This article, by Justin Baiocchi, was originally published in The Northern Daily Leader on 12 March 2016.
One of the (admittedly trivial) difficulties in my life is coming up with the 450 words needed for this column each fortnight. 450 words of interesting, snappy and fresh writing, which yet somehow links back to finance and investing. Did Jack say something hilarious after school that I could relate back to the stockmarket? Or is there some event in my school or university years that I haven’t yet somehow translated into a lesson on the dangers of over-trading? Are there any behavioural characteristics, however obscure, that hadn’t yet had a mention? Fortunately, when the well of clever ideas runs dry, there’s always one ready source – the government.
Yes, the government can always be relied upon as a ready source of financial fodder. As Americans like to say, the scariest sentence in the English language is: “We’re from the government, and we’re here to help”. The problem with the government, and in this I mean every government, not just the current majority in parliament, is that they’re alternatively torn between protecting us and stealing from us. Superannuation is a perfect example of this conundrum. The government wants us to save and provide for own retirement, thereby not relying on the government-funded Age Pension to cover our living expenses during retirement. However, every dollar that we save towards our retirement deprives the government of a small amount of immediate tax revenue. Now, seeing as our elected leaders are surely the smartest, most knowledgeable and forward thinking examples of humankind, surely it would be readily apparent to them that foregoing say, five cents in taxation revenue now, but saving a dollar in pension payments in 30 years’ time, is a reasonable compromise? Wouldn’t it? Well sure, on the same basis that Father Christmas does exist, Harold Holt is alive and well in a small village outside Beijing and I really did see Elvis at the self-service checkout at Coles last week.
Unfortunately, for most politicians, especially the new breed of ‘career politicians’, the short-run imperative of getting re-elected tends to outweigh the obvious long-term benefits of wise economic and financial policy. Which is why superannuation, while possessing wonderful taxation benefits (under current legislation, ahem), should be a key plank of your retirement planning, it shouldn’t be the only one. Having money in superannuation is smart; having all your money in superannuation is a risk. In exchange for the tax benefits you have effectively given the government control of your money in superannuation. Which is why, where possible, we have always recommended having assets both inside and outside the superannuation environment. For without Don Chipp around to ‘keep the bastards honest’, you need to do the job yourself.