The Gaming Den

cthulhu wrote:You know you can use your super money to invest in whatever you feel like?

I've already pointed out how massively, and publicly unsuccessful self managed super has been, right?

Not to mention the losses made basically across the board by the private system.

Not to mention the losses made by certain large swathes of "choices" within the private system.

You know how I would like to invest my super. IN THE FUCKING GOVERNMENT. I don't get the choice to make our schools and hospitals and roads better, I get the choice to hand my money to one of a large range of corporate aristocrats who may or may not manage it well, steal it, or just go bankrupt, NONE of them will contribute to society with it.

Or I can try and juggle it in my own sweaty hands during a period of massive economic chaos!

Yeah "choice".

cthulhu wrote: The share market makes 6% roughly p/a over a 40 horizon.

That is irrelevant. Because you don't get to take your Super out at a market high. You take it when you retire. And the market fluctuates. A lot.

So 6% p/a huh?...
"For the 12 months to January 31, 2009 the median balanced fund lost 17.7 per cent, with the median Australian shares fund losing 30.7 per cent and the median property fund down 30.4 per cent."

Oops!

"So far during 2008/09 balanced option funds have lost 15.1 per cent of their value...Only a major financial miracle can prevent Australians from suffering their second consecutive negative financial year return this year"

So that's what? 5-6 years of negative growth there... wouldn't want to be retiring now, unless It was the choice between retiring now and retiring after another 2-5 years of this (which is not exactly beyond some predictions on the economic crisis).

Heck any young sucker who started super within the last 5 or less years now probably has less money than they invested!

cthulhu wrote:The Australian pension is living on the poverty line and needs to be either supplemented with

A) Massive private savings (Super)

B) Massive increases in income tax

Draco_Argentum wrote:But now the tax rate is lower, how awesome is that. Everyone likes less tax. That super deduction, totally not tax with a different name.

I suspect enough people buy that to make it electable.

Proof that another one is born every minute.

Finally, the government cuddles us all plan has been discredited. The US social security system is essentially the system you advocate and it is.. stupid.

It certainly isn't the plan I advocate, but neither is it stupid. It happens to be entirely solvent despite the exact same spurious line of attack you are making. Indeed if Bush and co had succeeded in putting that money into the market like they wanted to it would currently be insolvent!

It is arguably one of the most popular and successful of all US domestic policies, so I'm not sure where your line of attack on that is supposed to be?

PhoneLobster wrote:

cthulhu wrote:You know you can use your super money to invest in whatever you feel like?

I've already pointed out how massively, and publicly unsuccessful self managed super has been, right?

Actually its the fastest growing sector in the industry.. so no I don't.

You know how I would like to invest my super. IN THE FUCKING GOVERNMENT. I don't get the choice to make our schools and hospitals and roads better, I get the choice to hand my money to one of a large range of corporate aristocrats who may or may not manage it well, steal it, or just go bankrupt, NONE of them will contribute to society with it.

Isn't this just buying government bonds? You could start a SMSF and just buy state government bonds, which they'll then spend on schools and shit. Its not even hard.

That is irrelevant. Because you don't get to take your Super out at a market high. You take it when you retire. And the market fluctuates. A lot.

Oh I know - but you don;t take it all out when you retire either. Instead, you can take a lump sum, and you can also draw down on it over time. Clearly if the market is tanking, you don't take the lump sum until later. On average you've got what? 20 years? That is a very long period of time.

Heck any young sucker who started super within the last 5 or less years now probably has less money than they invested!

Actually, despite this being me to a T (well not quite, I had some from working at a super market when I was at school), I've more than doubled my money due to the government co-contributions thing for low income earners, and my industry super fund being a top performer, which has limited my losses.

It certainly isn't the plan I advocate, but neither is it stupid. It happens to be entirely solvent despite the exact same spurious line of attack you are making. Indeed if Bush and co had succeeded in putting that money into the market like they wanted to it would currently be insolvent!

It is arguably one of the most popular and successful of all US domestic policies, so I'm not sure where your line of attack on that is supposed to be?

Did I say it was insolvent? No - I just said it was stupid. Consider that the government has an investment horizon of infinity: But they hold government bonds? That earn less than inflation. Why not hold equities? Like, incidentally, the Australian government future fund.

As I pointed out before: If you want to do this with your super scheme you can, just buy Oz Government (state and Federal) bonds and nothing else.

I'm not even sure what your point is? The Australian government will let you do exactly what you want: invest in the government

Exactly what I want: Invest in equities

Exactly what others want: invest in property

and it provides a safety net if you cock it up.

cthulhu wrote:and it provides a safety net if you cock it up.

I think it is very revealing of your position that you go from one moment decrying the government pension as poverty to using it as a crutch to justify your position.

Which is it? Perfect security or a terrible fate we must avert?

And either way what the hell is the idea with diverting all pension investment away from it to prevent it from becoming more adequate?

Yeah, the US system is and was a perfect solution, as it paid for the old people who were starving immediately and has kept up for the duration.

If we use the funds that have been paid forward - a regressive tax added in the 80s - SS never becomes insolvent unless no one ever dies. Even if we point out the government is in debt to the system, the government is already in debt, so it doesn't matter.

Lastly... The SS system cannot ever lose money. At no point will the government checks be not-good unless something other that would destroy all other forms of payment. And so a healthy country will always be able to pay the bills of the old people... Slowly edging the lowest age up and limiting the ability to draw from it for wealthier people.

I guess this isn't lastly: Funds are different than shares. They do by definition move their investments around while things are bad, so you can lose money in them. And Government Bonds are not really investing in infrastructure; although it provides a stronger market for them it doesn't mean the money is spent, it's mostly going to pay other people like you that the government owes. Bonds (over time) generally perform worse than Funds. However, you're much less likely to lose your share value.

The biggest problem with the Super and similar is that a percentage of people will fail to deal the monies correctly, and end up at a loss. We still have to pay for them. Which is what SS does. And when applied, the benefits of such a system aren't actually apparent for forty or more years - that's forty or more years in which you're paying into two systems.

Why create a system that doesn't protect the unfortunate, bills us twice, randomly redistributes wealth and randomly destroys it, when we have SS, which merely redistributes wealth from 'everyone' to 'the elderly poor', now?

-Crissa

Look, I'm saying that a combination of things is best (you know, a blended approach, rather than an absolute position)

The social safety net is very important! Its critical! It is the essence of our society and should never be abolished!

But it is just that: a social safety net. Its a payment of last resort to keep you in your home and on a minimum standard of living.

We have lots of these in Australia, unemployment benefits, welfare, the pension and medicare. I look forward to the introduction of medicare for dentistry because that is important.

The pension is not perfect security. My parents can afford a trip overseas every year due to their super savings. If they were on the pension (like my grand mother), they most certainly could not.

But the standard of living demanded by retirees far exceeds that provided by the social safety net. I don't know about you, but I don't want to live on the pension. It doesn't meet my lifestyle expectations: and it doesn't meet the lifestyle expectations of almost all Australians.

So its important we save money to reach our higher lifestyle objectives: And because of the change in dependent ratios, this has to actually be set aside as cash held by someone for peoples futures. It cannot be taxed from the future population because that will be oppressive if it is to meet lifestyle expectations.

So given that, we need to force people (because they are poor planners) to set aside money now for the future (to reduce the pension burden). As you rightfully point out this can either be done by:

A) The government holding money ala US social security.

B) Trust funds (i.e. super funds, or IRAs or whatever) holding the money on behalf of the individual.

Really, either can work, but I prefer B, as in its implementation, it allows you much greater flexibility to tailor your contributions to meet your outcomes.

The US implementatin is poor for a number of reasons: for example, it is a regressive rather than a progressive tax.

Super is effectively a regressive tax because as your wealth increases you tend to get more money from investments that don't require a contribution, but at least it is better. Also, I have ability to control my investments to match my risk profile and my appetite.

So I am strongly in favour of B, given all the evidence. But you still need the safety net!

cthulhu wrote:The US implementatin is poor for a number of reasons: for example, it is a regressive rather than a progressive tax.

So you prefer a more regressive system?

Anyhow, it is regressive because we have 1/3rd of Americans who prefer a regressive system.

-Crissa

PS, the government doesn't hold money in the SS system. Except for population booms - which are dealt with by holding some hedging monies, like the tax added in the 80s - the money goes directly to those who are elderly and poor. And John McCain.

And what's with this "two strategies for retirement" thing you've got going?

I mean social safety net and Super?

It's already been pointed out super is just like tax and pension.

And if it isn't like that then it's just like, you know, just plain having a lot of investments and monies when you retire anyway.

It performs NO functional role at all that isn't performed by the most basic concepts of taxation, welfare and private wealth already.

It encourages people to use a portion of their wealth to be wealthy later instead of now, PL. Opportunity cost.

But that's it. And guess what? We have those in the US, too. It's why the top 1% pay less than the next 39% (on average, as a percent of income).

-Crissa

PhoneLobster wrote:And what's with this "two strategies for retirement" thing you've got going?

I mean social safety net and Super?

It's already been pointed out super is just like tax and pension.

And if it isn't like that then it's just like, you know, just plain having a lot of investments and monies when you retire anyway.

It performs NO functional role at all that isn't performed by the most basic concepts of taxation, welfare and private wealth already.

Super is private wealth yes: But structured to force savings.

Forcing savings is very important because it removes the pressure on the social safety net: If I have lots of money for retirement, I don't qualify for the pension, so the government doesn't have to pay it, which means that the change in the dependants ratio isn't as bad for the government spending regime, allowing more money to be spend on schools.

Also, super reflects your earnings enabling your lifestyle in retirement. The Australian Fixed pension doesn't allow this as it is a very low number. This is different from the social security model which adjusts your payouts to reflect your contribution.

I don't like linking payouts to contributions ala social security for a number of reasons, mostly because it results in the poor (who are most likely to need the safety net), getting sub poverty line outcomes.

The minimum standard + payouts linked to contributions (super), works much better.

Now, you could change superannuation so the government ran a single government managed super pool - like the Australian Future Fund, which is the fund ran to meet the obligations of APS employees on legacy employment contracts and the military.

And that is fine you know, but really it isn;t materially different from what we have now (they buy shares on the stock exchange etc), and why have the government make a single inflexible offering, when it can just let you allocate the money as you see fit, allowing you to select your own risk profile etc.

the key elements of super are

A) Forced savings

B) A highly advantageous taxation regime to encourage more savings than the minimum amount

B) Investor choice about the investments made.

Social security offers only A), and requires supplementation by B and C.

Incidentally, I think the goals of super/IRAs/Social security or whatever are:

1) Providing a social safety net for the poor and disadvantaged

2) reducing the impact on society of changes in the dependent ratio

PhoneLobster wrote: It performs NO functional role at all that isn't performed by the most basic concepts of taxation, welfare and private wealth already.

OK PL I think I kind of missed your point, you're saying that if we just took the tax savings being given out to super contributions and actually put it in the government security scheme, than we'd have a more robust government social security scheme that would give all retirees a better standard of living without necessarily needing supplementary investments.

I'll concede that (if it is indeed your point).

Your points on investment loss I disagree with. People near retirement should be out of risky assets several years before retirement to avoid getting kicked in the nuts when hitting retirement. For the rest of us, assuming we will see a recovery and this is not the end of capitalism, this is in fact our greatest chance at asset value growth. I don't know about you but I'm looking where to invest right now.

ckafrica wrote:
you're saying that if we just took the tax savings being given out to super contributions and actually put it in the government security scheme, than we'd have a more robust government social security scheme that would give all retirees a better standard of living without necessarily needing supplementary investments.

I'll concede that (if it is indeed your point).

I'm not sure this point is worth conceeding: If you just bundle the money into the government and pay out by contribution: Say like the Australian Future Fund does right now, how is the social security scheme more robust?

How is it even different, except you don't get to control your investment like at all.

If you're actually proposing cutting out super and instead increasing income taxes, and then paying out a flat pension to everyone else, I'm moving to new zealand.

My capability to save would be massively reduced (by 18% p.a, I lose super and then pay 9% income tax), and because I'm a young middle income earner, I'd have to pay more tax later (due to a shift in the dependants ratio), and I'd have a lower lifestyle in retirement.

Crissa wrote:It encourages people to use a portion of their wealth to be wealthy later instead of now, PL. Opportunity cost.

Except that taxation and government pension does that already.

The angle presented by Cthulhu was that it was an additional option (part of John Howard's "Choice" bait and switch propaganda) An option to effectively have more wealth.

If its forced it isn't an option and is a less stable and less productive form of tax/pension plan.

If it isn't forced it's the same as optional private investment.

Like I said, Super is superfluous.

ckafrica wrote:I'll concede that (if it is indeed your point).

Not just the tax savings. You have a tax-by-another-name in the form of employee and employer compulsory super contributions that could be called a tax and used like one. Right now it is a tax and all the revenue is literally given to inbred corporate aristocrats to toy with.

Cthulhu wrote:If you're actually proposing cutting out super and instead increasing income taxes, and then paying out a flat pension to everyone else, I'm moving to new zealand.

Hope you like Ann Rand because it will just be you and her. Your empty Atlas Shrugged threat is not a point in your favour, even (perhaps especially) if it isn't empty.

For the rest of us, assuming we will see a recovery and this is not the end of capitalism, this is in fact our greatest chance at asset value growth. I don't know about you but I'm looking where to invest right now.

It is far too soon. See the word on the street among the economists who AREN'T in the "NO ONE COULD HAVE IMAGINED!" crowd and knew this was coming... It's going to get worse and last longer.

PhoneLobster wrote:
If it isn't forced it's the same as optional private investment.

What the fuck is the difference between the government taking 9% and investing it in the share market, and the government forcing me to take 9% and invest it in the equities or securities of my choice?

Except that A is entirely worse than B because I have no control over my investment portfolio.

Not just the tax savings. You have a tax-by-another-name in the form of employee and employer compulsory super contributions that could be called a tax and used like one. Right now it is a tax and all the revenue is literally given to inbred corporate aristocrats to toy with.

This is moronic, or you are in willful denial of reality. We have exactly the system you propose in action right now. And guess what - what do you think the government does with the mandatory super contributions it collects from government APS employees under legacy federal contracts and the military right now?

Clue: It takes it, then hires 3rd party investment advisers to invest it in the equity market, exactly like you would if they just gave it to you directly. The government is just a waste of time in this transaction. It adds no value at all.

Now if you want a radical change from the hybrid model we or the US have (the one you just finished holding up as a success), thats a different debate.

cthulhu wrote:It takes it, then hires 3rd party investment advisers to invest it in the equity market, exactly like you would if they just gave it to you directly.

I see the cunning "If it isn't working try more of the same!" argument favoured by all privatisation loot the public pocket types.

BECAUSE your anti government movement has already demand what amounts to a partial privatisation it therefore justifies MORE privatisation!

There is no talking with you pro privatisation types, you live in a different world where being richer is its own justification for having better services like healthcare and where every privatisation ever hasn't been at massive cost and inconvenience to the public. Go read up on Super over here or something and get with the reality crowd.

And lets be clear my opinions on the effects of this economic crisis on super, Ie causing real losses for real people (a crisis engineered by the same group of geniuses that are holding onto our Super funds) You may say its crazy, but it's an opinion shared by various obscure amateurs...

My Buddy Kevin the apparent leading Australian professional Moron according to some wrote:"... Let's be absolutely clear about it. What is happening in the global economy and what people see daily on their television screens and the impact on stockmarkets affects people's superannuation earnings, it really does. "It hits the bottom line and it's bad, it's really bad. Let's not mince words about it.

PhoneLobster wrote:

cthulhu wrote:It takes it, then hires 3rd party investment advisers to invest it in the equity market, exactly like you would if they just gave it to you directly.

I see the cunning "If it isn't working try more of the same!" argument favoured by all privatisation loot the public pocket types.

BECAUSE your anti government movement has already demand what amounts to a partial privatisation it therefore justifies MORE privatisation!

What? How is it privatized if the government is hiring in the skills: Seriously, if the government just paid investment bankers directly and called them public servants, it would still be exactly the same thing.

Its a market, you need skills, you pay dollars X. The guys who can run the governments super fund have a range of career options, so you have to remunerate them appropriately to retain key skills. Aslo the government needs to obtain or create IP, investment research, etc.

No matter how you slice it the government needs those skills, and its totally irrelevant if they

A) Hire some firm to provide them

B) Hire all the people individually to provide them.

Where the goods can be productised, such as research, it is actually more expensive to do it in house, as the government is seriously careful about competing with the private sector and thus won;t act as a reseller - because sometimes it does and destories legitimate business by operating at a loss, due to poor internal accounting controls.

Also: Yeah, super has lost money. I'm not sure what your point is. Either the government has to accept risk, in which case the same thing would have happened to it regardless, or it has to refuse risk and thus charge a lot more for the same level of benefit.

Seriously, did you read Ian Henry's speech to the DMO about government and risk?

You should.

cthulhu wrote:No matter how you slice it the government needs those skills, and its totally irrelevant if they

A) Hire some firm to provide them

B) Hire all the people individually to provide them.

You... don't even understand what privatisation is do you?

I mean you don't understand the difference between a public servant and a profit motivated corporation... I don't think you even live in fairy land. I think where-ever you live humans can't physically pronounce the name.

Seriously you are very short sited about how government and business can co-exist for mutual benefit.

Yes, the corporation wants to make a profit: But seriously, professional services firms don't grow by being parasites on the host businesses! If they added no value, people would get rid of them. You can hire your own lawyers/bankers/management consultants/IT professionals.

Why do people hire external law firms, despite the law firms profit motives vs being direct employees of your business or the government?

Because the professional services firms function as unique repositories of knowledge that can be productised and sold onto clients. Consider why the government pays for first year lawyers. Its not because they want the skills of the lawyer: they want access to the knowledge the firms hold and make available to them.

in turn, the firms benefit from economies of scale, gathering that knowledge is expensive, and by making it availible across many businesses and the government, they can offer the service to them cheaper than they can do it themselves, while also making a profit.

This is why the government outsources technology functions within departments, or employs contractors.

In my view, employing contractors isn't privatisation, that is entirely selling an asset or function to the private sector.

Plus, as I live in canberra, and have spent my entire life working with the government, I can tell you they are incapable of actually delivering, because the public service culture is so bad. Seriously, read Ian Henry's speech. If the government is unwilling to take risk to save itself 4 billion dollars(!) how can it function as an investment advisory firm!

Look, there's no reason for the government to be in the business of investing.

I'm not sure the purpose of these Funds as a government good. They don't perform better over the longest periods that the government cares about, or than the very short term money-to-the-poor.

So why are they involved?

-Crissa

cthulhu wrote:But seriously, professional services firms don't grow by being parasites on the host businesses!

If I asked you for directions to Fairy Land from where you are at could you even give them?

cthulhu wrote:Plus, as I live in canberra, and have spent my entire life working with the government, I can tell you they are incapable of actually delivering, because the public service culture is so bad. Seriously, read Ian Henry's speech. If the government is unwilling to take risk to save itself 4 billion dollars(!) how can it function as an investment advisory firm!

I see so you personally ARE an outsourced "public private partnership" parasite on the public purse.

Vested Interest explains your fantasy world and your foaming fantasy defence of it.

I wouldn't be surprised if you somehow pocket a share of the profits from the super scam directly.

hahahaha.

No actually, I quit the public service and joined the private sector because the culture is vile. But don't take my word for it: Check out the public service saying that about itself. Seriously, check out the APSC: The report is 'fostering an attendance culture'

Which is hilarious for two reasons:

1) What a bad name for a report: Why not fostering a performance culture or something

2) They cannot get people to turn up! Why? Two reasons cited in the report: A entitlement culture on the part of public servants, and a lack of performance management rigor.

Seriously, the APS is the parasite by its own admission, the private sector can be (effectively used), much more effective in saving the government money, for a small upfront fee. I've personally experinced this situation:

Government screws about for 9 months with a team of 6-7 and does nothing. Our crack team of commandos (5) come in on a poorly scoped project, and do everything they were supposed to have done in 9 months and then a entirely new piece of work in 3 months. Then, we propose the onsell (profit motive ahoy), the implementation piece. It was supposed to take 6 months if we did it (and it would have). 8 months later, have they implemented? Fuck no. Estimated savings per annum, 40-60m. Why not pay us 2 million to save the government 300 million over 5 years, when it is pretty evidence that left to the locals they won't save anything.

Have you read Ian Henrys speech yet? Have you heard how the government forwent 4 billion dollars in investment profits because it was unwilling to take a risk, and that they nearly fired one of the top performing public servants over a scheme that saved them 800 million dollars?

Seriously, the reward for saving the government 800 million was almost getting fired, and you think I am the parasite.

hahahahahahahahahhahahahahahahahhhahaha. I love it! I can cite reports from the APS showing how the APS has a poor culture and poor performance management, and I'm the leech, what with us working our tails off for the public service to cover for their bad scoping, and having a great culture (award winning and internationally recongised) and striving to deliver excellence to the public service at every turn.

Awesome.

Also: Fuck that. The APS is in dire need of reform. It needs performance management, it needs the pay bands restructured to make the upper echelons more appealing, it needs to have its culture changed so it is willing to accept risk to more effectively serve the public, it needs a culture of responsibility, rather than paying tens of millions of dollars to legal firms for work that it can conduct internally just to cover the backside of public servants.

It is not a dynamic, performance focused workforce. It needs to be.

Yeah, government sucks, can't do anything, it's done nothing but hold humanity back, only private enterprise ever performed the charitable act of building and maintaining society and...

Oh no wait, that's how it is in FAIRY LAND.

Have you read the report, or Ian Henrys speech?

I'm providing evidence based assertions from the Australian Public Service Commission - the government agency which has oversight of the Australian Public Service's Human Capital, and the Treasury Secretary, and you think I am the one making things up? I've presented facts!

Please, support your position with evidence: I'd love a report founded in by a major Australian government agency decrying the need for professional services or engineering firms.

Sure current implementation of PPPs isn't all that hot, and needs work, but the altenatives (100% government or 100% business) are worse. Seriously, it requires a hybrid approach: Government needs to be concious of what it does very well (defining policy, providing social safety nets), and what it does very poorly (deliver projects, exhibit a risk appitete).

Seriously, the government hires construction firms to design and build roads, because the government is good at working out where the road needs to go, and bad at making that happen, so it hires outside help.

PhoneLobster wrote:Yeah, government sucks, can't do anything, it's done nothing but hold humanity back, only private enterprise ever performed the charitable act of building and maintaining society and...

Oh no wait, that's how it is in FAIRY LAND.

I love how you grossly misrepresent my opinion in every post. Remember when I said that government social safety nets, and the medicare scheme are vital, critical, and very important? See how that contradicts the straw man position you are attributing to me?

No wait, you probably don't as I don't think facts, reason or logic enter into any of your posts. At all.

cthulhu wrote:Seriously, the government hires construction firms to design and build roads, because the government is good at working out where the road needs to go, and bad at making that happen, so it hires outside help.

This further indicates you know nothing about anything.

Governments can build roads, and PPPs are historical atrocious at building roads. How many privatised road debacles do you fucking need in this very country?

Like I said, you live somewhere five doors down from Fairy Land.

So you don't think the Government hires GHD to build roads? Man, do I have some news for you.

It doesn't do it as private/public partnerships, it just puts out a tender, construction firms tender, and then they build the road.

For example, I overlook a massive construction site of road building from my office: The work is paid for by the ACT government, but it is currently being performed by a construction firm - Connell Wagner

Check out the list of tenders let on www.tenders.gov.au or any of the state government sites

For example

Coffs harbour highway planning : Sapphire to Woolgooga section : submissions report / Connell Wagner [for Roads and Traffic Authority]

http://catalogue.nla.gov.au/Record/4494432

Look at that, Connell Wagner.

Private sector firm

Snore.

Designed Eastlink too.

How about the princes highway upgrades you say? No, no

The project, originally between Forest Road at South Nowra and Falls Road at Falls Creek, was jointly funded by the Australian and NSW governments. In 2008 additional State funds were allocated to the project and the section between Falls Road and Jervis Bay Road was included in the current work.
In February 2007, the contract to construct the project was awarded to Reed Constructions Australia. The RTA also engaged Professional Engineering Services Pty Ltd to manage the construction contract.

More private sector firms.

But I look forward to you providing evidence of a major road construction project that was not delivered by a major private sector construction company, because I'm sure you have a multitude of examples - as I know nothing, and live in fairy land.

This further indicates you know nothing about anything.

Governments can build roads, and PPPs are historical atrocious at building roads. How many privatised road debacles do you fucking need in this very country?

Like I said, you live somewhere five doors down from Fairy Land.

Okay, so in light of the evidence, in which the government doesn't build any major roads at all, I think you are completely wrong.