increase to compulsory superannuation over
the next few years, coupled with generous
concessions to entice extra contributions,
and not surprisingly – it becomes a
focal point. Moreover, this focal point is
projected to exceed $7 trillion in 15 years
time, according to studies by Deloitte.
Of course, there is a sensible argument
to be had over whether sending quite as
much money to the future is a wise thing to
do when Australia’s ‘post boom’ economy is
sagging. The theory goes that we would be
better off reducing super and spending the
money today.
So the question is, why is the mining
sector not getting a real slice of the action
other than through listed companies?
It should come as no surprise that a honey
pot as large as the collective Australian
superannuation attracts attention from
all quarters. Government for one. And no,
it does not matter who is in power – don’t
expect the completely tax-free status of
retirement savings to last more than a few
more years. It is just a question of who
blinks first, and at what rate.
Mercifully, and as yet, we have not seen
wholesale theft of money, although some
significant scams have been perpetrated
on the trustees of superannuation funds.
The Trio Capital fraud saw $123 million
dispatched offshore by super funds, never to
be seen again.
Possibly one of the greatest threats is the
explosion in self-managed superannuation
funds and the realisation by the white
shoe brigade that there is money to be
made. Now representing close to a third
of total money in superannuation, the self-
managed sector has exploded over recent
years. Whilst advocates are keen to explain
that people like the control and flexibility,
there is also plenty of evidence to suggest
that local accountants and advisers seeking
relevance (and fees) have a big part to play
in the push. Allowing super funds to gear
investments a couple of years ago has seen
the property spruikers swarm over the
sector like blowies at a barbecue.
Is it a good idea to sink your total
retirement nest egg into one geared asset, in
a single asset class? Probably not.
What we really need to do is to bring
a sector that is screaming for capital and
marry it off to a sector that is screaming
for quality, yield-generating investments.
A sector that is desperate for infrastructure
funds linked with a ready source of
liquidity, and that is actually looking
for a long-term pay off. It seems like an
obvious fit.
So why has this not happened? The
good news is – it is starting to. Many of
the larger funds are now looking actively
at specific projects, but to get the mum and
dad investor on board, there are a few things
that need to happen.
The quality of any project needs to be
independently assessed and it needs to
stack up. Ideally, the projects are pooled.
In spite of the white shoe brigade, Aussies
do understand diversification and the
need to spread risk. One suspects
they might flock to well-run managed
investment funds concentrating on
infrastructure developments.
So tug on the heart strings. Get Ian
“
Macca” on Sunday morning radio or
Dick Smith on board, and the job is done.
Okay, this may appear an oversimplification
but when we understand that there are
literally billions of dollars stuffed into term
deposits paying sub 4% interest, and then
look at your funding costs – you get the
picture. To quote a famous phrase from
Star Trek: “Make it so”.
Padbury Mining is strategically well placed to capitalise on its
resources, in what will be the next global hub for iron ore production,
and through the exploitation of its port and rail solution for Oakajee.
www.padburymining.com.au
Forging New Growth in Iron Ore
100
Colin Street, West Perth, WA Australia 6005
Phone
+61 8 6460 0250
Fax
+61 8 6460 0254
Email
info@padburymining.com.au