Peter Costello (Liberal Party player, potential chairman of a combined Nine-Fairfax, and chairman of the Future Fund) believes compulsory superannuation payments should be directed away from industry super funds into a single national default fund — somewhat like the Future Fund, which handles public service superannuation funds management.
“Instead of the government arbitrating between industry funds and private funds, there is a fair argument that compulsory payments, the so-called default payments, should be allocated to a national safety net administrator, let’s call it the Super Guarantee Agency,” he said last October. “It would be a not-for-profit agency which would set up its own investment board.”
This is all very interesting in light of this week’s Future Fund results. In 2017-18, the Future Fund managed a 9.3% return on its $146 billion pool of funds, which helped deliver a three-year per annum return of 7.6%, a five-year per annum return of 10.4%, and a 10-year return of 8.7% per annum.
How does that stack up against industry super funds? The Future Fund outperformed all super funds over 10 years — the best super funds managed 7.5%, due to the impact of the financial crisis on financial markets in 2008 and 2009 which meant all super funds went backwards. At that time, the Future Fund had only just commenced and had yet to roll out its investment strategy. It thus held over 60% of its assets in cash, meaning it dodged the GFC bullet.
Over the shorter term, the results are poorer. Last year’s 9.3% return wouldn’t make it into the top 20 performing super funds, all but three of which were industry funds (the others were corporate funds). In fact industry funds, according to Chant West, averaged 10.3% — a full one point higher than the Future Fund. Over three years, similarly, the Future Fund isn’t in the top 20 and nearly a full point below the average of industry super funds. Over five years, the Future Fund would be placed sixth behind the major industry super funds, but outperformed the average industry super fund by 0.7 points.
Costello was appointed chairman in early 2014, so make of that what you will. But industry super fund members would be substantially out of pocket if they’d been put into a national fund that performed like Costello’s Future Fund. We will be watching to see if Nine employees, including future Fairfax staff, report on that underperformance.
That means Costello’s prognostications on superannuation make about as much sense as his efforts on a banking royal commission. Last year he airily waved away the need for a royal commission because there was no “schematic illegality” within banks. That’s aged about as well as the concessions you opened up for wealthy middle-aged tax dodgers, Pete.
Costello has now belatedly discovered that there really is schematic illegality in the banks. So, he has demanded to know where the regulators were. “The next step of the royal commission,” he said, “is to actually find out why the regulatory agencies weren’t awake and at the wheel.”
Darn tootin’, Pete. Those bloody regulators, eh? Who was it who set up ASIC and APRA and left financial services consumers without the protection of a real watchdog? Who moved financial services consumer regulation from the ACCC, where Alan Asher infuriated the banks by taking them to court, to a toothless and timid revamped business regulator, ASIC, in the late 1990s?
Don’t be shy, Pete. It was you. This is the house of financial regulation that Peter built and it’s collapsing at the royal commission he said wasn’t needed because of the schematic illegality he said didn’t exist.
Thank goodness this bloke isn’t in a position of real power — like head of a big media company, for instance.
Should Costello stay at the helm of the Future Fund? Write to boss@crikey.com.au and let us know.
Perhaps we should not be too hard on Pete. I have always assumed he had to persuade Howard to start the Future Fund to prevent him giving away all the surpluses. Also the FF probably does not have exactly the same objectives as a super fund so the investments and results are not entirely comparable.
On the other hand Pete always insisted the GST was a state tax and the superannuation surcharge was not a tax, so go for it.
Bet there have been plenty of constructive comments sent to boss@crikey on the question of Peter The Great; my publishable one is no; seeing him with his hand up Joshua’s back the other day was like having a taipan having a good look at you.
“Should Costello stay at the helm of the Future Fund?” . . . uummn, . . . uummn . . .
Nah, he should hand it over to super achiever, the dolt from Higgins, aka Kelly O’Dwyer.
My first thought was “And this is the guy Frydenburg went to talk with last weekend because he was such a wonderful Treasurer??” Really you could not make up this kind of craziness without your adult children conferring urgently about finding a psychiatrist for you. Costello and Howard created the attitudes of entitlement that now see this country being led to third world status by its political class.
Climate change denial, no energy policy, rampant sexism, racism and bullying all on public display in parliament, a refusal to hear the voices of Indigenous peoples, an unspeakable NBN, cruelty towards refugees, daily operating examples of the Old Mates and Donors Act (as regularly amended)… I cannot think of a single positive parliamentary achievement since June 2013.
“I cannot think of a single positive parliamentary achievement since June 2013”
What about Peter Dutton grabbing Mathias Cormann and jumping out of the parliamentary plane without a parachute last week?
That was pretty impressive.
I think totally destroying Iraq and killing approx. 600,00 is a pretty big achievement, of course, serial photo forger Howard was” a bit embarrassed”. Never did find those pesky WMDs so maybe it wasn’t much of an achievement.
Lol, Sean.
“And this is the guy Frydenburg went to talk with last weekend because he was such a wonderful Treasurer??” Just modesty. Joshie, as Julie Bishop calls him, might feel that Costello, for all his faults, was a better Treasurer than Joshie will be.
Come on mjm. You started so well. Don’t hold back. Costello was the idiot’s idiot. The luckiest treasurer oz has ever seen who wasted a great majority of his good fortune. He should be sacked as chairman of FF as soon as Labor is elected.
What good fortune that it got going after the gfc.
Historically the worlds worst Treasurer? Mr Privatise the profits, socialise the losses. No, he should not be within cooee of any public money. Get the Non Profits, Super Industry Funds as chairs as they have out performed the Privates both financial return and ethically. This is all too much for me, how much more damage to democracy are these neo-con money managers, thieves and liars, allowed. Financial Managers produce nothing but outrageous wages, for the bosses, profits for the shareholders, making much more money, from your money, than you the actual owner of the money!