Terry McCrann: Labor and Libs’ unity ticket on Australia’s greatest ever rort — compulsory super

The billions of dollars that super fund managers of money rip off Australians every year utterly dwarfs the excesses exposed in the banking royal commission, writes Terry McCrann

THE biggest rort in Australia is compulsory superannuation. The billions of dollars that the managers of money rip off millions of Australians every year utterly dwarfs the excesses exposed in the banking royal commission.

Outrageously, both the government and the opposition are running a unity ticket to ratchet up the rort, by mandating that even more of your money must — compulsorily, by law; and if you don’t like it: tough — be handed over every year.

Labor wants to send more money to the union-dominated industry super funds — which will create yet even lucrative feather-bedded jobs for ex-Labor pollies who lose their seats in federal or state elections.

COMPULSORY SUPER IS AUSTRALIA’S BIGGEST RORT

WORLEY PARSONS’ DIRECTORS RESPONSIBLE FOR VALUE CRASH

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The Coalition wants to send more money into the hands of the corporate and retail ‘for-profit’ (especially for their managers) super funds.

The money is your money, on two levels. It’s first, what could otherwise come directly to you in wages and salary. But it’s also the cost in higher taxes from the tax concessions handed out both on the money flowing into the funds and then on their income.

Labor wants to add a vicious little twist to this, by ending the refunding of so-called excess franking credits. This will mostly hit self-funded retirees and direct investors. But super funds and especially industry super funds should be able to sidestep it and keep the money, your money.

The whole justification for compulsory superannuation was that over a lifetime it would build up balances so that most people would not have to go on the Age Pension and would actually end up with a better retirement than if they did.

That’s to say it would be a clear win-win. It would end up saving taxpayer money — the pension savings would be greater than the tax benefits; and yet retirees would be better off.

Well, after nearly 30 years, it’s now blindingly clear that is not going to happen. It’s not going to happen with the 9.5 per cent of wage/salary that goes into super now; and it still won’t happen if that’s bumped up to 12 per cent.

The retirement balances will still be insufficient; most retirees will cash some or all of theirs, sufficient to get them on to a full or part pension.

The only absolute winners along the way would be the super funds and their managers, as they got to take their slice of the extra money flowing into the near-$3 trillion pot of super money.

The far Left-wing Grattan institute got it half-right in pinging the rort. But it got it even more ludicrously wrong in claiming people would retire wealthy with the 9.5 per cent.

 

DAR BLINKS AND WP LEAPS

THE Lebanese-Saudi-Dubai Dar group blinked — and the ‘smartest guys’ in various investment back rooms in Melbourne and Sydney have breathed some huge, literally multimillion-dollar in aggregate, sighs of relief.

As the horses lined up for the Cup on Tuesday, the various big investors who had taken a very big punt on the mammoth $2.9 billion Worley Parsons share issue were looking down the barrel at huge losses.

They faced the prospect of having to pay $15.56 for a stack of new WP shares that were trading in the market at just $14.07. The immediate loss added to potentially more than $100 million.

Further, that would come on top of what they were already losing on the new shares they had already bought a week ago at $15.56. All Dar had to do was sit on its hands.

The potential losers were the sub-underwriters of the WP issue — institutional investors who had guaranteed to subscribe for any shares in the WP issue not taken up by retail holders by the close of business on Wednesday.

Unusually, indeed uniquely, the single biggest ‘retail’ holder was the Dar group, which had already subscribed for $185 million of the new shares in the $1.8 billion insto component of the WP issue. But it was up for another $476 million in the retailpart — almost half the total remaining.

It faced its own form of punt. Would it put its hand up to take the shares and so maintain its 23 per cent stake in WP? And relieve the obligation on the sub-underwriters?

Or would it pass and allow itself to be watered down to around 16 per cent — which arguably was precisely one of the objectives of the whole WP exercise of its company-making US acquisition, financed mostly by this share issue?

Dar would have been punting on a lot of unwanted shares sitting in the hands of the subbies — that, therefore, there wouldhave been plenty of shares available to allow it to creep back up the WP register, maybe not as cheap as $14.07, but likely considerably cheaper than the $15.56 subscription price.

Well, Dar decided to play safe: WP announced on Wednesday Dar would subscribe directly for those $476 million of shares, and the WP share price promptly leapt $1.47 to be just a whisker belowthe subscription price at $15.54.

As a consequence, sensibly and reasonably, WP is now giving retail investors until Friday close of business to subscribe.

But WP must also disclose on Thursday whether any commitments or assurances were made to Dar to persuade it to tip in the extra$476 million. Both ASX and ASIC should ask the relevant questions to keep holders and the market fully and timely informed.

Further, anyone selling around the $14 mark on Wednesday morning — and indeed as low as $13.87 — before the WP announcement at 11.39am would not be happy. WP must also explain why the statement was not made before trading opened.