24 thoughts on “Aandpit

  1. When Paul Keating set up our superannuation sector he might have established a statutory universal super fund. Such a fund could have employed private-sector managers to choose investments and to maximise returns; think of the Victorian State Superannuation Scheme and the Commonwealth Future Fund.

    Instead we have a feast for financiers and bankers, intent on making a profit for themselves from an enormous pool of contributions mandatorily acquired from all of us.

    We have lost the immense power brought about by aggregation and also lost the possibility of directing our savings for the public good.

    Do you think nationalization would bring advantages ?

  2. @Doctor Duck

    Yes, we simply should have had a statutory universal super fund. People could have put say a minimum of 5% and up to a maximum of 10% of their wages or salary into it. People who wanted to invest more, in super or elsewhere, could have gone to the private sector for extra investments. The statutory universal super fund could have paid a minimum return equal to say government bonds plus any extra returns earned to the super holders. We would have had no need of private-sector managers “to choose investments and to maximise returns”. It’s not rocket science. Nobody can beat the market consistently. A large fund well spread would ride very closely with the market average. Too easy. Only problem? There would not have been a big pig-trough for the private financial sector.

  3. Superannuation experts suggest that a worker needs to place 15 per cent annually into their super fund. By the time they retire they will need seven times final salary to be financially independent during retirement. Superannuation provides the savings pool needed by the Australian economy, but too much of it is invested overseas. For a capital deficient economy like Australia, this is suboptimal. The superannuation savings of young workers should not be freed up for property purchases. Workers need money in equity and non-equity areas but not at one and the same time. Young people needs emergency cash balances to avoid bankruptcy, middle aged people need equity in their homes and retired people need investment options that are partly convertible and partly income producing, depending on their age. Living on the pension alone, with little or no assets is a receipt for poverty.

  4. There would not have been a big pig-trough for the private financial sector.

    Most of the money is in industry funds, I thought.

  5. @Greg McKenzie

    Selling your house and retiring in a low income country is always an option. Australia’s inflated house values mean make this option very attractive. Certainly, it is my intention.

  6. … but the basic problem with government-run defined-contribution investment-in-private-assets schemes is that if they are sufficently diverse to not be picking winners then you’ve got slices of 90%+ of the economy and it’s probably simpler and more equitable to just scratch the “holdings” paperwork and run it as taxes.

    [and if they aren’t that diverse, then your selected firms have significantly lower costs-of-capital than those on the outside and it’s all unfair competition and what-have-you. Given that individual choice of investment fund avoids both these problems for no notable downside…]

  7. @HED PE

    Certainly, it is my intention.

    Got any particular “low income country” in mind ? One with decent laws and institutions – and particularly good mendical and dental services.

  8. Collin Street,

    Fund managers cannot “pick winners”. They cannot consistently beat the market. Ones who do that for a while are benefiting from pure dumb luck, like tossing heads eight times in a row. In any bunch of punters spreading bets across all horses, some will pick the winner.


    What this article says of investment banks is true of any stock picker pretending he or she can pick winners.

  9. “Picking winners” in the dirigisme sense: picking firms and making them winners on account of their low cost of capital.

    If you’re not doing that, then you’re literally investing in everything, and you’re thus you’re taking a slice of profit [and control] out of literally everything: you’re actually better running it as a tax and scrapping the “investment” framework.

    If you are going to have mandatory investment-backed defined-contribution retirement savings — an open question — then the only practicable way to make it work is pretty much the way we do it here: anything else has numerous practical/conceptual problems and is almost certainly misconceived.

    [Remember: the relationship of the government to property rights is fundamentally different to that of private citizens.]

  10. Back in March 2015, apparently, the total accumulated funds held in Australian super was $2.15 Billion, and the total value of all shares listed on the Australian Stock Exchange was about $1.7 Billion then.

    That means we can used the Super money to buy back the farm, doesn’t it ?

  11. @GrueBleen
    I don’t wish to provide information about my family members without their consent. Anyway, we have looked into it. Hundreds of thousands of westerners now retire in low income countries. All my dental work is already done abroad at less than half the Australian cost. I haven’t had any problems, but I always do my homework first. Extended family connections help with the homework but if you do not have them, the larger expat communities have their own doctors and dentists.

  12. I don’t wish to provide information about my family members without their consent.

    But you already have, haven’t you? We wouldn’t be asking for more details if we didn’t already have some from you, would we? You didn’t have a problem that far: “I only want to provide information about my family members with their consent or if it helps me in an argument on the internet” is not exactly a position I can respect.

  13. @ralph

    Does this bid up house prices out of the reach of locals (as it appears Chinese investment does here, and rich people from everywhere does in New Zealand) ?

  14. So much for freedom of speech. I have been blocked from commenting on the Pauline Hanson facebook page. I am surprised that it has taken this long I suppose.

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