While Malcolm Turnbull whips himself into faked frenzy over the evolving nature of deposit guarantees, he actually escaped lightly yesterday.

Overlooked amidst the theatre of Liberal Senators making geese of themselves was a Ken Henry line about Turnbull’s self-serving and irresponsible promotion of lifting the long-proposed $20,000 guarantee to $100,000.

I wasn’t in a position to take a verbatim note of what the Treasury secretary said, but it was something very much like: The speculation about increasing the guarantee was not helpful.

A soft, public service comment, but there was plenty behind it. A smart Labor Senator should have probed that remark and drawn out the meaning, but that would have required a smart Labor Senator to be present.

Championed by the Murdoch hacks clinging to the shreds of Tuesday’s story, Turnbull is succeeding in making sideshow alley the main event in the guarantee circus. Yes, the guarantee has caused some dislocation, but the global financial crisis has caused DISLOCATION, if you know what I mean.

And some of the local niche products feeling the squeeze are less important than others.

For example, cash management trusts. The Hill Samuel bright sparks who started the things here made a fortune out of the slackness of banks who only offered depositors a pittance at the time. The banks are now falling over themselves as they bid for depositors’ favour, so the unguaranteed CMTs are looking like products whose day has gone.

But not without a fight. Take the ad in the AFR for “Macquarie Cash XL” — an effort that deserves some sort of prize for making the most of fine print, for offering a Claytons deposit guarantee. You can almost hear the fella from the Macquarie TV commercials reading the print ad under the headline “Time to change tack 7.75%”:

It pays to play it safe these days, and yet have access to your money at call when conditions change. That’s exactly what Macquarie’s online cash account offers – plus high returns, no transaction fees and no deposit or withdrawal limits.

Macquarie Cash XL is invested in a government guaranteed deposit product.

Which doesn’t actually mean it is guaranteed — it’s a cash management trust that avoids using the words “cash management trust”, as the fine print spells out down below to keep the ad legal:

None of MBL, MIML or any other Macquarie Group company guarantees the performance of the Trust or the repayment of capital from the Trust or any particularly rate of return. While units in the Trust are themselves not deposits with the Bank, the Trust invests solely with the Bank.

And so on. If Macquarie doesn’t want to guarantee its own CMT, I can’t quite see why the Australian taxpayer should either.

Cash management trusts, who needs ’em?

Peter Fray

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