28/06/2005 - 22:00

Making the best choice on super

28/06/2005 - 22:00


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Superannuation choice is upon us, and there is a lot of talk of the cost to business in this change.

Superannuation choice is upon us, and there is a lot of talk of the cost to business in this change.

Admittedly, whenever a system changes there is a cost to someone.

In my view, Australian business ought to be thankful it has, in the main, outsourced the role of pensions rather than being caught like so many in the US with defined benefit schemes that mean they are still paying today for labour they employed decades ago.

We reap what we sow, as the saying goes.

Similarly, Australian business need do less gnashing of teeth about this administrative issue and simply realise that they have to live with this change.

In some ways, business is being let off the hook, because it is now up to employees to make choices about where to invest their superannuation.

From what I have read, business is discouraged from directing employees towards various options because that may come across as some form of investment advice.

In some ways that is a pity. While there are always the unscrupulous employers who will focus employees’ attentions on questionable choices, the great bulk of employers want a happy workforce, and nothing helps that more than financial security.

I think, therefore, employers may have a role in ensuring that where superannuation promotion takes place in connection with their workplace, they ought to keep a close eye on the credentials of those doing the promotion.

There was a massive scandal in the UK a decade or so ago when workers were “unchained”, (as the ads went, just like the GST ads here), and many soon found themselves worse off as they succumbed to glamorous marketing that failed to highlight the fees involved.

Many employees already have their own choice of superannuation fund and there doesn’t seem to be the schools of sharks that Britain had. Scandals over the past decade have also tightened investment marketing globally.

However, there will be those who seek to take advantage of people who can’t seem to help themselves.

This, of course, is undesirable from both an employer and community perspective. Unhappy workers distracted by financial stress lose motivation and performance. At a social level, there is an immediate impact as this flows on, as well as a latent effect of diminished investment upon retirement.

But – in contrast to the US experience, and that of the Commonwealth employees – ensuring people take responsibility for their own retirement is critical and choice is part of that.

Business people are better placed than most to understand both the need for this and help with the education process regarding the wise handling of investment.

Alcan move bad news for NT

The surprise announcement by Alcan to dump the Woodside Energy/ENI joint ventures Blacktip project is bad news for more than just Western Australia.

In the greater scheme of things, Blacktip is just a small project which only just sneaks into WA territorial waters, though it was ultimately being run out of Perth.

But many in the Northern Territory will be tearing their hair out over this decision. Before its recent election, the NT Government was already frustrated by the difficulty it was experiencing in getting gas developments up and running, despite mountains of the resource off its north and west.

The Alcan deal planned for a pipeline across the territory from the west to link up with the Gove alumina smelter in the north-east corner of Arnhem land.

Although this was a dedicated pipeline for the one customer, the trans-territory distribution raised the possibility of linking with an inland gas supply from the territory’s south to create a small network that could then fuel industrial growth in the north and mining development in the interior – creating the demand that might spark further offshore gas development.

This was only ever blue sky, but with major gas deals stalled over diplomatic issues with East Timor, it was a hopeful sign that the territory could get the energy it needs to fuel development in the Top End.

While Alcan is now discussing the possibility of bringing in gas from Papua New Guinea, that would be less likely to impact on other parts of the territory and would simply underline the difficulties in developing the NT’s own resources.

I had the opportunity to meet officials in Darwin on the recent CCIWA resources tour and their frustration was palpable.

Here they are, sitting adjacent a major gas province, with their own abundant resources to develop, and yet opportunities appear to bypass them due to a lack of available energy.

Only Chevron has bitten the bullet and built a small LNG plant up there, but that doesn’t appear to be a catalyst to great expansion of energy resources for the region – at this stage.

The territory’s problem is it doesn’t have the population base to go for a build-it-and-they-will-come type of resource development that was the catalyst for the North West Shelf project in WA.

And it has already received significant federal largesse in the form of the rail link between Darwin and Adelaide, which, nation-building concept that it is, is very much about creating supply ahead of demand.


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