The Australian economy is the envy of the world. Just ask foreigners.
The Australian Financial Review reported the story this morning with the blaring headline, "Aussies just a bunch of 'whingeing Poms' say Brits", citing a Guardian story detailing how "While the rest of world lurches from crisis to economic crisis, the land of Oz is powering ahead… basking in more sunshine than the rest of us can dream up".
One firsthand account
This is a story I know firsthand, as a recent transplant from Washington, D.C. to the gorgeous Gold Coast. While my friends and family back home combat ice and snow this late in the year, I'm slathering on the sunscreen in the aptly named Surfers Paradise.
My American friends and family are as in awe of the strong Australian economy as they are of the beautiful weather. On Skype calls, I'm at pains to explain that the unemployment rate is below 5.5% here and the housing market also never pulled back in the gut-wrenching fashion it did all across the United States.
"It's the Lucky Country," I tell them, extolling Australia's universal healthcare system, relatively low tax rates, and robust, surging stock market, in which many of the ASX's greatest success stories — including Commonwealth Bank (ASX: CBA), Woolworths (ASX: WOW) and Wesfarmers (ASX: WES) are widely held by retail investors.
Australians' overtaxed, poorly served perception revealed
My own experience aside — to hear The Guardian tell it, Australians themselves "appear incapable of seeing just how lucky they are". A survey released by think tank Per Capita in part supports this view.
The tax take in Australia, measured by the tax-to-GDP ratio, has hit long-term lows in the last few years. Australia now has the fifth lowest tax burden of the 34 OECD countries, higher only than South Korea, Chile, the United States and Mexico. Recent public spending cuts, particularly in health and education, would normally be expected to lift support for greater spending.
However, it is perception rather than fact that drives attitudes, and the prevailing perception is that Australians are overtaxed and poorly served by public spending. The single most important driver of this perception appears to be the Federal Opposition's highly successful campaign against "big new taxes" and for "cutting the waste".
But, as with any economic news, it is all in large part a matter of perception, offensive "whingeing poms" type monikers aside.
One ignored bright spot
Still, there's one objective scenario in which Australians are most definitely better served than their counterparts elsewhere: dividend tax law. Australia's franking system, allowing companies to pass on tax credits to shareholders, avoids the double taxation inherent in other systems, and makes holding the best ASX shares even more attractive.
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The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. Motley Fool writer/analyst Catherine Baab-Muguira does not own shares in any of the companies mentioned in this article.
