Tag Archives: future fund

Business Leaders Urge Action On Problem They Do Not Want Solved, And Treasury Does Not Understand

6 Aug

see_no_evil_hear_no_evil_speak_no_evil___three_monkeys_photo-1280x1024

There must have been something in the air last night.

While I was writing today’s blog on Treasury’s epic fail in its analysis of Australia’s structural budget deficit, it seems that our business elite were bending the ears of the nation’s journalists on the same topic:

Call to tackle deficit as business blasts budget

AUSTRALIA’S failure to prepare for the end of the mining boom is damaging the nation, business leaders warned as they expressed “zero” confidence the election campaign would deal with the structural budget deficit.

…business leaders also questioned Labor’s reliance on Australia’s AAA credit rating to bolster its economic credentials.

Former Future Fund chairman and Commonwealth Bank chief executive David Murray said some states that later suffered credit ratings downgrades or had been told a downgrade was possible had “done this for years – tell everyone it’s OK”…

Commonwealth Bank director and former AMP chief executive Andrew Mohl attacked politicians because they “don’t want to do anything structural” and warned that “current tinkering is doing nothing but creating uncertainty”.

“The chance of the structural deficit being addressed in this election campaign is zero,” he said. “I have no doubt the budget policy over the past five years, given the resources boom, has been too loose. There has been wasteful expenditure, policy formulation has been dysfunctional. If we face a fiscal shock, the economy is more vulnerable than it was. We have spent our ammunition and we don’t have much to show for it.”

The comments come after the government on Friday revealed a $33.3 billion revenue writedown in barely 10 weeks – a situation that Brambles and BlueScope chairman Graham Kraehe described yesterday as “incredible”.

“My fundamental view is that economic policy at the moment is absolutely ad hoc from day to day without any long-term cohesive, integrated plan,” said Mr Kraehe, who is also a former Reserve Bank board member.

“We have a history of increasing government spending throughout the resources boom and now that the resources boom is tapering off, there is no suggestion that we are planning to reduce government spending, instead of which we are just increasing taxes.

“To have a credible economic strategy, government of either persuasion needs to tackle government spending in a serious and co-ordinated way. That’s spending in the commonwealth budget and the overlaps in commonwealth and state. Unless we do that, with an ageing population we are going to continue to build on deficits.”

…

Last night, Mr Hockey said that on Mr Rudd’s logic, the European and American economies “with virtually zero per cent interest rates would be doing well, but they are not”.

Some business figures also said interest rates had been cut as the economy softened.

Aussie Home Loans founder John Symond said: “You’ve got to remember that the reason for the RBA dropping is because the economy isn’t performing as well as we would like.

“That’s on the back of some poor government decision-making – some has been fine, some has been awful.”

We really are screwed, when the loudest voices in calling for action on budget mismanagement are our business elites.

Especially when they — like Treasury — fail to correctly identify the cause/s of the structural budget deficit.

But then, this is to be expected.

Every .. single .. one .. of those “business leaders” quoted in the above article — yes, including Graham Kraehe — either are now, or were formerly, senior executives in the finance industry.

Merchants of Debt.

They are hardly likely to tell us the truth.

That the reason for Australia’s structural budget deficit, is not the mismanagement of the mining boom.

The prime cause of our structural budget deficit is exactly the same as Ireland’s:

While part of the revision to the IMF’s pre-crisis estimates of the structural budget balance is due to a lower estimate of potential GDP, the main reason for the change is that these estimates failed to capture the dependence of the fiscal position on an unsustainable boom in the housing sector (Kanda 2010). With residential investment and house prices soaring, property-based taxes grew at a pace well above GDP growth. Failure to recognise at the time that the bulk of these revenues were cyclical led to significant tax cuts and expenditure increases, which created a large structural hole in Ireland’s public finances.

At Business Spectator, leading business commentator and ABC presenter Alan Kohler also has a go at the structural deficit problem today. And he too, fails to identify the real cause:

What neither party will admit: budget heading for large structural deficit

What does all this mean for Australia, as it starts the first post-boom election campaign?

It means any promises based on confidence about knowing the future are meaningless.

The economic statement issued on Friday was both recognition of how rapidly the world is changing and a stab in the dark about government revenue between now and 2016-17. In truth no one has any idea, and least of all Treasury.

What we do know is that there is a structural budget problem related primarily to the ageing population and the growing cost of health care.

Sorry Alan.

Epic fail.

That’s a problem. Sure.

But it’s a coming problem.

The structural deficit is here, and now. It was caused in the past.

Interestingly, Mr Kohler flatly contradicts the Treasury in their working paper Estimating The Structural Budget Balance Of The Australian Government.

Their brilliant economic modellers are convinced that:

The key point to draw from the analysis is not the specific year in which the budget returns to structural surplus, but the steady improvement over time…

The estimates over the forward estimates and the projection periods suggest a steady improvement in the structural balance over time, reflecting over the forward estimates, the Government’s structural savings measures and, over the medium term, its commitments to limit real spending growth and allow tax receipts to recover naturally.

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David Murray Shows The Greens And MSM Are Clueless. Again.

18 Apr

Former chairman of the Future Fund, David Murray, ruffled lots of establishment feathers during his tenure, particularly for his scathing criticism of the Warmageddonist movement.

Now, he has shown up the Greens – and, the entire lamestream economics and political media contingent – with his astute comments about the real reason why the government must balance the nation’s books.

From the Australian (emphasis added):

FORMER Future Fund chairman David Murray has accused the Greens of making “ill-advised” demands on the federal budget, declaring the priority should be to protect the government’s credit rating as the global financial system remains under strain…

Mr Murray, former chairman of the nation’s $73 billion sovereign wealth fund and a former Commonwealth Bank chief executive, said he was concerned about the Greens’ suggestions that curbing government spending was not important, given the woes in the global economy and the size of the blow-out in the budget at the peak of the global financial crisis.

“What’s at risk here is that with very significant offshore borrowings and a shaky world for raising capital, if the commonwealth in particular can’t hold its ratings, that will affect the ratings of the banks, that will affect the cost of debt, and it also means that the commonwealth is not there in the same measure as a backstop if things go wrong again and the banking system can’t fund itself offshore,” Mr Murray told The Australian.

“That’s the higher risk that has to be managed at the moment. We don’t control what happens in the rest of the world. You need the commonwealth rating as a backstop because of what’s going on elsewhere in the world. You can’t put that at risk. To do that you have to achieve a budget that is cash-neutral at least, so that the debt stabilises and within that cash neutral position you can pay interest.”

Exactly right.

As we have seen here at barnabyisright.com for many months now, the government (and the economy) are now trapped by the errors and abject stupidity of the past.

The credit ratings agencies have put our government on notice that the credit rating of the government – and more importantly, of the banking system – is contingent on the government showing a credible path back to balanced budgets. Why? Because in the GFC, the government explicitly and implicitly guaranteed our hugely overleveraged, foreign-debt dependent, housing market exposed banking system, using the sovereign balance sheet.  If the government can not promptly curb its ever-rising debt and deficits, then the government guarantee propping up the banks will lose credibility.

On the other hand, if the government does attempt to achieve an actual surplus in 2012-13, and not just a forecast for one on May 8th, that spells disaster for the economy too.

How so?

See for yourself – Labor’s Inbred, Debt-Fed Chickens Coming Home To Roost.

We are Ireland Mk 2.

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Too Little Too Late

30 Mar

[h/t for video to wakeup2thelies]

Great, isn’t it?

As we have seen in last week’s post on the too-high AUD, and again in today’s post on the mining tax, it seems that it is only after a problem is created, only after diabolical, and/or idiotic, and/or treasonous legislation is actually passed into law, that the legislation starts to receive any serious scrutiny and criticism from the “experts”. And, for that criticism to be prominently and neutrally reported by the mainstream media.

From AAP via Business Spectator:

Murray launches attack on ALP policy

The outgoing chairman of the Future Fund has launched a stinging attack on the Gillard government ahead of his departure next week.

David Murray described the carbon tax as the worst piece of economic reform he had seen in his life, warning it would be very bad for the economy.

It would raise costs within Australia and reduce the export competitiveness of energy-related commodities.

Speaking on ABC radio, he also fired a shot at the mining tax, saying it was “clumsily” designed and introduced.

“The timing at the top of the terms of trade was not good,” he said.

UPDATE:

Ummmm … hasn’t the government been tirelessly claiming that households will not be worse off under the CO2 derivatives scam, because of the “compensation” package?

The unions disagree:

Unions want wage increase to offset carbon tax

A group representing the Australian Services Union and Queensland Public Sector Union plans to factor in the cost of the carbon tax during bargaining negotiations with the Queensland government later this year, arguing the tax will raise the cost of living for their members, according to a report by The Australian.

The Together group, representing the two unions, were supporters of the carbon tax, but now say the $8 billion household compensation package would not cover the cost of the carbon tax for their workers.

“They are compensating 60 per cent of people for some of it,” Union secretary Alex Scott said, according to The Australian. “That’s far from full compensation. We want to make sure we don’t go backwards in terms of cost of living.”

The prospect of carbon tax costs factoring into union wage negotiations has sparked growing concerns among employers over fears the new tax will cause a ripple effect that will raise the cost of production and labour beyond expectations.

UPDATE 2:

From the Australian:

OUTGOING Future Fund chairman David Murray has condemned Labor’s carbon tax as “the worst piece of economic reform I have ever seen in my life”.

Mr Murray, who has also lashed the Gillard government’s mining tax, warned the tax would undermine the nation’s competitiveness and damage the economy.

“If you want me to tell you my view, it is the worst piece of economic reform I have ever seen in my life in Australia,” he told ABC radio this morning.

“The consequence of introducing that tax at that level in Australia today is very, very bad for this economy, particularly in terms of international competitiveness.

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Labor Begins To Steal Your Super

12 Sep

Barnaby was right.

From the Australian today (emphasis added):

Labor is planning to withdraw hundreds of millions of dollars from the Future Fund in an unprecedented move that will help the government meet its promise of returning the budget to surplus in 2012-13.

A spokeswoman for Finance Minister Penny Wong confirmed to The Australian that more than $250 million worth of assets were due to be withdrawn from the Future Fund in the 2012-13 financial year, despite the fund having been created, by Peter Costello, under the condition it was not to be touched before 2020.

The government, which has forecast a surplus of $3.5 billion in 2012-13 after several years of heavy deficits, claims that the assets will be returned to the fund at a future date.

But the opposition has slammed the move as “reckless and fiscally irresponsible”.

“The fact is that the government is planning to raid the Future Fund, including the revenue from the expected sale of Future Fund assets in its revenue forecasts, yet they haven’t been able to point us to where in the budget that money is supposed to be going back into the Future Fund,” opposition assistant Treasury spokesman Mathias Cormann said yesterday.

Mr Costello, the then treasurer, established the Future Fund in 2005 to cover the costs of future public servant superannuation liabilities. At the time, he told parliament: “The fund will only be drawn upon at the earliest in 2020 or a time when an independent actuary determines that the fund’s assets are sufficient to offset the unfunded part of the government’s accrued superannuation liabilities.”

The Future Fund’s own website sets out that “withdrawals from the Future Fund may only occur once the superannuation liability is fully offset or from 1 July 2020″.

…

A spokesman for the Future Fund confirmed the anticipated withdrawal was known to the fund and that this was the first time a withdrawal had been included in the budget bottom line.

Senator Cormann said the “real concern is that, if they get away with their plans to raid the Future Fund now they will do it again and again, every time they need more cash to fund their wasteful spending”.

“The Future Fund was set up by the Coalition after we paid off the Hawke-Keating debt and it shouldn’t be touched until the public service superannuation liability is under control,” he said.

Remember Barnaby Joyce’s forewarnings before this year’s May budget?

Before the budget (5th May):

In response to a question I put in Senate estimates, Treasury revealed that $64 billion of the difference between our gross debt and our net debt is made up of the cash and non-equity investments of the Future Fund. The Future Fund is there to cover the otherwise unfunded costs of public servants’ superannuation.

That is a little fact that the people of Canberra might be interested in. When Wayne mentions net debt translate that to, I am going to pay his debt off with my retirement savings.

And right after the budget (13th May):

Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt.

Barnaby was right when he forewarned of the US debt crisis.

And he is right again, about your super being stolen by our government.

Think it is only public servants’ super that is at risk of being stolen by our government?

Think again.

For quite some time now, your humble blogger has been covering the wave of government confiscations of private citizens’ retirement funds that has been sweeping the over-indebted Western World, and warning readers that it is going to happen here too.

The reason this has been happening in so many countries abroad, including the USA, UK, France, Ireland, Poland, and more?

Exactly the same reason as cited by our own government now.

To help meet the government’s budget targets. With the vague promise that the “borrowed” monies will be returned at some unspecified future date.

And we all know what most politicians’ promises are worth.

Barnaby Joyce is the only politician in our nation with the wisdom, foresight, integrity, and courage, to publicly confirm what this blogger has been repeatedly forewarning.

That government theft of private super savings, is a real and present danger here in Australia too.

And don’t kid yourself that a Coalition victory at the next election will save us.

The Liberal Party quietly announced a new policy on June 3 this year, that should have every citizen deeply concerned. It represents an even more blatant move to have the government get their hands on not only public servants’ super, but everyone’s super.

Learn more, in this most recent of my many previous blog articles on the topic:

Stealing Our Super – I DARE You To Ignore This Now

UPDATE:

Senator Wong denies that their plan is to steal public servants’ super.

Are you convinced?

I’m not.

Wong’s very opaque counterclaim is that they are “simply making a small change to the types of assets it holds”. The key here is having a very clear definition of exactly what is meant by “a small change”, and “types of assets”.

This denial in no way convinces me that Labor are not shuffling/stealing money (and/or figures) to meet their objective – a media headline of return to surplus in 2012-13. After all, this government has form for fiddling the books, as documented numerous times on this blog … and openly conceded by former Finance Minister Lindsay Tanner in his book after retiring.

And not just form for fiddling the books … there’s also this:

(March 2007) Peter Costello: Rudd will mortgage future, leaving kids to foot

(April 2009) Kevin Rudd raids Future Funds

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When “Outspoken” Is A Perjorative For “Truth-Teller”

12 Aug

Outspoken former RBA board member Warwick McKibbon (emphasis added):

Ditch the delusion that stimulus saved us from GFC

The sell-off in global sharemarkets reflects the realisation that debt problems in advanced economies are serious, but it reflects more than this. For some time the fiscal fragility in the global economy has looked like a slow-motion train wreck …

Australia is now likely to be hit with a second global shock. This is different from the GFC in a critical respect. It is a concern over excessive government debt so the response in Australia should not entail a new fiscal package …

Bad fiscal design always has an unexpected cost. Why is a flood tax being introduced just as the economy slows? The forecast that this would help dampen the boom is now likely to be wrong. There clearly should be an urgent review of the mismatch between spending commitments in the pipeline and highly uncertain revenue. This is essential to better understand future fiscal vulnerability.

The delusion that what saved the Australian economy from the GFC was entirely fiscal policy needs to be jettisoned.

Outspoken chairman of the Future Fund – the government fund containing public servants’ super, that Barnaby has warned will be raided to pay down debt – says that the global sovereign debt crisis could take 20 years or more to “play out” (emphasis added):

The chairman of the $75 billion Future Fund has warned the debt crisis engulfing Europe and the United States could take at least 20 years to resolve, causing ongoing market volatility.

David Murray warned the post-global financial crisis environment would continue to be characterised by a series of market shocks, with investor uncertainty heightened by concerns over the ability of political systems to contain any emerging meltdown.

And he sounded the alarm on the level of government and private sector debt in Australia, saying they both needed to be reduced, given the capacity of Australia to be caught up in a new global financial rout.

“The global financial crisis was caused by excessive debt which had built up in the world at both the government level and in the private sector in developed countries,” Mr Murray told ABC radio.

“The sorting out of that problem is something that could take up to 20 years. As that post crisis environment unfolds we will see continuing events such as we’ve seen in the past couple of weeks.”

“Outspoken” is another of those words wielded as a weapon.

In modern, politically-correct Unspeak, it is the latest putdown label for “truth-teller”.

When someone speaks the truth, contrary to the “mainstream wisdom” – especially someone like Warwick McKibbin or David Murray holding a public position, who cannot be “politely” attacked more viciously – then they/their viewpoint is labelled as “outspoken”.

The unspoken implication of labelling someone as outspoken … is that we should not speak out.

That we should all be good, silent, obedient slaves.

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Stealing Our Super – I DARE You To Ignore This Now

8 Aug

Caricature by Zeg | click to enlarge

My sincere apologies, dear reader.

I understand that you are probably a little concerned about the future for the economy right now.

If you own shares, then you are probably worried about last week’s bloodbath in global sharemarkets.

But I have a very important question to ask you.

It’s a bit of a reality check, I’m afraid.

Do you think your Superannuation “nest egg” is safe from the greedy hand of government?

If you answered “yes”, then …

I dare you.

I dare you to ignore the rest of this blog.

I dare you to ignore the fact that Senator Barnaby Joyce – the only Australian politician who foresaw and forewarned about America’s present debt nightmare – gave this warning on 5th May 2011:

In response to a question I put in Senate estimates, Treasury revealed that $64 billion of the difference between our gross debt and our net debt is made up of the cash and non-equity investments of the Future Fund. The Future Fund is there to cover the otherwise unfunded costs of public servants’ superannuation.

That is a little fact that the people of Canberra might be interested in. When Wayne mentions net debt translate that to, I am going to pay his debt off with my retirement savings.

I dare you to ignore the fact that Barnaby repeated his warning on May 13th, straight after the Budget:

Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt.

I dare you to ignore the fact that the US Government has been stealing federal workers pensions since May this year:

Treasury to tap pensions to help fund government

The Obama administration will begin to tap federal retiree programs to help fund operations after the government lost its ability Monday to borrow more money from the public, adding urgency to efforts in Washington to fashion a compromise over the debt…

Geithner, who has already suspended a program that helps state and local government manage their finances, will begin to borrow from retirement funds for federal workers.

I dare you to ignore the fact that the US Government has been planning to steal their private citizens’ super too, since at least February 2010:

The plan, as sketched in the 43-page document, calls for the creation of something called  “Guaranteed Retirement Accounts” (GRAs). Biden slyly shifts the onus for the idea through weasel words typical of the federal government: “Some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk, and in some versions under discussion, would guarantee a specified real return above the rate of inflation.”

These accounts would be “free of inflation and market risk” because they would be under the direct and absolute control of the federal bureaucracy.

I dare you to ignore the fact that Argentina’s government stole their citizens’ super in October 2008:

Argentina’s center-left President Cristina Fernandez on Tuesday signed a bill for a government takeover of the $30 billion private pension system in a daring and unexpected move that rocked domestic markets.

I dare you to ignore the fact that Hungary’s government nationalised stole their citizens’ super in November last year:

Hungary is giving its citizens an ultimatum: move your private-pension fund assets to the state or lose your state pension.

Economy Minister Gyorgy Matolcsy announced the policy yesterday, escalating a government drive to bring 3 trillion forint ($14.6 billion) of privately managed pension assets under state control to reduce the budget deficit and public debt. Workers who opt against returning to the state system stand to lose 70 percent of their pension claim.

I dare you to ignore the fact that France began stealing their citizens’ super in late 2010 as well:

France seizes €36bn of pension assets

Asset managers will have the chance to get billions of euros in mandates in the next few months for the €36bn Fonds de Réserve pour les Retraites (FRR), the French reserve pension fund, after the French parliament last week passed a law to use its assets to pay off the debts of France’s welfare system.

I dare you to ignore the fact that “Europe’s economic superstar”, the one EU nation that (like Australia) came through GFC1 with positive economic growth, began stealing their citizens’ super in May this year:

It appears moving backwards on pension reforms has become the thing to do on both sides of the Atlantic.

Hungary last year moved much of its private pension assets to the state. Last month, new rules came into effect in Poland diverting 5% of the 7.3% of salary going to private pension funds to the state.

I dare you to ignore the fact that Ireland too, began stealing their citizens’ super in May this year:

Irish Bombshell: Government Raids PRIVATE Pensions To Pay For Spending

“The various tax reduction and additional expenditure measures which I am announcing today will be funded by way of a temporary levy on funded pension schemes and personal pension plans.”

I dare you to ignore the fact that the UK Government announced plans to steal public sector workers’ pension entitlements in June this year:

Thousands of teachers, lecturers and civil servants joined a UK wide strike yesterday in a mass protest over pension reforms.

…

The government … wants to impose a 3%-of-pay levy on public sector workers’ contributions to help reduce the budget deficit. This amounts to a pay cut to follow on the heels of the current pay freeze.

I dare you to ignore the fact that the Liberal Party of Australia quietly announced a new policy on June 3 this year – sneakily disguised as a helpful “reform” – that should make your hair stand on end:

Further relief for small business

The Coalition will relieve the red tape burden from Australia’s small businesses by giving them the option to remit the compulsory superannuation payments made on behalf of workers, directly to the ATO.

Small business will be given the option to remit superannuation payments to the ATO at the same time as they remit their PAYG payments.

This will require only one payment to one agency – rather than multiple cheques to multiple superannuation funds. The ATO will be responsible for sending the money to superannuation funds directly.

I dare you to ignore the fact that an “option”, can very easily become a “non-option”.

I dare you to ignore the fact that our Green-Labor Government announced plans in the May Budget that should also make your hair stand on end:

The Gillard government’s 2011-12 budget has proposed a raft of initiatives aimed at encouraging superannuation fund and private investment in infrastructure projects.

I dare you to ignore the fact that “encouraging”, can very easily become “enforcing”.

I dare you to ignore the botched “school halls” program, and the white elephant NBN, as you ponder whether or not you really trust this government to wisely and prudently invest your super in Government infrastructure projects, and achieve a reasonable return on your money, when even so-called “experts” have doubts:

The government’s plan to use tax incentives to encourage superannuation funds to invest in new infrastructure could be thwarted by inadequate returns on projects and a reluctance by the states to take on project risk, experts say.

I dare you to ignore the fact that the government’s white elephant NBN is a(nother) Green-Labor thought bubble, drawn up on the back of Kevin Rudd’s in-flight napkin, with no cost/benefit analysis:

Trust us with the NBN; we’re politicians

I dare you to ignore the fact that Bill Shorten, the Minister for Financial Services and Superannuation, already thinks of your super as a “significant national asset” … a kind of “sovereign wealth fund”:

Superannuation is our sovereign wealth fund

This week marks 12 months exactly since the government announced plans to take compulsory superannuation from 9 per cent to 12 per cent.

… our superannuation savings place Australia fourth in the world. Its $1.3 trillion in funds under management through superannuation significantly boosts national savings and provides greater retirement security for millions of Australians. Superannuation is also a significant national asset because it strengthens our financial sector.

I dare you to ignore the fact that our government has guaranteed our banking sector using the promise of your future earnings as collateral, and that Moody’s ratings agency has put our government on notice that our banks are Too Big To Fail – just like in the USA, UK, and Europe:

Heavens to Betsy.  It’s finally out in the open. The big four are too big to fail and Moody’s rates the Australian government’s implicit guarantee of the banks’ wholesale debt (as well as the explicit deposit guarantee) as worth two ratings notches. Moreover, by phrasing it this way, Moody’s has essentially put the Australian government on notice that if it dares back away from that guarantee then it can count on the result. The further implication is that the Budget had better remain shipshape to provide the guarantee.

I dare you to ignore the fact that the government’s carbon pricing scheme scam includes a new “independent” Clean Energy Finance Corporation (carbon bank) that will be permitted to borrow against future government revenue – your future tax dollars – in order to invest in “green” energy projects:

The Clean Energy Council will today release a discussion paper proposing the carbon bank, which it says could be allowed to borrow money to invest in renewable energy projects against the future revenue of Labor’s proposed carbon tax and emissions trading scheme.

…

The Gillard government is examining the creation of a multi-billion-dollar carbon bank to drive renewable energy technologies as the Greens demand “complementary measures” to cut emissions in return for accepting a lower starting price for the carbon tax.

…

6.2.1 The Clean Energy Finance Corporation

The $10 billion Clean Energy Finance Corporation will invest in businesses seeking funds to get innovative clean energy proposals and technologies off the ground. These Government-backed investments will deliver the financial capital needed to transform our economy.

…

A variety of funding tools will be used to support projects, including loans on commercial or concessional terms and equity investments.

…

The Corporation will be independent from the Government. The Government will appoint an independent Chair who will have appropriate banking or investment management experience.

I dare you to ignore international banking’s core philosophy, now rendered infamous by GFC1: “Privatise the profits … socialise the losses”.

I dare you to ignore the fact that another sharemarket collapse – like in 2008 – would be a perfect pretext for nanny-state, “Big Brother knows best” governments everywhere to step in and “safeguard your retirement”, by taking and “investing” your super in Government-approved “safe investments” … just like the US Government’s planned, doublespeak-titled “Guaranteed Retirement Accounts”.

I dare you to ignore the fact that this blog has documented in detail the wave of super confiscations that is already rolling around the Western world, and the clear evidence that both sides of Australian politics already have their own quiet, sneaky plans to do the same.

I dare you to not bother reading any of my many articles on this topic –

No Super For You!!

US Treasury “Borrowing” Of Federal Pensions Brings Theft Of Private Pensions One Step Closer

Now The UK Government Is Stealing Super Too

Fresh Evidence Our Banks In “Race To The Bottom” Means You Can Kiss Your Super Goodbye

Fitch Ratings: Australian Banks Most Vulnerable To Europe’s Debt Crisis

Our Banks Racing Towards A “Bigger Armageddon”

Money Morning Agrees – Your Retirement Savings Under Threat

The Pricing Carbon Choir – Why Should *Any* Sane Person Trust Economists After The GFC?

Why Would Any Sane Person Believe Treasury’s Carbon Tax Modelling When Its Budget Forecasting Record Is This Bad?

How Wayne ‘Franked’ Another $20 Billion

Wayne: OOPS! I Did It Again

Liberal Party’s Sneaky Plan To Steal Your Super To Pay Labor’s Debt

Dear reader …

I dare you to ignore, mock, and ridicule Barnaby Joyce’s warnings … again.

I dare you to bend over … grab your ankles … bury your head in the sand … and keep telling yourself that “She’ll be right mate”.

I dare you to ignore the fact that …

Barnaby is right.

* A hearty “Thank You” to the inimitable Zeg for his brilliant cartoon drawn especially for this post, and at very short notice.

Please follow him on Twitter – @Zegcartoonist and subscribe to his blog – http://zegsyd.blogspot.com/

Better still … hire him!

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US Treasury “Borrowing” Of Federal Pensions Brings Theft Of Private Pensions One Step Closer

25 Jun

Regular readers will know that this blog has been closely following the wave of government confiscations of private citizens’ retirement savings that is quietly rolling around the world.

It is a wave that is already silently lapping at our shores, with both major parties having released policies that sneakily move towards taking our super, to pay down government debt.

If you’ve missed any of these posts, you can catch up with the following –

“No Super For You!!”

“Why They Are Planning To Steal Our Super, Explained In 4 Simple Charts”

(There are multiple links to previous posts at the end of the 2nd link above)

One of the interesting features of this wave of super thefts, is the different methods used in different countries.  In some, private retirement savings have simply been “nationalised”.  In others, the government has started with a “softly softly” approach, by “borrowing” the retirement savings of government employees first.

In the following article from The Examiner (USA), we find the opinion expressed that the US Treasury’s recent “borrowing” of federal workers pension funds is simply a first move. And that confiscations of non-federal workers pension funds – called “401K plans” in the USA – is now one step closer (emphasis added):

This step in pulling from government held retirement funds is once again bringing up the potential for the Obama administration to seek acquisition of the public’s 401K’s to help pay for spending and debt.

On May 16th, the Obama administration agreed to tap into federal retirement programs to help fund programs and agencies that would otherwise be funded through borrowing before the debt ceiling was reached.

The use of retirement and pension funds as the first resort of the government to pay for programs, debt obligations, and even ongoing military operations is a large warning signal to the American people regarding a huge and untapped resource that up until now, the government has refrained from exploiting.  The amount of money stored in corporate retirement funds, federal retirements, and market based 401K’s amount to several trillion dollars that unlike Social Security, which it is collateralized by IOU’s, this is real money that the government has already sought to acquire in budgetary discussions.

The plan, as sketched in the 43-page document, calls for the creation of something called  “Guaranteed Retirement Accounts” (GRAs). Biden slyly shifts the onus for the idea through weasel words typical of the federal government: “Some have suggested the creation of Guaranteed Retirement Accounts (GRAs), which would give workers a simple way to invest a portion of their retirement savings in an account that was free of inflation and market risk, and in some versions under discussion, would guarantee a specified real return above the rate of inflation.”

These accounts would be “free of inflation and market risk” because they would be under the direct and absolute control of the federal bureaucracy. There would be no risk because the funds would no longer be moored to the free market and subject to the fluctuations thereof. Rather, the retirement funds of every hard-working American dependent on a 401(k) for their retirement security would be nationalized and made subject to the whims and will of the executive branch. – New American (May 2010)

The track record of the Federal government towards retirement accounts is not very good.  Over $3 Trillion dollars has been removed from the Social Security trust, and spent by the government under general budget spending.  The money that was taken out of Americans paychecks each month to be used for retirement was instead replaced by Treasuries that are now on the brink of default.  With the Treasury Departments use of Federal pension funds now to pay for budgetary obligations because the government can no longer borrow money, the next viable step is the acquisition of private retirements and 401K’s.

And as noted from the 43-page document already created last year, this is not a plan regarded as a contingency, but instead as one that is intended to be implemented in the future.

The US government has failed in its opportunities over the past decade to cut spending, and slow down on its debt borrowing.  Now that the rubicon has been crossed regarding the debt ceiling, and the Treasury Department accessing federal retirement funds to pay for general obligations, how soon before the government has no choice but to access the trillions of dollars available in the market, and give the American people another ‘promise’ that they can take care of your money and retirement future.

In Australia, our two major parties have also begun planning for the theft of our super, but in slightly – and slyly – different ways.

The Labor Party has first announced (in the recent May budget) new legislation intended to “encourage” super fund managers to “invest” your super in government “infrastructure programs”.

The Liberal Party has taken a different tack. On June 3, they quietly announced a new policy – sneakily dressed up as a “helpful” business “reform” – that aims to have employers send their workers’ Compulsory Superannuation payments directly to the ATO, rather than directly to your super fund.  It would then be up to the ATO to pass on your super to your fund manager (!?!).

If you are unwilling to see the danger that lurks so thinly-veiled behind these “positive” and “helpful” policies, then consider this.

Senator Barnaby Joyce has directly warned at least twice this year, that the government plans to steal our super to pay down debt. And exactly like America, he has indicated that they intend to start with public servants’ superannuation set aside in the Future Fund:

In response to a question I put in Senate estimates, Treasury revealed that $64 billion of the difference between our gross debt and our net debt is made up of the cash and non-equity investments of the Future Fund. The Future Fund is there to cover the otherwise unfunded costs of public servants’ superannuation.

That is a little fact that the people of Canberra might be interested in. When Wayne mentions net debt translate that to, I am going to pay his debt off with my retirement savings.

Straight after the May budget, Barnaby spelled out his warning even more clearly:

On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.

Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.

The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.

Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt.

Stealing public servants’ superannuation in the Future Fund will only be the beginning. We can be sure of this, simply by looking at what is happening abroad. And by carefully examining the implications of the policies – quietly released, without fanfare – of our own politicians.

Barnaby is right.

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Future Fund Boss’ Debt Warning: Barnaby Is Right

21 Jun

From The Australian:

Future Fund chairman David Murray has urged governments to heed the lessons of the European and US sovereign debt crises as growing state and federal borrowing pushes their financial liabilities past half a trillion dollars in the new financial year.

Analysis by The Australian finds the states are forecasting their net-debt levels will surge from almost $102 billion this year to $135bn next year to help fund upgrades to rundown electricity, water and other infrastructure.

This will help push their net financial liabilities – a figure that includes liabilities for pension benefit schemes – to a record $285bn next year.

On top of this, the federal government’s net debt levels will rise from $82bn this year to $107bn next year – largely to fund the budget deficit – helping to drive their liabilities from $200bn to $227bn.

The surge in debt prompted Mr Murray to warn that this could force the private sector to compete for funds as the resources sector booms.

All of which is exactly what Barnaby Joyce warned of 18 months ago, and repeatedly since.

It’s also worth noting that this is the boss – though not for much longer – of the Future Fund.

Barnaby Joyce has warned at least twice this year, that the government plans to steal our super to pay down debt – starting with public servants’ superannuation in the Future Fund:

In response to a question I put in Senate estimates, Treasury revealed that $64 billion of the difference between our gross debt and our net debt is made up of the cash and non-equity investments of the Future Fund. The Future Fund is there to cover the otherwise unfunded costs of public servants’ superannuation.

That is a little fact that the people of Canberra might be interested in. When Wayne mentions net debt translate that to, I am going to pay his debt off with my retirement savings.

And more recently, straight after the May budget, Barnaby spelled out his warning even more clearly:

On Tuesday night’s budget, Labor sneaked in an Amendment of the Commonwealth Inscribed Stock Act 1911. Here is the most telling statement for where our nation is going under this Green-Labor-Independent Alliance. Under Part 5 Section 18 subsection 1 “omitting ‘$75’ and substituting ‘250’ ”.

Now that is in billions ladies and gentlemen and it is real money that really has to be paid back. If we have all this money stashed away under the lower net debt figure that is always quoted by Labor, then why not use some of this mystery money to pay off what we owe to the Chinese and others who we are hocked up to the eyeballs to.

The reason why we can’t is at least $70 billion that makes up ‘net’ debt is tied up in the Future Fund and student loans.

Of course, the public servants will not be happy when we use their retirement savings, put aside in the Future Fund, to pay off some of Labor’s massive debt.

Pinching public servants’ superannuation will only be the beginning. We know this simply by looking at what is happening abroad.

Learn all about the wave of government confiscations of private superannuation savings that is quietly sweeping the Western world, and how both major parties in Australia already have policies to do the same, in “No Super For You!!”.

Barnaby is right.

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