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What about revisiting the idea of incentives for releasing Australian super fund monies into the cash market via the big four banks and their smaller competitors (or indeed the creation of their own banks via AMP), instead of having super funds rely so heavily on shares to produce returns? (See The Basel burn, April 15).
These funds should then be available for commercial application for Australian infrastructure requirements, to relieve the housing shortage currently helping to create the housing asset bubble and also to slow the inflow of overseas capital currently being relied upon. In conjunction, take the tax review talk of encouraging bank savings a step further and provide encouragement to people to pay down the massive household debt we have accumulated.
Surely, this would be more creative than simply handing out government incentives to first home buyers and adding to the boom bust cycles we seem be creating? (And don't get me started on Insulation Schemes and Better Schools Building debacles!)
Surely Australia has enough managerial talent outside of government and in the super and banking industry's to handle our super funds for greater benefit to the funds, the superannuated and the Australian economy?
This is an old argument I know, but lets revisit it in the light of what's happened in the last few years and for our future needs to become more self reliant.
The forming of an 'Aussie Mac', what an interesting idea.
(See The Basel burn, April 15).
It would be an interesting experiment to see what would happen if the banks could sell their RMBS to an Aussie Mac or similar – as long as the banks themselves were always held accountable for any/all of the mortgages that defaulted. This would ensure that they only ever made the correct call by signing them up in the first place.
Anyway, if they 'sold' a chunk (100 per cent) of them and 1 per cent or 2 per cent defaulted then they still have a 98 per cent success rate with minimal costs associated over a long term.
If they were silly enough to offer any ARM's, LOWDOC's or other such dubious products then they have the option of keeping them (due to their higher interest rate return) or taking the gamble to sell them and 'possibly' end up paying the penalty later.
It may even help to discourage them from taking the unnecessary big risks in the first place.