Paul Keating in his own words about the future of the supermarket

“Without being heavy-handed, there is a requirement for funds to pursue social opportunities.”

On the challenge of population aging

“We have been a relatively young country [so] we could have afforded to be in growth assets, rather than annuity-type income. If you look at the US stock markets from, say, 2000 to 2009 and then from 2011 to now, we’ve had two big booms. So the superfund bet on equities, particularly in the northern hemisphere, has paid off for Australia. That is why we have been able to see funds doubling every eight years or so.

“If you look at the classic European funds, they have a much, much higher weighting of fixed interest. And particularly as their populations age and go into the pension phase, they can’t take the risk in the casino, they can’t put all their funds in the black.

“But now we’re seeing a tipping point… We’re getting older, we’re going to start entering the pension phase for the Baby Boomer generation. That means we need the reliability of earnings at the same time we’re seeing the stock market start to go down to a certain point.”

On superfunds and bank loans to medium-sized companies

“Since banks want to diversify not only for housing, but also for small and medium-sized business loans, then having access to the savings reserve [in super] must be a winner. They don’t have their balance on the line…but they are a facilitator and they are rewarded in a facilitation.

“I don’t think the superfunds can make a big commitment to lending to SMEs without the banks. And the banks have to want to be in it, but the banks also have to be helped because APRA [the Australian Prudential Regulation Authority] otherwise it will bloodily crush them in terms of capital.

“In the end, we have to bring them down and make them see a sensible way to ease bank commitments to longer-term debt.

“We have joined Japan and China as exporters of capital, but we don’t really have a developed capital market for longer-term debt.

“Ten-year debt should be something that banks should be able to do.”

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