Posts by Gareth Ward
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George - his point there is that we are taking the same response to a crisis they did. The causation of that crisis is very different. And in a discussion about stockmarket returns, the causation of the crisis is very important.
Although, certainly, we could end up with a "lost decade" on our stock exchanges. But the underlying causes wouldn't be the same as Japan's
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A few points Matthew:
- I'm no partisan hack of any flavour. My vote record is a freakin rainbow
- I'm not referring to Labour's "changes in entitlements" statements (in fact, I think I've erred on the side of "everything else staying as it is")
- I certainly acknowledge that the Fund is only a small percentage of the total Super bill. Arguments still hold though.
- The difference is about $1.75b a year in contributions back from the Super Fund in 2030, based on Treasury's graphs in the analysis paper.
- From 2020, net super expenditure will be higher under this model than the Pre-Budget one
- Keith has handled the rest of the absolute numbers
- Calling my statement absolutely insane, and then accusing me of extreme language is... poetic? :> -
Absolutely insane? No, it's not. I'm not advocating it, but it's certainly not absolutely insane. You are still clinging to this "it's about making money" mentality when it isn't. The primary purpose is to SMOOTH the cost of superannuation because Governments (and rating agencies) prefer stability and cost control. The fund is an adjunct of that, one which should be run at least cost.
The household analogy is STILL rubbish, no matter how you want to angle it (as Keith ably demonstrated). The Govt is faced with MULTIPLE demands on it's funding, which it can raise through taxes or borrowing. Superannuation as a percentage of GDP is going to be much higher come 2030. Under your model, we'll have to suddenly ramp up funding to deal with it (ceterus parabus with regards to other spending and tax levels*, even putting aside the much higher projected health costs). You're advocating doing that with lump-sum debt that goes straight into operations. Under a model that puts money aside (even at zero-cost/return) the change in spending is less disruptive and in fact lowers risk because you've locked in (a degree of) funding and are not relying on unknown quantities. Governments (and rating agencies) prefer to not have rapidly increasing spending and/or debt.
I accept that my "small negative return" scenario was pushing out the boat, but it was simply to prove the point. It is based around the fact that there is a cost to uncertainty and rising spending and pre-funded super helps removes that cost.
*which is the only way to do it - you have to presume Government spending and tax levels stay the same (because they are outside scope). And you can't invent either improved/declined tax bases or economic shocks that go either way because they are equally outside scope and equally presumptious. I note all your assumptions are conveniently upside for your scenario (growth of the tax base etc) -
If by coincidence, somebody in Wellington is charged with bizarre and florid sexual perversions and given the usual name suppression, there will be a tendency for people to jump to conclusions?
Well if they're anything to do with an executed canine I'm looking in your direction pal...
:>
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Russell also has an excellent energy star rating and comes in a range of colours.
Allegedly.
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I do have a bit of a range.
Indeed. All the way to God Controller apparently...
Which I presume is like the Fat Controller but with a more pronounced beard? -
The margin (6% vs 6.53%) is small because 6.53% is after tax. The estimated pre-tax rate of return is 8.65%.
And yet even if the margin was zero (post-inflation) the Fund would still be fulfilling it's duty - which is to keep aside some money for the future (and it would be negating the financial cost of any debt incurred to do so).
There's possibly even an argument for indulging a slight loss over time - if that cost would be "less significant" than the cost of having to pay a much higher percentage of spending on Super in the future. -
Sure Sacha. For it to be taken back in 15 years through much higher tax rates to pay for the inflated super bill.
You could do that but Treasury, Cullen et al decided that wasn't fiscally prudent. -
Any chance Richard Worth is the sneaky centrefold of the first issue?
Ya know, just asking... -
Not to mention shooting the dog.
I guess you chalk that up as sexual.If that's what you crazy Wellingtonistas are calling it these days...