Thursday, March 09, 2023

Super funds add to ‘too high’ fees by using expensive external managers

This is precisely why I manage my own retirement investments. A small percentage in fees every year can soon wipe out any gains.

Super funds are spending more than $2.5 billion of members’ money annually on top end of town fund managers, adding to fees that experts say are too high by world standards.

Official statistics show that over the eight years to 2022, super funds streamed $18.2bn from retirement savers to fund managers, part of a $45.3bn bonanza enjoyed by an army of administrators, consultants, lawyers and other service providers hired by the sector.

Last year just one investment manager, IFM Investors, which is owned by union and employer-controlled industry super funds, collected $412m in fees from its hundreds of clients.

Experts question whether super funds are getting value for members’ money when they pay external fund managers to direct investments rather than taking care of it in house.

They say reducing fees, which currently average about 1 per cent of super balances, is more urgent than the Albanese government’s proposal to enshrine a purpose for super in legislation – something Treasurer Jim Chalmers last month said would enable more investment in nation building projects.

Xavier O’Halloran, the head of Super Consumers Australia, said that while it was important to have a debate about what superannuation was for “in terms of the here and now and what the trustees are delivering, this focus on fees is really important”.

“It will put more money in the savings accounts of people, ultimately, which is going to lift the performance of the system overall.”

Disclosure documents show that the country’s top three super funds – AustralianSuper, Australian Retirement Trust (ART) and Aware Super – use dozens of external investment advisers including Seek co-founder Paul Bassat’s tech group, Square Peg, investment bank Macquarie Group – dubbed the “millionaire’s factory” due to its high executive pay – and IFM Investors, which is itself owned by a group of industry super funds.

The biggest fund, AustralianSuper, paid $669m in investment expenses last year, while ART paid $350m and Aware paid $479m.

According to Canstar data, the highest-fee fund in Australia is Perpetual Select, which charges $1024, or 2.05 per cent, to manage $50,000 in super savings, and last year lost members 6.1 per cent.

For the same balance the lowest-fee option, REST Super, charged just $133, or 0.27 per cent, but performance was worse with the fund shedding 8.5 per cent of its value.

Canstar executive Steve Mickenberger said it was questionable whether external investment managers were doing a better job picking stocks than index funds that simply track the market at large.

“When you look at the returns from some funds, you’ve got to scratch your head and say, ‘Are they doing better than the index over an extended period’,” he said.

“And now we’ve published the five-year returns and you can see that there are some index funds that are performing pretty well.”

He said funds that invested directly in property and infrastructure, such as toll roads, tended to do well. Funds with lower fees also generally did better because taking out fees reduces the amount available to invest.

Canstar’s data shows that average fees for mainstream MySuper funds fell from 1.27 per cent in January 2019 to 1.06 per cent in January this year.

The fall follows the introduction of performance tests in 2021 as part of the Morrison government’s Your Future Your Super package that have forced funds with sub par returns to merge with better operators.

However, Mr O’Halloran said fees should be further reduced. “If you look at the tens of billions of dollars it’s costing to run Australia’s superannuation system, I think there’s still more value to be had,” he said. “Any of that value goes directly back into people’s retirement balances.”

Fund performance tests currently only cover the simpler MySuper funds, which hold about half Australia’s $3.3tn super nest egg, and exclude so-called “choice” funds, which hold the rest and typically offer retirement savers a long list of investment options.

Mr O’Halloran said this meant choice funds have been “able to get away with charging exorbitant fees without any real proper checks and balances in place”.

“We know the government is reviewing right now whether and how to expand the performance says to the choice segment – we’re really encouraging them to get on with the job because we know there are significant cost savings that will flow from that,” he said.


Changing climate change: debunking the global colossus

Mark Imisides

In a previous article, I discussed how climate science has grown from an obscure theory in the late 80s to a worldwide colossus that will soon overtake the oil and gas industry in terms of its size.

How is it that despite the scientific case for a climate apocalypse comprehensively collapsing some 20 years ago, we have seen a 16-year-old girl (at the time) being invited to address the United Nations, weeping children marching in our streets, and a federal election outcome in which this issue dominated the political landscape?

Where did we go wrong? And by ‘we’ I’m referring to those of us termed sceptics – people who understand the science, and the house of cards that comprises the notion of Anthropogenic Climate Change.

Mainly, we have fallen into the trap of thinking that just because the evidence is on our side, people will come around to our way of thinking. Or to put it another way, we naively assume that everyone is as interested in evidence as we are.

They are not. The Climate Change industry is a massive global entity with unimaginably large financial and political interests. There is too much at stake for those involved to sully themselves with things like evidence…

The time is ripe for a major political party to take up the cudgels and go to the next election on the ‘cost of living’ platform by tossing every initiative or program with ‘eco’, ‘green’, and particularly ‘renewable’ in the bin. Peter Dutton, I’m looking at you.

How do we do it?

Put simply, we must learn the art of the polemic. The art of rhetoric. We must recognise that there’s no point in having evidence on our side if we don’t know how to use it.

We begin with this proposition. There is no case for reducing our carbon footprint unless all four of these statements are true:

The world is warming.

We are causing it.

It’s a bad thing.

We can do something about it.

No rational person can have any problem with this, and if they do, we need to find out why.

Here’s where we have to decide which of these points we want to contest. Remember, you only have to falsify one of them for the whole thing to collapse like a house of cards.

Most sceptics, in my view, pick the wrong fight. They do this by attempting to prosecute the case based on one of the first two points. This is a mistake.

Here’s why.

Arguments about whether the world is warming revolve around competing graphs: ‘My graph shows it’s warming. If your graph shows it isn’t, then it’s wrong – no it isn’t – yes it is – no it isn’t…’

This argument also looks at Urban Heat Island Effects, and examines manipulation of data by government agencies.

This is a poor approach to take because:

You’re never going to prove your graph is right.

You can be very easily and quickly discredited as a conspiracy theorist (Brian Cox did this to Malcolm Roberts on Q&A a few years ago).

People just do not believe that government agencies would manipulate data.

We should not fear a warming world. Records began at the end of the last ice age, so it’s only natural that the world is warming. And the current temperatures are well within historical averages.

As for arguments about whether we are causing the warming, this is even more problematic. The various contributions to global temperatures are extremely complex, involving a deep understanding of atmospheric physics and thermodynamics. With a PhD in Chemistry, this is much closer to my area of expertise than Joe Public, but I am very quickly out of my depth. I recognise most of the terms and concepts involved, but know just enough to know how little I know.

Sadly, many people on both sides of the debate don’t understand how little they know, nor how complex the subject of atmospheric physics is, and it is nothing short of comical seeing two people debating about a subject of which both of them are blissfully ignorant.

This approach is taken simply because it is so tempting. We can point to the Vladivostok ice cores that prove that CO2 follows temperature changes. We can ask why the cooling period from 1940-75 coincided with the greatest increase in CO2 production the world has ever seen. It’s very tempting. But, I’m sorry to say, it is simply a futile approach.

The bottom line is this – they simply don’t change anyone’s minds – ever. Having seen these arguments used for years, and having used them myself, I cannot point to a single person that has said, ‘Oh yes! I see it now…’ The whole point of arguing, or debating, is to change someone’s mind (including, at times, your own). If that isn’t happening, then it’s futile to continue with the same approach.

I think the reason both these approaches fail that most people do not believe that all these experts, and the government, can be wrong. You say the world isn’t warming? Oh, I’m sure you have the wrong graph. You say that CO2 is not responsible? Oh, I’m sure the government scientists know more than you do.

This then brings us to the third point. Why is a warmer world a bad thing?

This is even more tempting than the first two points, as it’s so easy to prove that a warming world, so far from being a crisis, is actually a good thing. The reason for this is that, unlike with the first two points, they don’t have to look at a complex scientific argument. They just have to look at the weather. Are cyclones and hurricanes increasing? Are droughts increasing? Are flooding events increasing?

Regretfully, it is impossible to get people to even look at this. Even worse, they seem oblivious to the simple concept of cause and effect. We see this in that they simply can’t see that droughts and floods are opposites, and the same cause cannot produce exactly opposite effects. Astonishingly, they somehow think that charts that plot these extreme events are somehow manipulated, even when they come from a primary source such as the BOM, and that there really is a ‘climate crisis’.

Where does that leave us? Well, before we adopt Catweazle’s mantra of ‘nothing works’, there is one more point – point 4 (can we do anything about it?).

Most people will have seen the address of Konstantin Kisin at an Oxford Union debate, where he prosecuted this case to great effect. He pointed out, in simple terms, that as the UK only contributes 2 per cent to the global CO2 budget, anything they did will have negligible effect, and that global CO2 levels will be determined by people in Africa and Asia. He then pointed out that people in these countries ‘didn’t give a sh*t’ about climate change, as all they want to do is feed and clothe their children, and they don’t care how much CO2 that produces.

Finally, he pointed out that Xi Jinping knows that the way to ensure that he isn’t rolled in a revolution, as happened to so many other leaders in former communist regimes, is to ensure prosperity for the Chinese people. And indispensable to that goal is cheap, reliable, power, which is the reason that China is now building lots more coal-fired power plants – in 2021 alone they built 25 GW of capacity – equivalent to 25 x 1000MW plants.

By all accounts, his speech was well-received, with many people turning to his side. The beauty of prosecuting this case, as opposed to the other three, is that people don’t have to look at any evidence. They don’t even have to look at the weather.

The argument is at the same time simple, compelling, and irresistible. The question is this: will we see a major political party with the courage to take it on?

That part remains to be seen. But what is certain is this – the definition of insanity is doing the same thing and expecting different outcomes. If, for twenty years we’ve been telling people either that the world isn’t warming, or if it is we aren’t causing it, or if it is warmer but there’s no climate crisis, and not a single person has been persuaded by our arguments, then we have the brains of a tomato if we think anything is going to change.

Konstantin Kisin’s talk, and in particular the way it was received, fill me with hope that I haven’t had in years. It fills me with hope that if the case is prosecuted wisely, the climate change colossus can be brought to a grinding halt, politicians will unashamedly take on energy security as a political mantra, and the notion of climate change will at last be exposed as the unscientific, anti-human, regressive, apocalyptic cult that it is.


The Left’s aversion to teacher quality is harming our kids

The Productivity Commission has recently thrown down the gauntlet on teacher quality, and its importance to the nation’s economic health. Despite the difficulties and complexities, we should pick it up and finally embrace the challenge.

Australia’s educational woes are well documented, with student learning outcomes in free-fall over the last two decades. But a recent report by the Productivity Commission has provided a ray of light.

Its report into Australia’s education system found the largest single factor in student success, and their ability to go on and make a meaningful economic contribution, is teacher quality. As a former teacher myself, I would say: quelle surprise!

The commission determined that students taught by above-average teachers will earn almost $500,000 more over their lifetimes than those taught by average teachers. Not exactly loose change. So, we need to have an overdue and difficult conversation about teacher quality.

Let’s get one thing straight: the majority of our teachers are amazing. They care for the students they teach. They’re dedicated and expert. Before entering Parliament, I was the head of a large secondary school in my electorate, so I know this first-hand.

Nonetheless, as is the case in any profession, some teachers are not currently up to scratch. Do you know someone who, as a result of struggling to get a job elsewhere, ultimately fell into teaching?

I do. And recently, I’ve been really concerned to find out that one in 10 new teachers can’t meet the necessary standard in critical learning areas like numeracy and literacy. Moves are afoot to change this.

Back in 2016 a Literacy and Numeracy Test for Initial Teacher Education Students was introduced. I’m hopeful that it will ultimately become a valuable tool. It’s also good that universities are lifting the ATAR scores required for admission to teaching degrees.

I’ll concede that not every teacher has to be a brain surgeon or a rocket scientist. Yet mastery of their chosen subject area is essential. Teaching requires significant intellectual grunt.

There’s a lot more to do at the front end, but here’s a much trickier question: how do we support the 300,000 Australian teachers – currently plying their craft – to be their very best?

One response must be to put in place meaningful and rigorous systems of teacher appraisal.

I commenced my teaching journey fifteen years ago. As a 24-year-old, entirely new to the profession, I could not believe the amount of autonomy I had. There was certainly no appraisal. What’s more, there were no key performance indicators. Indeed, there was very little oversight of any kind.

This meant that I could teach whatever I wanted, however I wanted. Coming from the fishbowl of politics, as a staffer, I loved my newfound freedom.

Teacher autonomy is hard-wired into the culture of our school systems which we borrowed from the British public school model. After a hundred and fifty years, that’s no easy thing to change. But it’s certainly not conducive to best-practice, or personal growth.

Change has started, albeit slowly, in the best private schools. A small proportion of schools have excellent models in place.

These involve regular lesson observations by a school leader and targeted feedback; student surveys about teacher performance; professional development informed by a mentor; and goal setting with ongoing reviews to assess progress.

Of course, powerful public sector unions are stridently opposed to processes such as these. Yet, in my personal experience, they can be enacted in a way that is highly supportive of staff.

I’ve been appraised myself on many occasions. It’s nerve-wracking, sure. But what I’ve seen is that the many fantastic teachers are affirmed, while those who are struggling are supported to get better, or find a job that better fits their skills.

These conversations are difficult. As a (biased) former teacher I have a high regard for those still in the profession. Yet facts are facts. Our students have never performed worse in the crucial areas of literacy, numeracy, and science – at least not since the Program for International Student Assessment commenced publishing its reports in 2000.

Of course, the quality of teaching is not entirely to blame for this. But it can play a huge part in arresting Australia’s learning decline. That, says the Productivity Commission, will pay real dividends for us all. ?


The feminists have won

International Women’s Day is a day when women of the chattering classes parade their virtue and moral superiority to the rest of us. If you were listening to the ABC last Thursday and expected your favourite male presenter, tough. And if you wanted a provocative, balanced read from the Age’s opinion pages, you were greeted instead by woman polemicists including ex-ABC broadcaster Virginia Hausegger and Fairfax’s resident feminist, Clementine ‘Fight Like a Girl’ Ford.

‘Are you done with women yet? Sick of hearing about them?’ were the first words of Hausegger’s Age piece. Her argument, however, boiled down to warning like-minded readers to beware ‘the brewing whiff of backlash’. ‘As women continue to push for progress’, she wrote, ‘men are clearly disoriented by the demands for change’.

The premise of International Women’s Day is that women need to be empowered, to lead, to shatter the glass ceiling. So Peta Credlin, herself a very powerful woman before she found her voice at Sky News, writes in the Australian decrying the Liberal party for not changing as fast as she wants. Tanya Plibersek and other grandstanding progressive politicians, male and female, brand feminism as a progressive Left triumph. Labor talks 50:50 gender quotas for its MPs; Credlin and other Liberals talk affirmative action and mentoring within the party’s preselection processes.

Credlin and Plibersek make a surreal unity ticket, but on one thing they’re indeed very much united: the final triumph of the feminist revolution in politics isn’t coming quickly enough for their liking. Yet they overlook the fear of a feminist backlash helps keep poor political performers who happen to be women, like Michaelia Cash, in post where men who blunder as royally would be sent packing. It means the sisterhood not condemning the bad examples of female politicians already in leadership, like Tasmanian Labor leader Rebecca White, whose petulant and deluded concession speech on election night made Turnbull’s ugly and spiteful 2016 effort look tame.

Labor’s much-touted seat quotas are tokenistic. That they simply guarantee more mediocrities enter parliamentary ranks under the guise of gender equality doesn’t matter to Emily’s Listers. And the Liberals mentoring women candidates is pointless when factional and personal loyalties now count more than ability in picking MPs of either gender.

But feminist polemicists and Q&A panellists should be honest about just who’s on top. Every day is now International Women’s Day. Feminist issues, feminist values now shape and frame what’s appropriate and what’s not in public discourse, especially in politics and the media. Public and business figures who once would have got away with louche personal behaviour towards women are now called out and broken. Not that some men in power don’t deserve what comes: Barnaby Joyce’s selfish disregard for his wife, daughters, mistress and even unborn child makes middle-aged white blokes look more pathetic and ludicrous than even Clementine Ford could assert in a fire-snorting Fairfax column.

Thus the #timesup and #metoo movements enthusiastically call out male sexual harassers and predators, their starting premise that every man is by nature a predator on women, and preternaturally disposed to aggression and violence. Thomas Hobbes’s dark vision of men’s natures is as nothing to that of Hollywood virtue-signallers and their political allies.

Consequently in politics, business and the media, men are being denounced and rooted out, and the ideology of the gender revolution benchmarks public life. Middle-aged white men in authority positions and ‘traditional’ male occupations particularly are fair game: we are a generation of Calibans to be tossed aside for fair, enlightened Mirandas. The progressive media, not just the ABC and Fairfax, are willing arbiters of what’s acceptable in this brave, new world. Ever-angry feminist pundits like Ford and Hausegger rage as if the struggle’s all before them, when it absolutely is not. They deny what straight middle-aged white bloke dinosaurs like me already know: the gender revolution is not a work in progress, but already won.

The social and cultural norms of 10,000 years of Western civilisation, that always have presumed men, with our physical strength, are the hunter-gatherers, warriors and natural leaders and protectors of families and communities, have been overturned in not quite two generations. That’s astonishing, but in this age of technology manpower counts for little. Brain is the new brawn and it’s not gender-specific: men’s natural advantage over women is obsolete. Women now have the upper hand and set the gender agenda. What is happening now is not, therefore, the feminist revolution, but its mopping-up operation. High-profile naming and shaming like #metoo is the revolutionaries consolidating victory, the new regime denouncing and purging pre-revolutionary leaders and hate figures, and all they represent. The vile behaviour of ogres like Harvey Weinstein simply makes their task easier.

Revolutions happen because the evils of what they replace can no longer be ignored or tolerated. Endemic sexual harassment and one person’s abusing personal power over another rightly deserve calling out. But in correcting the perceived excesses of millennia, and in the heady thrill of toppling the likes of Weinstein, Don Burke and now Robert Doyle, revolutionary zeal and a desire for vengeance can create dictatorships potentially as bad, even worse, than the regimes they topple. Think Jacobin France, Soviet Russia and post-Shah Iran.

For feminist elites, International Women’s Day is their May Day in Moscow, showcasing themselves and consolidating their revolution. Establishment acts of solidarity like the ABC’s unnecessarily ostentatious, all-female International Women’s Day ensured the rest of us got the message.

Instead of securing their equality goal, the media and political Revolutionary Guards of Australian feminism are creating a new, permanent gender imbalance. The new matriarchy is here. We men have lost.




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