Martin Hawes: Lucky country lives up to name

Australia has been least affected by the global recession. Photo / Mark Mitchell

If you are looking for a place to invest for the long term, it would be hard to find better than our nearest neighbour, Australia.

It is not surprising Australia has been least affected by the global recession - it has nearly everything going for it.

First, Australia has what William Bernstein in his book Birth of Plenty identified as the four requisites for a growing economy and prosperity: assured property rights, efficient capital markets, good communications and transport and the ability to develop and commercialise ideas free from state and religious interference.

Like New Zealand, but unlike some other countries which otherwise might warrant investment (e.g. Russia, China), Australia has these essential attributes.

Second, Australia has a growing population, adding roughly the equivalent to Wellington and Palmerston combined each year. Australia has a population of 22 million but given the trends, in 50 years will have 35 million.

Clearly there are huge opportunities for those companies that provide things like infrastructure, housing and healthcare.

Third, Australia has natural resources to die for. In a world hungry for food, energy and other commodities, Australia's ability to dig things out of the ground would underpin any economy.

Fourth is Australia's proximity to Asia. It is hard to imagine China in particular, and Asia in general, are going to stop growing anytime soon.

As a supplier of food and commodities and a destination for tourists and immigrants, Australia is well positioned.

Sure, Australia has some problems - but a lack of water and a clunky state/federal system are unlikely to hold it back. Barring a major global meltdown, it is difficult to see Australia lose its way.

From a Kiwi's point of view, investing in Australia is simple. The legal and tax environment is much the same and we share many financial and business institutions (especially the banks).

It is true that franking (imputation) credits are not available to Kiwis meaning double taxation of dividends but Australia is exempt from our Foreign Investment Fund regime with its complicated compliance.

Australia's position and its track record of growth mean that most investment advisers encourage their clients to allocate more to Australian assets than the size of the country suggests.

Even though Australia makes up only 2 per cent of the world's share markets, I am happy for people to invest 20 per cent and more there.

Australians have a great deal to be confident about.

* Martin Hawes is a financial adviser. His disclosure statement can be found at www.martinhawes.com