Don’t Touch My Super!
Sir Albo, as I like to call him, has another crazy, stupid idea. He has somehow concluded that your superfund balance is not, erm, actually yours. He can’t say that of course so he decided to use, as politician’s do, a fancy word which only a few will understand.
Anyway, according to Sir Albo our superfund balances are a ‘national asset.’
And that to me is scary because it could have some serious consequences to your superfund balances.
As an advisor, who advises business owners on how to navigate taxes, money and business the constant ‘ideas’, law changes and tinkering is getting wearisome. It is scaring the hell out of people too.
A while back I was in Fiji, and a raft of new legislations came through changing the budget because the original budget was designed on a scrap piece of paper. This resulted in my inbox blowing up with clients asking what this all meant.
Then I decided to have the weekend off to relax and recuperate when Sir Albo decided $4.5 trillion dollars of our money should maybe not be our money but a ‘national asset.’ This also resulted in manic and panic phone calls, and this resulted in my wife not being a fan of Sir Albo – which come to think of it is not necessarily a bad thing.
Anyway, you know the Government is a bit messed up when people call or message in a panic.
And that is what we have. A nation whose citizens are under pressure and uncertain. An uncertain population is not confident. And a lack of confidence is not a good place for a country to be because history has shown this stops a country growing.
So, for those of you who think Sir Albo is going to raid and take their Superfund balances away from to pay for whatever you think our governments should not pay for, that is not what he is saying.
His actual words are “There is a real potential to see these funds as a national asset that can be used more appropriately and get better returns as well, not just for individuals and for retirees, but for the nation.”
In my words he is saying:
‘I have spent so much money that I had to borrow and that borrowing is ballooned so big that sooner or later everyone will realise I was the idiot that put the nation’s wealth at risk.
So, I have idea. There is $4.5 trillion dollars in Superfunds. Why don’t I ask Superfunds to invest in Government projects and give Superfunds a percentage return we make on those projects and that way Australia as a country does not need to borrow more. Isn’t that a fantastic, brilliant idea?’’
Err…. No. It’s a stupid idea.
Here’s why.
Australian governments (Labour or Liberal) can’t organise a drinks party at a brewery. If they tried this is what would happen:
– They would book a school hall (because they think that will do as a brewery)
– Organise it to start at 12pm and end at 2pm (not realising that midday is not a time for drinking and most people will be at work anyway).
– Overpay for the food and drinks (not realising no-one is going to turn up)
– Then realise that you can’t serve alcohol in a school because it is illegal.
See what I mean?
There’s more.
The problem is that Australia is looking at what has happened in China and the Middle East and think they can replicate that here. They can’t. That is because we think short term and they think long term.
We all think that the EV revolution started about 10-15 years ago. Nope. The Chinese government started and invested in EV companies going back to 2001. Even today there are about 150 companies in China making EVs and the Chinese government are still investing in them. And they will make a killing (money wise) from all of us.
When you invest it is always about the long term. For Australian Governments its always about the short term. The two don’t mix.
And that is why I think this idiotic idea is a disaster for your Superfund balances. Our government cannot budget for anything. Remember NBN? It was supposed to cost $40Bn. We ended up paying $70bn. We also had a French Submarine Program. That was to generate $4bn income. It actually generated …… $0. Nil. Nothing. Zilch.
If this happens in China someone gets shot. When it happens in Australia someone get a gold plated pension.
I have been reminded that Superfunds need to act in the best interests of their members so they will not do what the government asks them. I know that but that does not stop the Superfund industry advisors making a killing from those same members in fees and charges. What are chances they are going to say no to a government handout that promises a new yacht?
This is what I know.
Many have Self-Managed Superfunds. They don’t get charged a fee unless they want to pay it. And I get to decide how their money is managed and what they are prepared to invest in.
The investments are usually a bit boring. There will some individual shares, property, ETF’s and index funds diversified across different sectors and geographical areas. They don’t pay for anyone’s private jet, and they will never invest in a useless government project. Ever.
It’s their money and Sir Albo can keep his grubby hands off it.
But what if you don’t have a SMSF? Keep an eye on your fund and see what they are doing. If you think their eyes are sparkling because Sir Albo may have promised them a new private jet, it may be time to move away. Also check how well your superfund is performing against others. In other words be vigilant. If you aren’t, don’t complain when you find out you invested in a wind farm where there is no wind.
— Hitesh Mohanlal
