The unfairness of superannuation?

Is it just me or have others noticed a plethora of voices claiming that superannuation is unfair? ‘We must make super fair’ is the typical tone of the claim. Usually, this is followed by some ideas for more regulation, compulsion, tax, affirmative action and so on. To date, I have not observed people complaining about lack of fairness coming to the obvious conclusion and easiest way of fixing a system they believe is broken: remove the compulsion to participate.

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The exposure of the climate druids

If you look out the metaphorical window in 2017, you will see none of the catastrophes that have been forecast by the climate druids for the last 25 years. World agriculture production is at its highest ever. Poverty is at its lowest ever. Income inequality is at its lowest ever. The Australian great barrier reef has not died. Pacific islands have not drowned. The extent of Arctic sea ice remains stubbornly normal. Polar bear numbers are at their highest in over 50 years. Perth has not died. No Australian city has run out of water. Fifty million climate refugees are not roaming the world. Hurricane frequency has not increased, nor has hurricane severity. The sea level has not risen to swamp waterfront mansions.

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The graph is sourced from the Food and Agriculture Organisation of the United Nations, showing, in constant dollars, the value of food production across three major regions.

What has happened? The climate scare has been exposed as a scam. The public perception of scientists has been dented. Some druids have become laughing stocks. The rise in atmospheric levels of CO2 (from a very low base) has resulted in a greening of the planet. The earth is now greener and forested more thickly than it was 30 years ago. The time to dump Renewable Energy Targets, Paris accords, Emissions Trading Schemes, Carbon Taxes etc is long overdue.

Coal would fix our looming energy crisis

There are over 600 coal-fired electricity generators being built in the world right now. Not one of those is in Australia. Our coal-fired generators are being decommissioned and demolished. Yet, Australian coal resources are huge.

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For reasons that are hard to fathom, Australian politicians appear to be deliberately antagonistic to coal-fired electricity generation. The playing field is not level – it is deliberately structured to make coal kick up-hill into the wind, so to speak. Solar and wind powered generators have the down-hill with-the-wind advantage afforded by taxpayer funded subsidies.

Why? Solar and wind are both unreliable. Hence the need for battery storage. Solar and wind combined with battery storage is incredibly expensive. The coal supply in Australia is plentiful; enough to last hundreds of years. Coal is a low cost, efficient and reliable source of electricity. Why is Government policy skewed against it?

Without stable, reliable and low cost electricity Australia will crumble into a backward, poverty stricken future. Take a look at those third world countries without electricity to see what I mean. There is no prospect of renewable energy sources providing the equivalent level of power reliability and efficiency as does coal. The only viable alternative to coal is nuclear. I have no preference as to which we rely on – only that energy policy is amended such that no one source of energy is penalised, no one source is favoured, and the Government gets out of the mix. If renewables are the future, as the chant goes, then they do not need Government policy enforcement.

Peak-retirement

Retirement strategies. Saving for and spending during. The world is awash with writings on how to save and invest for retirement. The volume of material is vast and it is being added to daily, including by me. Why is it so? If ever there were a topic that should have been settled over 100 years ago, retirement savings is it. There is no need for continuously adding to the material. The fact that such material is ever growing hints that there is a problem. If the topic was settled, there would be no need for a constant barrage of new material.

There most definitely is a problem in retirement savings (in advanced economies): it is the futility of trying to save effectively on an individual basis without any risk sharing arrangements in the context of lengthening life-spans, higher costs of living and higher expectations of lifestyle. It is a cruel hoax foisted on the bulk of the population that insists they can do it, provided they have the right investment strategy, the right draw-down strategy, the right contribution strategy and so on. But the right combination does not exist. That is why people are always looking for new ways, new ideas, some development or technique that will allow them to save effectively and retire securely in a lifestyle that meets their expectations. Yet it cannot happen but for the small proportion of each country’s most wealthy. Continue reading

Turnbull achieves what Chifley could not

The Australian retail banks have effectively been nationalised. What Ben Chifley tried to do in 1947 but failed has been achieved in 2017. Chifley was a Labor PM. Turnbull is nominally Liberal.

The banks all operate with a government guarantee on deposits. In effect, the Government, ie the taxpayer, has assumed a fundamental risk of the banking business. They operate within a big 4 policy framework that shuts down the possibility of mergers and restricts competition from other parties. The Government is now going to impose an arbitrary tax on the banks outside normal company tax rules. The Government is going to regulate bank executives behaviour, keep a register of ‘acceptable’ vs ‘non-acceptable’ bank staff, control bankers’ pay and the gender make-up of the employees. There are very few aspects of banking business that are not under covert or overt Government control.

This is the path to socialism.

The end of conservative government in Australia

I am not a particular fan of the big Australian banks – they enjoy privileges granted by Government policy that makes the business of big banking too sheltered from competition, too easy to extract economic rents and protected by barriers that prevent new entrants to that sector. Yet in the wake of the Federal budget for 2017-18 announced last week, I find myself on the same side of the fence as the bankers. The proposed bank tax is disturbing. Continue reading

Unlimited #vacation leave policy – a pricing error

It sounds like a good thing – unlimited holiday time, still meeting budget, making bonuses. Here’s a recent piece on the topic. It might work for some, perhaps not others.

It will be clear if it isn’t working. Customers will suffer, other colleagues will complain about being overworked to make good the leave, budgets will not be met. It will be a shambles, obvious very early on. Continue reading

Give me your #money. I know what to do with it better than you do.

What happens when people are appointed to leadership roles in organisations such as the World Economic Forum and the Australian Chamber of Commerce and Industry? Ostensibly, these organisations should favour free markets over regulated, free enterprise over Government-sponsored monopolies (and monopsonies) and have faith in the individual consumer to know best what they want rather than a bureaucrat or a political insider. Yet these leaders make speeches that call for action exactly in opposition to normal perceptions of free markets.  Continue reading

Is the #pension a safety net or an asset in a portfolio?

Malcolm is not as popular as he once thought he would be. Here is a little window into his waning popularity with Australians in receipt of the age pension:

 

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The difficulty here is that the purpose of the age pension is no longer clearly established and accepted by the (majority) population. Is it a safety net that pays only to those in genuine hardship? Or is part of a retiree’s personal wealth portfolio, a defined benefit lifetime annuity independent of other sources of assets or income?

The pension was established (over 100 years ago) as a safety net. For much of the 20th century, anecdotal evidence suggests the population accepted that fact and ‘going on the pension’ was almost seen as an indicator of low social standing and to be avoided. The pension is means-tested, so phases out entirely when assets and income exceed thresholds. Clearly, it has been operated as a safety net, although there is a genuine debate over the appropriate threshold levels.  Yet the angry pensioners argue that they have earned the right to their pension and no politician should take it away even if they have a million dollars in other investments and they own their own home outright.

As is often the way in political economy, when Governments fail to do the spadework before pulling the policy levers of change, we end up in an unholy mess. The spadework must prepare the ground based on values, principles and attitudes. Only when the population is in broad agreement and understanding with and of these principles should policy be developed or reformed.  Only when Australians  agree on the purpose of the age pension should it be amended.