In the AFR on Paul Keating has jumped on the growing bandwagon in support of my multi-year critique of super fund asset-allocations. This is a tad ironic, since one of the chief reasons Keating set up super in the first place was to give, in his words, mums and dads exposure to shares. Having said that, it is good to get Keating's evolved imprimatur. In this context, I remember the chairman of IFM, Garry Weaven, presciently telling me in December 2009 (words to the effect), "Chris, I think you are going to win this asset-allocation battle." The AFR comments:
"Paul Keating has added his voice to a growing chorus of business leaders warning that Australian superannuation funds are too exposed to sharemarkets. The former Labor prime minister also wants the level of compulsory super contributions increased to 15 per cent, and 3 percentage points of the contributions used for health and aged-care costs. “One of the problems super has is that there is not enough members’ money invested in debt instruments,” he said. “Funds are too heavily weighted in equities [and] not enough in fixed interest.”
In January 2010, I offered Business Spectator's readers an anecdote on the history surrounding the establishment of Australia's super system, which is worthwhile restating here:
"One fascinating historical aside that Kelly unearths relates to the authorship of the superannuation idea. While it is well known that super was first introduced as part of the 1980s Accord negotiations between the ACTU and the Hawke Government, it is less well understood that the inspiration behind it was the trade union chief, Charlie Fitzgibbon. According to his successor, Bill Kelty, Fitzgibbon exclaimed, “Whatever happens, Bill, if Labor only governs for two months, we’ve got to get super”. Kelty continues, “In my judgment, Fitzgibbon was the greatest union leader, in intellectual terms, this country has had – and I agreed with him. We had to get super.” With Kelty and Keating’s imprimatur, Hawke was to formally enshrine the new system into law in 1992 while his understudy sat brooding on the backbench. It is, of course, an open historical question as to how many of these reforms could have been achieved had the other side been in power."
