Solving Swan’s $100b super liability discrepancy
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There are lies, damn lies and statistics. And in the coverage of Wayne Swan’s first budget, there were some wild disparities in the figures, none bigger than the $100 billion discrepancy between what readers of Crikey and The Australian were told. This is what I wrote yesterday:
And this is what George Megalogenis told readers of The Australian:
This page from Budget Paper No 1 shows that unfunded federal superannuation liabilities are projected to be $108.11 billion at the end of next month, rising to $112.12 billion by June 2009. If the Future Fund really is full, why does its website home page talk about having assets of only $59.6 billion. Presumably this means the unfunded component is still $48.4 billion, unless there is another $50 billion of unallocated cash sitting around. On government debt, this page from the budget reveals that there will be $49.6 billion of outstanding bonds by the end of 2008-09. I emailed Megalogenis the following yesterday but haven’t received a response yet:
The Australian followed up in its budget editorial today by repeating the Megalogenis line as follows:
Rather than super being fully funded, the liability predictions are actually getting worse. This is what the last three budgets have said about the size of the liability at the end of 2008-09:
Isn’t the real story here a blowout in super liabilities, which will require even more contributions to the Future Fund, rather than turning off the tap barely half-way to making it fully funded and instead going on a “nation building” spending binge? Check out this video from the budget lock-up security fiasco |
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16 Comments
again i say..we are paying millions to so called smart people.[ ecomist} to invest our money in other failed companys..lets start bank of australia…today it was reported our banks ..made $11BILLION..IN BANK {FEES}..in one year..lets get real..put the money back into the australianpeople….
Geez, challenge the orthodoxy and get your head blown off! At least elfin got the point I was trying to make, that it is better invest in the economy now and pay for super liabilities as they fall due - out of future revenues.
Plablo - clearly by posting an academic paper from a well respected post-keynsian think tank I have arrogantly demonstrated their all consuming knowledge! ? I would also question the validity of the analogy you draw with the US deficit, given that I was talking spending on infrastructure and not a misguided war in a far away place…Pull your own head in before you have a stroke…
I thought I remembered reading in Crikey some time back that when Costello invested the Future Fund offshore to stop Kevin Rudd getting his hands on it and the sub prime mortgage fallout in the US started to bite, a lot of that investment went down the gurglar.
If that is the case, why is the media not shouting it from the rooftops? Costello, in my opinion, should have to pay the shortfall back out of his own pocket.
I have never understood why the media have kept so quiet about all the money lost. by Costello’s bad investment.
Thanks for your concern col, but I have been working the whole time to pay for my degree! How will this policy cost jobs? If you invest in infrastructure and education not only do you increase the economy’s capacity for growth and employment, but also its abilty to respond to presssures like meeting super payments for an ageing population. My point was that Stephen Mayne needs to get away from employing Regan era economic rhetoric if he is going to make any useful contribution to the economic debate. All he is doing is pedalling the economic misinformation that got this country into its current situation!
Oh Col, I’ve never heard that saying about the cripple before, i’ll have to ask my Nanna
Erk. You are a rough crowd!
Surely the bleeding obvious point here is that it doesn’t matter whenthe fund matched the liabilities. After all, as poor Nigel tried to say, is it better to build a government fund (ostensibly to match super liabilities in the future) or so use current revenues for serivices and infrastructure?
The super liabilities are known and can be paid from recurrent revenue: and surely the issue is in managing the benefits and liabilities not their funding?
Finally, you terribly smart people: do you reallky want to encourage governments to build piles of your tax revenue so we can have our very own Temasek? I, for one, like DIY.
I thought I remembered reading in Crikey some time back that when Costello invested the Future Fund offshore to stop Kevin Rudd getting his hands on it and the sub prime mortgage fallout in the US started to bite, a lot of that investment went down the gurglar.
If that is the case, why is the media not shouting it from the rooftops? Costello, in my opinion, should have to pay the shortfall back out of his own pocket.
I have never understood why the medial have kept so quiet about all the money lost. by Costello’s bad investment.
Dunno about beds and reds but think Andrew’s off his meds.
Couldn’t agree more Steve. Unfortunately they can’t wind back the clock.
cheers
Dunno about beds and reds but think Andrew’s off his meds.
Couldn’t agree more Steve. Unfortunately they can’t wind back the clock.
cheers
Forget about lies over numbers, what about the lie he stood in front of. WORKING FAMILIES - which is exactly what I am a part of, yet I am getting slugged across the board because I am happy to work 16 hours a day for the betterment of my family. Under these clowns who now have control of our economy and sit begind the facade of being fiscally conservative, we find the old socialist mantra of income equalisation. If anyone thinks this government is anything socialist it is living in a fog. And I say that as I prepare to work a 17 hour day to look after my position and to donate one of those hours to someone else! Does that sound fair? Doesn’t to me! There are no reds under the bed, they are in treasury. And if you think I’m angry, you are right. And I ask again, why can’t any of the media in this country ask hard questions of a Labor government?
young nigel..you sound like what bob ansett said when he said.the world is full of educated derilicts….the proof is in the eating…on your policy that is what has just happend how many jobs ,plus loss of super ,is this system going to cost…a quick saying ..walk with a cripple you you develop a limp…get out in the real world….
For god’s sake Nigel, there is nothing worse than someone with an undergraduate degree in economics who comes out and spouts his mouth off. Do you even understanding the simple truth that economics is just a narrative. As you are so clever I will just say bergson or Minsky or Kydland and Prescott. I’m sure you have already read their stuff and incorporated that into your all consuming knowledge. As to the first year undergrad paper that you point to to substantiate your claims. How is money created again? You also assume that australia can deficit spend like the US. Have you seen the value of the US dollar lately, or more importantly the price of oil? I don’t know, but from where I stand arrogant little upstarts are not particularly attractive… Pull your head in…
Forget about lies over numbers, what about the lie he stood in front of. WORKING FAMILIES - which is exactly what I am a part of, yet I am getting slugged across the board because I am happy to work 16 hours a day for the betterment of my family. Under these clowns who now have control of our economy and sit begind the facade of being fiscally conservative, we find the old socialist mantra of income equalisation. If anyone thinks this government is anything socialist it is living in a fog. And I say that as I prepare to work a 17 hour day to look after my position and to donate one of those hours to someone else! Does that sound fair? Doesn’t to me! There are no reds under the bed, they are in treasury. And if you think I’m angry, you are right. And I ask again, why can’t any of the media in this country ask hard questions of a Labor government?
Steve you may or may not be right but you can’t really draw these sorts of conclusions without knowing the expected payment pattern for the liability and the various other assumptions that go into its calculation. The budget estimate is simply the present value of those future payments and, depending on the assumptions you use, the investment earnings on the $59.6 million may well be enough to cover that future payment pattern. I’d ask an actuary or two about this before you get too carried away.
Help me here …. it was fully funded but it no longer is? So where did tthe money go? Who “took” it and why? To me this seems like massive fraud and I hope that the inquiry does not stop here.
It would be a whole lot easier if the government just made contributions to the normal federal super schemes like every other employer and then we could see the regular actuarial assessments.
For god’s sake Stephen, can you stop regurgitating all this bullsh#t 1980’s era rhetoric about infunded government liabilities. They don’t even teach that crap in university anymore (i just finished!). Your understanding of how a modern monetary economy operates reflects how little Australian’s understand of modern economics. You don’t have to fund liabilities that exist in the future now. Super liabilities fall due over time, and governments will meet these expenditures out of operating revenue in the future. The best way to “finance” super payments is to invest TODAY and grow the wealth of the economy so that the super payments are easily met out of future revenue. Ripping billions of dollars out of the economy in the name of “funding liabilities” will only reduce the future capacity and wealth of the Australian economy. You can brush up on your macroeconomics here: http://e1.newcastle.edu.au/coffee/templates/wp2.cfm?id=76