So part of the framing of this was apolitical framing for the governmentto say, this is how you can stimulatethe economy without spending moneyyourself. But recognising what you’redoing to super in the short term, youshould actually frame that with the longterm argument for an increase in super,so you meet the short term need forconsumption, and the long term needfor saving in the one proposal.Garry Weaven: Looking at thenames that signed that letter, I acceptit’s friendly fire. But it still can be lethal.My concern was really two things, one isthe politics of it, and second that it’s notnecessarily a stand out idea – you know,it’s not a bad idea, but there are otherways to add what I think is the requiredadditional stimulus.

I just think that if you did reduceSG from 9 to 6, I’d be almost certainthat the next election would be foughton the idea of not –not taking that boneoff the hungry dog, and putting it backinto super. The next election would befought on that. And there is no way inthe world that at least one of the majorparties wouldn’t run that position. Sothat I think it’s a dangerous, dangerousstrategy from a political point of view.It was too hard to get there, and socreatively done by the government whenthey legislated SG, with the phasing and all – we can’t risk it in my view.And on the economics of it, I think thatthe marginal propensity to save hasgone up, and only a small part of thestimulus that has been put out there hastranslated into consumption.

That’s notthe end of the story, I know, Nick.But I think it wouldn’t be bad to tryand focus on the issues of more directjob stimulus. And if the superannuationindustry needs to be roped intothat, with creative measures, fine, youwould do that if you thought the crisiswas bad enough, and you wouldn’t do itotherwise. Because I think we all knowthe problems of regulation seeming agood idea at the time. But, my bet isstill really on the idea of direct stimulation.We haven’t done anywhere nearenough thinking, if any, on how theprivate sector, that part of the privatesector which has some money, whichis largely in superannuation funds, andoffshore funds, sovereign funds, andsome parts of the private industry, howit can be channelled into that direct jobcreation stimulus.

I’d prefer to focus onthat. Michael Bailey: But is that sort ofprogram providing the immediacy weneed?Tony Cole: I worry about thegovernment starting to tell super fundshow to invest their money.Nicholas Gruen: Exactly. I think alot of what Garry’s said is interestingand I’d like to follow it up. But certainlyon that point I’d be much more concernedabout governments telling superfunds how to invest than trying to fiddlewith the rate. It’s like an interest rate,it’s so transparent and hands off, it’s justmoving a single parameter.

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