It is interesting visiting corporate offices these days and comparing them to how they were like 20 years ago.

Many physical buildings were designed and built at least 20 years ago but are now occupied by today’s trends. This means, the building no longer suits the way corporations want to use building spaces, but the rational decision is to make do, rather than demolish and rebuild, as long as there is an economic life in the asset.

Grand entrance halls and foyers are now often empty. A single, lonely person may sit at the front desk. Visitor car parks have plenty of empty spaces. Sign-in books can remain on the same page for days. Meeting rooms clustered near the entrance foyer are empty. Continue reading →

There is an old joke about tourists in Ireland stopping a local in Dublin to ask for directions to Killarney. ‘Well,’ the local replied, ‘if I were going to Killarney, I wouldn’t be starting from here.’

At least those tourists stopped to ask. There has been little obvious evidence that the critics of the Australian superannuation system, and there are many, have stopped to ask themselves what is super’s purpose before criticising it and calling for change in policy. Super policy is easy to criticise when there is no articulated reason for its existence. This vacuum then results in an Alice in Wonderland response – the critic can criticise anything or everything because they make up their own idea of what super is for.

The Royal Commission into Misconduct in financial services in Australia turned its attention to superannuation funds in recent months. It’s fair to say that time in the witness box was uncomfortable for many.

This Commission should mark the end of the gloating. For years, you will have heard self-serving nonsense about how Australia has the best retirement income system in the world, about how it is the envy of other countries, about how it was won as a right for ordinary Australians after a long and bitter industrial campaign. This gloating ought to  stop as the Commission has exposed publicly the many failings of the system. The gloating has been, in the main, perpetuated by insiders – some policy analysts, some academics, fund managers, industry associations, some service providers and politicians, especially former PM Keating and former union boss Kelty.

As far as managing money goes, the Australian system has been good. Investment portfolios are diverse, accessible and low cost. That is it’s one true good quality. As far as delivering retirement incomes, reducing pressure on the age pension, increasing national savings and weeding out unethical practices goes, the system has been miserably bad.

The most obviously desirable, necessary and easily implemented change is to remove the compulsion of the Superannuation Guarantee. Make the decision as to contribute or not contribute one that the employee can make based on their own circumstances and preferences. That would immediately concentrate the minds of the fund owners and operators – they would have to earn and keep the trust of investors, rather than rely on the force of law to guarantee that revenue stream.

Here is the text of a letter of mine to the editor that the Australian Financial Review published last week.

Karen Maley writes that Commissioner Kenneth Hayne has posed the question, “Is incentive remuneration necessary?” in relation to banking. Maley describes this question as radical. I would describe it as a very good question.

Will Commissioner Hayne, having another few months to complete his report, pose two more questions that strike at the core of the cultural problems in Australian banking? They are: 1) Is the Reserve Bank necessary? 2) Is the four pillars banking policy necessary? These questions would render his first one redundant. It is time to have the discussion. A sound banking, monetary and payments system needs neither the RBA nor the four pillars policy. In removing them the potential benefits for the real economy, rather than the financial economy, are material. However, given the timidity of parliamentarians, I do not underestimate the difficulty Hayne would face in putting those questions in his final report.

Most, if not all, institutions now have Inclusion & Diversity policies. It’s fashionable to do so. These policies are entrenched in corporations, government agencies, peak sporting bodies etc. But what does an I&D policy mean and what do they achieve?

I&D policies may as well be called Conformity or Exclusion policies – they are conceptually equivalent and they achieve the same outcome.

To argue for inclusion requires the explicit assumption that exclusion is currently in force: an individual or a group or class is excluded, hence the need to change behaviour to include them. Logically, this requires that the entity or group or influence from which some are excluded can be identified. If it can be identified, then by definition it must exclude someone and has a test to be passed before membership is attained or retained. The consequence of an I&D policy initiative is therefore to change the rules of entry, change the definition of the group and exclude those who no longer meet the amended membership test. I&D is conceptually no different from Conformity or Exclusion. No barriers are broken down – they are just moved into a different position.

The Society of Actuaries published a short piece that I wrote about Australian Retirement Incomes in the May 2018 International Section newsletter. If you are interested in reading it, it is available at this link.