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 By now you
should have worked out that your editor is not a fan of government. Regardless
of the colour and political persuasion, all government parties and government
opposition parties are corrupt.
You can see that by the horseplay at the federal level and in New South Wales
in recent weeks. Their only concern is to gain power so they can grab taxpayer
money to spend on their own favourite projects.
However, there is one policy that we would like a government to implement -
right before government itself is abolished - and that is for all actuaries to
be made illegal.
I'll explain why in a moment. But before I do, a quick note on the debacle in
Copenhagen, which ties in to today's Money
Morning.
If you've visited the Money
Morning website you'll have seen our band of bloggers have been
quite active on the subject. Your editor writes about crazy Keynesian
economists, so the bloggers make comments about Climate Change.
Your editor writes about ratings agencies which causes the bloggers to make
comments about Climate Change. But that's alright, we don't mind at all. In
fact we've even acquired our own unofficial 'Climate Change Correspondent' who
goes under the name of 'cb'.
It seems 'cb' has posted a number of comments and even links to other websites.
We haven't had the time to look at all of them yet, but what we have read so
far makes for pretty revealing reading.
If you'd like to leave your own comments feel free to do so. The more the
merrier. Even if you disagree with your editor that shouldn't stop you from
making a comment. There are quite a number of posts which "dare" us
to post their comment, so we do. But don't worry, even if you don't
"dare" us, we'll still post it.
In fact, providing you keep the language clean we don't censor any comments.
But aside from that, you may have heard about the stink caused by a secret
drafting of an agreement that is to be put to delegates at Copenhagen. You can
download the full document here.
Naturally enough, the fuss has been because developing and island nations don't
believe they're getting enough money. Which says it all really. They didn't
protest in the streets because of rising sea levels or warmer temperatures.
They protested in the streets because they don't believe USD$10 billion per
year is enough cash.
They shouldn't worry though, because if Copenhagen only costs taxpayers USD$10
billion per year then you can count that as a victory. Because if you look at
points 20, 21 and 22 in the document you'll soon figure out the number is going
to be much, much higher:
"International public finance
support to developing countries [should/shall] reach the order of [X] billion
USD in 2020 on the basis of appropriate increases in mitigation and adaptation
efforts by developing countries."
Obviously they're still filling in
the gaps. Any guesses on what the 'X' billion will be?
It'll be a lot more than USD$10 billion, we know that for sure.
And whatever number they come up with it'll only get more expensive for
taxpayers as time goes on:
"The Parties commit to
regularly review appropriateness of contributions and the circle of
contributors against indicators of fairness based on GDP and emissions levels
and taking into account the level of development as set forth in Attachment
C."
In other words, once this document
is signed, future governments are locked in to paying out more and more cash
each year. And no country is going to fight to reduce their contribution are
they?
Not on something as important as Climate Change.
Then point 22 reveals that a Climate Fund will be established with:
"Parties commit to allocate an
initial amount of [$x] to the Fund as part of their international public
climate support."
Again, we're not talking chicken
feed here. They've backed taxpayers and themselves into a corner.
You can't go on about sea levels rising by six metres and Antarctic ice shelves
collapsing causing ice bergs to hurtle towards Western Australia, only to
donate a second hand totem tennis set and a $50 Myer gift voucher.
The biggest ever fear campaign - bigger than SARS, AIDS, Y2K, Swine Flu, and
even bigger than the fear of Mark Latham becoming PM - must be accompanied by
the biggest ever funding promise.
How big? No idea. But surely the benchmark is the $43 billion the Australian
government has pledged for the funding of the national broadband network (NBN).
How can the government logically spend any less?
Think about it, if the Australian government offers to contribute less than $43
billion to the UN programme then it's admitting that combating alleged Climate
Change is less important than you being able to download the latest Miley Cyrus
hit in three seconds.
That's the thing with spending by the coercive (public) sector. Its only
benchmark is spending. It can't or won't measure the return because that'll
only highlight how inefficient and pathetic the coercive sector is.
So each bold new plan has to be more expensive than the previous one. And in
the case of Climate Change the spending will have to be the biggest ever.
But how on earth will the government pay for it? Raising taxes perhaps? Not yet
it seems. Or, not direct taxes anyway.
I've shown you the table from the Department of Climate Change. That shows the
'generosity' of the government in that it will take with one hand - higher
bills - but then give some of it back with the other - government benefit
payments.
And that brings us back to the abolition of actuaries. You know what they are,
they're the boffins who crunch the numbers for insurance companies, working out
how much a premium should be based on the likelihood of an event happening.
Anyway, two actuarial boffins, Professor Michael Sherris and Associate
Professor John Evans (remember that 'Professor' is a job title not a
qualification) have concluded that:
"It is difficult o see how the
private sector could develop efficiently priced annuities that would be
attractive to retirees... a public sector solution is likely to be the most
efficient, provided the annuitisation is compulsory."
Money Morning reader Robert drew our attention to the comments. The
comments were in a report commissioned by Australia's most dangerous and
powerful man - treasury secretary Emperor Ken Henry.
You can download the full document here.
You know what they say about commissioning reports, "don't do it unless you know the outcome."
Is it really possible that Ken Henry and his cronies would commission a report
on compulsory annuities unless it was high up on the list of priorities?
Of course not.
But let's take a step back. What is this whole thing about?
Well, if you've read Money
Morning for a while you'll be aware that earlier this year I warned
you the government had a secret plan to "steal your super." Of course
we were told that would never happen, people would never stand for it.
Wrong, we declared. Not only will the government do it, but they'll do it soon.
Our rationale is that with $1 trillion tucked away in superannuation funds, it
was inconceivable that the government wouldn't want to get its dirty paws on
it.
When stimulus programmes, and 'shovel ready' building projects are all the
rage, getting access to a pot of cash to fund those programmes would be like
finding the pot of gold at the end of the rainbow.
After all, why commit electoral suicide by raising taxes when the government
can just use a clever ruse to 'encourage' individuals to hand over their
superannuation funds instead.
And if the Emperor Ken Henry accepts and recommends the submission from the two
professors, that's exactly what will happen. Except they won't need to
encourage people. Oh no, when you're in government you can go much further than
that...
The most distasteful part of it is the final comment from the submission:
"The estimated premiums clearly
show that greatest efficiency is achieved through the compulsory conversion of
superannuation benefits to annuities through a public sector arrangement."
Got that,
"compulsory." The 9% that comes out of your pay every year and which
goes into the super fund which you think is yours, will - under this proposal -
be compulsorily acquired by the government as soon as you retire.
Imagine the uproar if the government proposed compulsorily acquiring your house
on retirement. But instead of giving you the proceeds it kept it but then paid
the rent for you to live in a rundown block of flats.
Would you agree to that?
Because that's the exact comparison. We're not sure what planet these two
actuarial profs are living on, but it isn't this one. Because in this world the
government is the least efficient entity there is.
The private sector may not be perfect - although in a free market it would be
because success and failure would be determined by the market not by government
- but even the manipulated market system we have now is better than anything a
monopoly government system could come up with.
We wonder if these profs are familiar with the current Aged Pension system.
They can't be. Because if they were they would see just how efficient the
government is at managing a retirement programme.
It's astounding that in their 40-page report they don't make a single reference
to the existing "annuity" modeled Aged Pension. How could they miss
that out of their analysis?
Think about what the Aged Pension is. You pay 'yer' taxes for most of your life
and then at the end of it the government pays you an income. Not that
dissimilar to an annuity.
Well how successful has that been? It hasn't, it's rubbish. And now Emperor
Henry is considering Aged
Pension II - The Emperor Strikes Back!
As I mentioned, we warned you about this months ago. And now it looks as though
it's happening. And that in a roundabout way answers our question from earlier
- how will the government pay for its Climate Change commitments?
It's pretty simple when you've got access to $1 trillion worth of savings.
There's bound to be a few bob left over after building new roads, bridges,
hospital wings and school gymnasiums.
There is absolutely no doubt whatsoever, that your superannuation funds, after
being compulsorily acquired by the government on your retirement, will be
'invested' in Climate Change programmes too.
Whether the 'investments' will be overt or covert is irrelevant. Overt
investments will be in subsidizing uneconomical 'green' technologies. And
covert 'investments' will... well, they won't be investments at all.
They'll be contributions to Climate Change slush funds. And just like every
other government programme they won't return a single dollar of profit. That
means your super fund money will have disappeared into a big black hole, never
to return.
The embezzlement of your retirement savings will result in the government
having to reduce your benefits which it will do through inflation, slowly
eroding the value of your dollar so that like Aged Pension I you'll be forced to live out
your autumn years eating tinned hot dogs and stale bread.
If the Stable Climate Deniers still think that Copenhagen and Climate Change
policies are all about saving the planet then they're sorely mistaken, and
perhaps they're living on the same planet as the two learned profs.
Because it's about nothing more than lining the pockets of the politician's
favoured special interest groups and ensuring that they can climb to ever
higher levels of power.
Cheers. By Kris Sayce. This article is contributed by Money Morning. Click Here to Subscribe to their free newsletter.
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