On March 5, Investment & Technologyand investment administration softwareprovider, SimCorp, held a roundtablediscussion on last November’s “economists’open letter” to the Rudd Government.Signed by eight of

Australia’s leading economicminds, the letter advocated a shorttermreduction in the superannuationguarantee to 6 per cent, and a relaxing ofsuper access rules, as an economic stimulusduring this financial crisis. The letter wenton to advocate a gradual increase in theSG as

Australia’s economy recovered, to aproposed 12 per cent by 2015.

Last month’s discussion included fourof the economists who signed that letter.The debate covered both their specificproposal dealing with the financial crisis,as well as the idea that responsibility forsetting the level of SG should permanentlybe taken from Government hands, andplaced with an independent agency suchas the Reserve Bank, to create a new, nonpartisanlever of fiscal policy.

Participants in the roundtable wereas follows:• Michael Bailey, Editor, Investment& Technology Magazine• Tony Cole, Business Leader,Mercer Investment Consulting Asia-Pacific• Rod Dew, Sales Manager, Sim-Corp Asia• Robert Goodlad, ManagingDirector,

State Street Global AdvisorsAustralia• Dr. Nicholas Gruen, CEO,Lateral Economics• Tony Harris, former Auditor-General of NSW• David Mackaway, General ManagerInvestment Operations, Challenger• Nick Quin, Director of Sales and Marketing, SimCorp Asia• Fiona Reynolds, CEO, Australian Institute of SuperannuationTrustees• Dr. Don Russell, Global InvestmentStrategist, BNY Mellon AssetManagement and Chair, State SuperNSW• Colin Tate, Executive Director,Conexus Financial (publisher of Investment& Technology)• Trevor Thompson, President, Institute of Actuaries of Australia• Pauline Vamos, CEO, Associationof Superannuation Funds ofAustralia• Garry Weaven, Chair, Industry Funds Management Michael Bailey: If the boldness ofan idea can be measured by speed anddegree of reaction to it, then last November’sproposal by eight economists- four of whom are with us today – that the superannuation guarantee (SG)level be temporarily reduced and accessrules to super relaxed to stimulate the economy, certainly qualifies as a boldidea.

At least a couple of industry associations- also represented here today- immediately dismissed the notion. Ithink ‘short-termism’ and ‘retrograde’were terms used at the time. And theSuperannuation Minister, Nick Sherry,wasn’t far behind. “We won’t be raidingsuper to fix short term economic issues”was his quote. But we at Investment &Technology think the economists’ proposaldeserves more debate. How well,for example, did a similar ploy reallywork in

Singapore on the two occasionsits government has tried it. Also, let’snot forget that the proposal also callsfor SG to be put back up again as theeconomy recovers, to a proposed rate of12 per cent by 2015.

Four months onfrom the economists writing that letterto the PM, we should also rememberthat the Rudd government has rackedup a significant budget deficit on variousstimulus measures. But if furtherpump priming proves necessary tosave jobs, do we let that deficit growlarger, or should we at least consider theeconomists’ SG proposal as a plan B? Ithought today that apart from debatingthe economists’ immediate proposal onmoving the SG down and up again, itwould be also good to look at the meritsof a structural change whereby the SGbecomes a permanent structural featureof economic policy.

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