The Australian franking system will go in the next decade

John Abernethy CIO of Clime has the following view on high levels of dividends paid out by many large Australian companies, “I would like to see companies in Australia invest in themselves to grow and not rely on just capital raising when it suits them. You have a high payout ratio and all of a sudden you tap up your capital because you have paid out too much. That’s not a way to run a financial system or economy. I would like to see dividends fall to more sustainable levels”. In a view sure to be unpopular with the superannuation industry and self-funded retirees Abernethy predicts an end to the Australian franking system. “Politicians have come here looked at our franking system and walked away shaking their heads….I don’t think we do know what we are doing…I think the franking system will go in this country in the next decade.”