retired as they are to those building towards that objective.

So, what could the fallout be?

Australians are an accepting bunch; we tend to consent to whatever governments hand down to us and get on with it. Little fuss.

We grumble, we shake our heads, but we’re a far cry from those Europeans, who sometimes smash shop windows and set cars alight when their governments dive too deeply into reform.

So, let’s see how this unfolds, but I suspect a critical threshold may have been crossed this time… The hornet’s nest has been shaken.

You can tell Australians to stay indoors. You can tell them to wear a mask, not go to school and take an experimental shot. Sure, we don’t like it, but we’ll do it.

But whatever you do, don’t mess with our ability to grow wealth!

Australians love their property; they love their blue-chip shares. And they also love the idea of not having to rely on government support.

Whether that goal is achieved or not, the pathway to try and get there is a key driver for workers, entrepreneurs, small businesses, the young and the old.

Gain financial independence, get off the grind and do something you love and that you were meant to do in this short amount of time we have on the planet. That’s what these new rules are messing with.

And I suspect Australia’s typically Laissez-faire attitude to most things political could be about to shift. This could be the government overreach that finally went one step too far.

That’s my take. So, take it for what it is.

But you probably know I’m going to link all of this back to resources, and I will. You see, there is one silver lining offered by resource investments…

Think Global: Lessen the Risk

You see, the Australian government doesn’t set the rules for copper demand, nor does it for zinc or gold demand. These markets sit well beyond its control.

And it’s one of the reasons I’ve maintained global exposure across our model portfolio… Yes, we hold ASX-listed names, but we also hold TSX and NYSE-listed stocks.

But even within those ASX-listed names, they’re exposed to markets with international pricing mechanisms. Plus, many have international projects.

The resource sector is truly global; you go where the best rocks are, and that isn’t always in Australia.

It’s a core strategy that I’ve maintained for our paid readership group over the years. And that could be about to work in our favour, better than I had anticipated.

If you’d like to find out more and gain access to our international list of mining stocks, you can do so here.