Wednesday, October 5, 2016

FIRB boss Brian Wilson shelves controversial private equity role amid perceived conflicts

Foreign Investment Review Board chairman Brian Wilson has shelved controversial plans to take an advisory role with a global private equity company to avoid a perceived conflict of interests.

In a statement released this afternoon, Mr Wilson said he would suspend his proposed role with The Carlyle Group "to ensure there can be no question as to the integrity of Australia's foreign investment review system".

"Having noted concern in some quarters and to ensure appropriate due public confidence in the foreign investment review system, I have decided to take this extra measure." Mr Wilson said.

The appointment as a senior advisor with Carlyle's Asia buyout team was seen by some critics as a potential conflict given Mr Wilson's role in overseeing Australia's foreign investment interests particulary given a tense relationship with China.

Last month when the appointment was announced, a spokeman for TreasurerScott Morrison rejected claims of conflicts saying Mr Wilson would step aside from deliberations that could clash with the interests of FIRB.

At the time, the spokesman defended the appointment saying FIRB needed to attract people with deep experience of foreign investment and that there were "strong proceedures in place to manage conlicts".

Mr Wilson says he will delay the commencement of the Carlyle role until April 2017 when his chairman role at FIRB expires.

Mr Wilson said the Carlyle appointment had been originally approved on the basis that "normal proocols would deal readily with the very rare conflicts."

In line with the Treasurer's statement from last month, Mr Wilson repeated he would stand aside from any matter involving The Carlyle Group until his chairmanship expires.

Monday, October 3, 2016

Compulsory super contributions should be left at 9.5% says Grattan Institute

The compulsory superannuation contribution should be frozen at 9.5 percent to encourage Australians to consider more flexible options to save for retirement, according to a report out today.

The Grattan Institute says the federal government should reconsider lifting the compulsory contribution to 12 percent warning that a focus on superannuation alone won't necessarily provide an adequate or comfortable retirement.

The study says it's a mistake to confuse superannuation with retirement savings given that on average superannuation only accounts for 15 percent of household wealth.

Grattan Institute chief executive John Daley told The World Today the importance of superannuation was "overblown" and an increase to 12 percent ignores modelling about the way people really save.

"If we do go to 12 percent we will be forcing many households to in effect live less prosperous lives while they're working," Mr Daley said.

"I think it's quite possible that we might see a government rethink the currently legislated increase to 12 percent. It's already been delayed a number of times so it's possible we might see that rethought."

The study comes as superannuation remains a hot political issues with the federal government negotiating to convince the Senate to approve reductions in tax breaks for super contributions.

The Grattan Institute research is also likely to anger the Labor opposition and former Prime Minister Paul Keating who advocate a 15 percent compulsory contribution as critical to retirement planning.

But John Daley says the 15 percent argument underscores the confusion in the national debate between superannuation and alternative retirement savings.

"It's needs to be around 15 percent if you assume people don't saving outside and that's just not true," Mr Daley said.

Mr Daley said there were vested interests in the superannuation sector - both retail and industry funds - who would immediately oppose the report's findings.

And he agreed taxpayers were rightly cynical about superannuation policy given the politicisation of retirement and super tax breaks.

"It's no surprise that people don't trust government not to change the rules," Mr Daley said.

"But I think it's also perfectly rational for people to have some of their savings where they can use it before they turn 65."