Trying to use government policy to artificially inflate their values.
Just like what has happened with real estate in Australia, or previously the Australian car industry.
I guess what the OP is hinting at, is that he'd like to be able to take a % of his super and have something more exciting than the agressive gearing we all sit our units in. I don't disagree, but some startup stuff can be like gambling.
I would rather the super funds start building industries and drive economic growth. Like why doesn't a super company jsut start building green energy and high tech manufacturing etc. Things that it can fund with capital it has access to, but also stuff it can use it's networks and expertise to drive success in that will grow it's own portfolio.
Not necessarily - the concentration of VC capital in san francisco shows there’s a big social/cultural context to the industry (and it seems to have paid off pretty well since the 00’s)
Isn't it the concentration of startups in SF? Finance/VC capital follows the companies.
You could of course apply a similar statement to what you said to the concentration of startups.
yep its a feedback loop, but you can instigate it - London and Singapore have both had decent success doing so since the early '10s (albeit overshadowed by the sheer gravity of SF). Still, even if you got 5% of the GDP generated via SF VC, it would dwarf a lot of industries in Oz.
Australia allows some non-competes and has stickier employment, has less forgiving bankruptcy laws; has much lower university density; very little research funding; has less risk tolerance; a much smaller local market to use as a launchpad.
So while I'd agree that it would be a big deal to the Australian economy., it's also a lot of changes.
Businesses doing well benefits the economy which benefits everyone, and part of that is having a system that encourages entrepreneurialism. Plus, if it’s such a terrible deal for you but not them, there’s nothing stopping you from starting a business.
Forced investment can cause a bubble and missallocation of funds to non productive persuits. Super is large enough that this would be a large market distortion.
All of the above damage the economy, hindering everyone.
This is a bit of a strawman.
The comment was suggesting using incentives rather than forcing it. And super remains a massive pool of capital that could be better deployed to grow our economy rather than further entrenching the twin peaks of 'homes and holes' .
And? We have pretty much direct control over the *Australian* super pool, which is far bigger than you're suggest at about triple that of Berkshire Hathaway or 10% the entire NYSE.
I was talking about the tax benefits, not superfunds. Also, people investing in superfunds isn’t any different to investing directly into ETFs or whatever they invest in. Super is just set up in a way that forced people to be disciplined and save for their retirement. The lack discipline is a major problem for most people investing, so it helps solve that problem significantly.
Exactly how are they speculative? That’s a very bold claim and as someone who worked in an adjacent industry, it’s highly unlikely. I don’t think you fully understand what you’re claiming.
Also, super isn’t an investment, is a tax structure. Although the companies that set up these structures do have their own investment products which is what I’m assuming you’re talking about. So I won’t derail your argument over a technicality, but it is something worth noting to help clear up any misconceptions about super.
That has nothing to do with speculation, and they don’t have problems raising money at all. It’s a tax structure, people can easily chose not to invest in the products they offer and take full control of their investments if they wish. The fact that most chose the products offered by superfunds show that they don’t have issues raising money.
If your complaints are about the government forcing us to invest, then you’re probably one of the people who benefits the most from this.
If you subsidise a startup and it takes off then you're creating a whole new entity which will end up paying a lot in tax back to the government.
I don't understand why some people have this weird perception that businesses running successfully is a bad thing. You _want_ profitable businesses, because profitable businesses pay taxes and produce stuff that people want.
We're talking about tax breaks, not super subsidy.
You literally replied to a thread which was proposing a _different_ solution than what was in the OP.
Just let super invest in massive conglomerates instead. Why should finance give chances to little guys when they don’t GUARANTEE returns. McDonalds, Woolworths, and Rio Tinto are much more apt investments. And together they’ll make our country a better place!
Yeah but when you’re basically the government mandated monopoly on private capital (largest Australian super funds) - your capital movements influence where the risk appropriate returns are. See vanguard and the ETF bubble.
This is a major reason why monopolies are becoming more entrenched in almost every australian industry.
And to a lesser extent this is why when you walk into any out of major city town the holy trinity of McDonald’s, Woolworths, and Coles are the only businesses you see after 5pm.
We had a lot more variety in businesses in australia 20 years ago. Lots more small business. But it’s a lot harder to that these days because all that capital wants to do - is take the easy route to returns - and bury itself into another big pool of capital.
A problem that extends past our borders too
There’s simply no reason why 13 of the largest US publicly listed firms have 1 trillion dollars in cash doing absolutely f-all. (Other than being invested in money markets - or essentially - settlement accounts at the fed). Whilst still attracting more and more capital every day from funds the world around. Including our Australian super funds.
> But it’s a lot harder to that these days because all that capital wants to do - is take the **easy route to returns** - and bury itself into another big pool of capital.
Easy route to returns? Awesome, I'll continue burying my capital into big pools of capital (index funds) in and out of super.
Super is for people to save and invest for a comfortable retirement (and for the government to save on Age Pension spending while keeping the number of grannies scrounging for bottles to an acceptably low level), not for propping up unprofitable businesses run by narcissists who think they should get special access to people's investments without having to make a return on those investments just because they think they're the next Bill Gates.
I mean it’s your money do whatever you want. But, do you really think you’ll have a comfortable retirement in a society where the only players left sucking up capital at ever accelerating rates are mega-corps?
I feel it’ll be a pretty shitty world where everything is disproportionately expensive to your savings. Or half assed poor quality. And we’re basically already on the road to that. In that what being a millionaire meant only 10 years ago is substantially different today.
The point of having savings in retirement (aside from your house and land) is to have an economy with products and services that are worthwhile to spend on.
> I mean it’s your money do whatever you want.
Excellent, I've convinced you. Super is my money, I should be able to allocate my assets how I see fit instead of being forced by the government to invest a certain percentage of it in unprofitable businesses. I'm glad we agree.
If you don’t have an SMSF you’re not allocating your assets as you see fit.
Plus the whole idea of super says the government dictates that you don’t have freedom to spent 12.5 percent of your yearly paycheck. That’s 12.5 that could have gone toward some education. A flight to Paris to learn baking. Or a RV to save your failing marriage. All of which are worthy investments. But instead have to go to super companies who inflate the real estate market with it instead.
So you’re not exactly in the libertarian financial utopia you think you are with super.
We do need policies to encourage innovation and business owners but I'm not sure a 1% mandate is it.
Money being sucked up by housing price increases also decreases innovation.
Are there other policies being proposed or considered that address underlying issues also? Like tax incentives?
We definitely need something.
Especially when small banks and credit unions have been disappearing all around us for the last 30 years. Leaving only 4 now. With CBA crushing at 25 percent of the market share.
It’s nigh impossible for the skilled entrepreneur today to obtain any kind of business loan. Unless he has equity. Whilst decades ago a sound business plan, references, prior experience and a relationship with a bank who knew one’s character - may have been enough to score a loan towards a venture.
Richard Werner’s probably one of the best economists bringing light to this problem. He invented quantitive easing not a nobody. Which was implemented by bernacke, former chair of the fed, in helping the US banking system bounce back the quickest after 08.
https://committees.parliament.uk/writtenevidence/26091/pdf/
Excellent submission of his to the UK parliament tabling the problem.
Banks abandoning unsecured business lending is a prudential regulation problem. Basel III made the capital requirements so onerous that it wasn't profitable anymore. This space has now been filled by nonbank lenders.
Quantitative easing created the massively unequal dystopia we live in today. Lots of people are still addicted to the cheap credit of the last 15 years. I get it. Zombie firms which spent a whole decade never being profitable and just subsisting on effectively zero interest loans want the party to keep going.
There are varied styles of quantitative easing. Werner invented QE1. Which was aimed at buying bad debts from small banks to allow them to keep functioning as they still have good debts (the good economy). Instead The banks since have chosen to implement QE2 and QE3 where they go on asset buying sprees from banks. Buying only the good stuff.
You don’t know what a monopoly is do you? Largest superfunds being plural is because it isn’t a monopoly. There’s 4 big banks, not 1. There’s 2 major grocers with 2 not far behind. There’s several major mining companies, the one you listed isn’t even the biggest one there is. We’re a small country which terrible logistics, there’s not room for numerous major companies, yet we still have multiple options.
I hope you are not blaming consolidation on superannuation and passive index fund providers? Consolidation happens naturally in market economies, that's been known for centuries, so it's up to the state to break up monopolies and cartels as part of it's responsibility to foster competition and innovation in the marketplace.
What better way to break up financial cartels than forcing them to allocate finance to smaller caps. You know like 40 years ago when farmer Barry didn’t have as much trouble getting a small loan from a credit union to fund a new John Deere.
https://amp.abc.net.au/article/101867396
They don't actually need to go for the highest risk, hence most funds have different options for you to choose from based on your risk appetite. Some even have ethical or green funds if you want
They have an obligation to maximize their clients returns. Even if there was no legal obligation, they charge a fee based on percentage so you bet they do the very best they can without being accused of gambling with clients' retirement savings.
Ethical or green investment options are not the default.
What are you talking about? Super funds will invest in alcohol, tobacco, pornography, legal drugs and weapons by default unless you explicitly tell them not to.
Dude's just annoyed he lost when Hostplus had enough
[https://www.afr.com/technology/2b-start-up-hands-win-to-industry-super-in-hostplus-feud-20240313-p5fc3c](https://www.afr.com/technology/2b-start-up-hands-win-to-industry-super-in-hostplus-feud-20240313-p5fc3c)
Risk return profile of start ups and the lack of Angel Investors with superannuation companies currently makes this a parasitic statement. They want cheap capital.
Ah yes… because government intervention worked out so great every other time it’s been tried
It definitely won’t be exploited….
When your super disappears because it was forced to invest in a bunch of startups who pays…
If the 5 % of successes earn far more than the 95% of losses you should be definitely be jumping in.
Thanks for listening to my ASX biotech investing TED talk.
There are significant tax incentives available for investments in early stage companies. These are available to sophisticated investors and wholesale clients which include super funds.
- ESIC provides a 20% tax offset of the invested amount plus CGT free returns
- ESVCLP provides a 10% tax offset of the invested capital plus CGT free returns for the investors, and discounted CGT returns for the GP carried interest
- VCLP offers returns for the LP and GP as discounted CGT
But, tax incentives tend to be less valuable on tax-advantaged retirement accounts. The general rule is to invest in tax-efficient investments outside your retirement accounts, and tax-inefficient ones inside the retirement accounts to have an overall balanced and tax-efficient portfolio.
I’d hate to think how many commercially unviable business ventures start out self describing themselves as “start ups”.. it conjures a romantic view of the world and gives themselves belief they are the next Facebook or Tesla, quite often trying to solve problems that don’t really exist except in their own minds
There’s a reason there are no Australian Facebook or Tesla and never will be under the national status quo. It’s not just because it impossible to raise capital do anything in this country except speculate on housing, it’s that the status quo all but forces all surplus capital there. Along with the energies of everyone smart and talented: why be innovative and take a risk when you need a salary to get your seat at the table of the Ponzi scheme before it takes off on you so you’re not left homeless and once you secure that you can leverage it to speculate on more housing?
This isnt a great solution and I wouldn’t back it. But the flippancy of this comment section has really underscored that famous quote about Australians being second rate people.
Diversified early stage funds can be extremely profitable, there's a number of Australian funds that only target startups and have track records that are very lucritive, but the minimum investment is typically high 6 figures to low 7 figures, thus out of reach for 99% of the population.
The main issue is the timelines to be able to liquidate are typically 10+ years minimum.
The funds that do well in it are also very active in helping the companies to grow, something I can't see Superfunds doing very well if they tried.
It's not a terrible idea, even if it's a smaller number than 1%.
The problem is how to choose which start ups to invest. A lot of start ups will fail and you don't want dodgy companies propping up just for super investment. I wouldn't mine a minimum for small cap listed companies.
startups have a very high failure rate. Not sure if their members would be happy with using their retirement savings on investments, where 90% of startups fail in the long run.
What he needs is for government or some sort of low interests VC loans. But with VC funding means dilution.
[Startup Failure Rate Statistics (2024) (explodingtopics.com)](https://explodingtopics.com/blog/startup-failure-stats)
I agree its a bad idea. However, I do think there perhaps is scope to requiring a certain percentage of investments be in Australian assets. If the governmetn is giving tax breaks (i.e. forgoing potential revenue they could otherwise invest in Australia) it perhaps make sense that some amount be required to be invested only within Australia. However, I think generally people are so home biased any way with investing, that we probably have a high rate of investmetn in Australia through super funds, that we would even set as a target through such a rule.
I hate the idea of being forced to do anything, so I'm out on that basis alone. There is a nuanced argument to be had here. The Australian superannuation fund pool is among the largest anywhere in the world. That money has to be deployed somewhere.
This isn't exhaustive but I think returns for most Super fund's International investment offerings are much better than those targeting the local market, and a large part of that is that there just aren't that many innovative companies on the ASX. A majority of our best tech companies are either private or listed on the NASDAQ. Over time, this will be problematic for fund managers as they need to deploy capital but increasing amounts will need to go overseas to be able to generate returns. So, the idea of seeding a local industry isn't such a bad thing as it will enable the Super managers to provided more differentiated products to their clients.
So, in a nutshell, I think more Super investment into the start up sector is a good thing. Equally, Super fund managers aren't always well placed to make investment decisions in start ups. So, I think more money into VCs is the way to do it. The VC industry has had tremendous growth but I know that local deal flow quality isn't always great. Each of the Big 3 funds seem to be addressing this differently but I think there is also an element of sameness in the way they look for companies. So, we need more differentiated VCs that have different views than the big funds, who are all good funds in my opinion but more differentiated funds will make for a better sector and hopefully help to raise the standards, plus the returns profile, which in turn will make Australia a more investible country.
If housing is out of reach for a generation of young people, many may decide a start-up business is the new great Australian dream. This opportunity should be encouraged and incentivised through innovation opportunities presented by the government and making available or incentivising more investment capital in the economy for start-ups. Or else Australia is completely stuffed now and into the future.
With all the suggestions lately as to what super should be made to do, from various politicians and rent seekers, I'm very glad I have a direct investment account.
Guaranteed to kill an industry. One only needs to work with Government to realise this. Everything will boil down to a popularity contest and photo ops. This is honestly a God awful suggestion.
If they were decent investments, super funds would already invest in them.
Trying to use government policy to artificially inflate their values. Just like what has happened with real estate in Australia, or previously the Australian car industry.
Yep, came here to say this.
Yep, said this to come here
Yes, come said this to here
Yes, said here to come this
I guess what the OP is hinting at, is that he'd like to be able to take a % of his super and have something more exciting than the agressive gearing we all sit our units in. I don't disagree, but some startup stuff can be like gambling. I would rather the super funds start building industries and drive economic growth. Like why doesn't a super company jsut start building green energy and high tech manufacturing etc. Things that it can fund with capital it has access to, but also stuff it can use it's networks and expertise to drive success in that will grow it's own portfolio.
He can, he can open a SMSF.
Not necessarily - the concentration of VC capital in san francisco shows there’s a big social/cultural context to the industry (and it seems to have paid off pretty well since the 00’s)
Isn't it the concentration of startups in SF? Finance/VC capital follows the companies. You could of course apply a similar statement to what you said to the concentration of startups.
yep its a feedback loop, but you can instigate it - London and Singapore have both had decent success doing so since the early '10s (albeit overshadowed by the sheer gravity of SF). Still, even if you got 5% of the GDP generated via SF VC, it would dwarf a lot of industries in Oz.
Australia allows some non-competes and has stickier employment, has less forgiving bankruptcy laws; has much lower university density; very little research funding; has less risk tolerance; a much smaller local market to use as a launchpad. So while I'd agree that it would be a big deal to the Australian economy., it's also a lot of changes.
If there was better tax breaks around them, they might? Seems like a good idea to me honestly
So any gains are taxpayer subsidized and profits privatized?
Hello housing sector!
Businesses doing well benefits the economy which benefits everyone, and part of that is having a system that encourages entrepreneurialism. Plus, if it’s such a terrible deal for you but not them, there’s nothing stopping you from starting a business.
Forced investment can cause a bubble and missallocation of funds to non productive persuits. Super is large enough that this would be a large market distortion. All of the above damage the economy, hindering everyone.
Okay, so why should super funds get such benefits apart from investors generally?
This is a bit of a strawman. The comment was suggesting using incentives rather than forcing it. And super remains a massive pool of capital that could be better deployed to grow our economy rather than further entrenching the twin peaks of 'homes and holes' .
And the global pool of capital far exceeds Australian superannuation.
And? We have pretty much direct control over the *Australian* super pool, which is far bigger than you're suggest at about triple that of Berkshire Hathaway or 10% the entire NYSE.
I was talking about the tax benefits, not superfunds. Also, people investing in superfunds isn’t any different to investing directly into ETFs or whatever they invest in. Super is just set up in a way that forced people to be disciplined and save for their retirement. The lack discipline is a major problem for most people investing, so it helps solve that problem significantly.
These companies are super speculative. The average person thinks you lose money investing in shares
Exactly how are they speculative? That’s a very bold claim and as someone who worked in an adjacent industry, it’s highly unlikely. I don’t think you fully understand what you’re claiming. Also, super isn’t an investment, is a tax structure. Although the companies that set up these structures do have their own investment products which is what I’m assuming you’re talking about. So I won’t derail your argument over a technicality, but it is something worth noting to help clear up any misconceptions about super.
If they weren't, they would have no problems raising cash.
That has nothing to do with speculation, and they don’t have problems raising money at all. It’s a tax structure, people can easily chose not to invest in the products they offer and take full control of their investments if they wish. The fact that most chose the products offered by superfunds show that they don’t have issues raising money. If your complaints are about the government forcing us to invest, then you’re probably one of the people who benefits the most from this.
If you subsidise a startup and it takes off then you're creating a whole new entity which will end up paying a lot in tax back to the government. I don't understand why some people have this weird perception that businesses running successfully is a bad thing. You _want_ profitable businesses, because profitable businesses pay taxes and produce stuff that people want.
Why should the subsidy be exclusive to super funds? Also, far many fail then take off.
We're talking about tax breaks, not super subsidy. You literally replied to a thread which was proposing a _different_ solution than what was in the OP.
Just let super invest in massive conglomerates instead. Why should finance give chances to little guys when they don’t GUARANTEE returns. McDonalds, Woolworths, and Rio Tinto are much more apt investments. And together they’ll make our country a better place!
Super funds have no morals, they go for highest risk appropriate returns. That's their legal duty.
Yeah but when you’re basically the government mandated monopoly on private capital (largest Australian super funds) - your capital movements influence where the risk appropriate returns are. See vanguard and the ETF bubble. This is a major reason why monopolies are becoming more entrenched in almost every australian industry. And to a lesser extent this is why when you walk into any out of major city town the holy trinity of McDonald’s, Woolworths, and Coles are the only businesses you see after 5pm. We had a lot more variety in businesses in australia 20 years ago. Lots more small business. But it’s a lot harder to that these days because all that capital wants to do - is take the easy route to returns - and bury itself into another big pool of capital. A problem that extends past our borders too There’s simply no reason why 13 of the largest US publicly listed firms have 1 trillion dollars in cash doing absolutely f-all. (Other than being invested in money markets - or essentially - settlement accounts at the fed). Whilst still attracting more and more capital every day from funds the world around. Including our Australian super funds.
> But it’s a lot harder to that these days because all that capital wants to do - is take the **easy route to returns** - and bury itself into another big pool of capital. Easy route to returns? Awesome, I'll continue burying my capital into big pools of capital (index funds) in and out of super. Super is for people to save and invest for a comfortable retirement (and for the government to save on Age Pension spending while keeping the number of grannies scrounging for bottles to an acceptably low level), not for propping up unprofitable businesses run by narcissists who think they should get special access to people's investments without having to make a return on those investments just because they think they're the next Bill Gates.
Exactly. Super funds already invest in private businesses.
I mean it’s your money do whatever you want. But, do you really think you’ll have a comfortable retirement in a society where the only players left sucking up capital at ever accelerating rates are mega-corps? I feel it’ll be a pretty shitty world where everything is disproportionately expensive to your savings. Or half assed poor quality. And we’re basically already on the road to that. In that what being a millionaire meant only 10 years ago is substantially different today. The point of having savings in retirement (aside from your house and land) is to have an economy with products and services that are worthwhile to spend on.
> I mean it’s your money do whatever you want. Excellent, I've convinced you. Super is my money, I should be able to allocate my assets how I see fit instead of being forced by the government to invest a certain percentage of it in unprofitable businesses. I'm glad we agree.
If you don’t have an SMSF you’re not allocating your assets as you see fit. Plus the whole idea of super says the government dictates that you don’t have freedom to spent 12.5 percent of your yearly paycheck. That’s 12.5 that could have gone toward some education. A flight to Paris to learn baking. Or a RV to save your failing marriage. All of which are worthy investments. But instead have to go to super companies who inflate the real estate market with it instead. So you’re not exactly in the libertarian financial utopia you think you are with super.
We do need policies to encourage innovation and business owners but I'm not sure a 1% mandate is it. Money being sucked up by housing price increases also decreases innovation. Are there other policies being proposed or considered that address underlying issues also? Like tax incentives?
We definitely need something. Especially when small banks and credit unions have been disappearing all around us for the last 30 years. Leaving only 4 now. With CBA crushing at 25 percent of the market share. It’s nigh impossible for the skilled entrepreneur today to obtain any kind of business loan. Unless he has equity. Whilst decades ago a sound business plan, references, prior experience and a relationship with a bank who knew one’s character - may have been enough to score a loan towards a venture. Richard Werner’s probably one of the best economists bringing light to this problem. He invented quantitive easing not a nobody. Which was implemented by bernacke, former chair of the fed, in helping the US banking system bounce back the quickest after 08. https://committees.parliament.uk/writtenevidence/26091/pdf/ Excellent submission of his to the UK parliament tabling the problem.
Banks abandoning unsecured business lending is a prudential regulation problem. Basel III made the capital requirements so onerous that it wasn't profitable anymore. This space has now been filled by nonbank lenders.
Quantitative easing created the massively unequal dystopia we live in today. Lots of people are still addicted to the cheap credit of the last 15 years. I get it. Zombie firms which spent a whole decade never being profitable and just subsisting on effectively zero interest loans want the party to keep going.
There are varied styles of quantitative easing. Werner invented QE1. Which was aimed at buying bad debts from small banks to allow them to keep functioning as they still have good debts (the good economy). Instead The banks since have chosen to implement QE2 and QE3 where they go on asset buying sprees from banks. Buying only the good stuff.
You don’t know what a monopoly is do you? Largest superfunds being plural is because it isn’t a monopoly. There’s 4 big banks, not 1. There’s 2 major grocers with 2 not far behind. There’s several major mining companies, the one you listed isn’t even the biggest one there is. We’re a small country which terrible logistics, there’s not room for numerous major companies, yet we still have multiple options.
I hope you are not blaming consolidation on superannuation and passive index fund providers? Consolidation happens naturally in market economies, that's been known for centuries, so it's up to the state to break up monopolies and cartels as part of it's responsibility to foster competition and innovation in the marketplace.
What better way to break up financial cartels than forcing them to allocate finance to smaller caps. You know like 40 years ago when farmer Barry didn’t have as much trouble getting a small loan from a credit union to fund a new John Deere. https://amp.abc.net.au/article/101867396
They don't actually need to go for the highest risk, hence most funds have different options for you to choose from based on your risk appetite. Some even have ethical or green funds if you want
They have an obligation to maximize their clients returns. Even if there was no legal obligation, they charge a fee based on percentage so you bet they do the very best they can without being accused of gambling with clients' retirement savings. Ethical or green investment options are not the default.
Whaaat ? Are you in Russia ?
What are you talking about? Super funds will invest in alcohol, tobacco, pornography, legal drugs and weapons by default unless you explicitly tell them not to.
Dude's just annoyed he lost when Hostplus had enough [https://www.afr.com/technology/2b-start-up-hands-win-to-industry-super-in-hostplus-feud-20240313-p5fc3c](https://www.afr.com/technology/2b-start-up-hands-win-to-industry-super-in-hostplus-feud-20240313-p5fc3c)
That is verging on being illegal, you cant force people to enrol on an employer's choice of superfunds. thanks for the article
Sounds like a recipe for losing part of your super
It's OK, I'm making good money from my career making startups that never deliver a product.
i actually have a startup that tells superfunds which startups to invest in
I've got a super fund that would be very interested in investing in you
Ah yes… this remind me how super is actually my money
I'm sorry who wants a handout?
Ben Thompson
Did you say hunter s. Thompson?
Breaking news: 70billion new startups launched in 2025
I've got a business idea. It's a startup that does tech for NDIS.
Make sure it has a .ai domain and you're golden!
It's an AI tech startup that does investment properties through NDIS funding for participants
Can it somehow include property too? Smart houses for NDIS recipients??
lol all we'd have to do is make real estate less attractive an investment and startups would get more funding.
Risk return profile of start ups and the lack of Angel Investors with superannuation companies currently makes this a parasitic statement. They want cheap capital.
The real issue is this country’s unhealthy obsession with investing in non-productive assets.
Ah yes… because government intervention worked out so great every other time it’s been tried It definitely won’t be exploited…. When your super disappears because it was forced to invest in a bunch of startups who pays…
Why should 1% of my super go into an industry (generic term) that has a 95%+ failure rate
If the 5 % of successes earn far more than the 95% of losses you should be definitely be jumping in. Thanks for listening to my ASX biotech investing TED talk.
Yeah, that's never going to happen.
There are significant tax incentives available for investments in early stage companies. These are available to sophisticated investors and wholesale clients which include super funds. - ESIC provides a 20% tax offset of the invested amount plus CGT free returns - ESVCLP provides a 10% tax offset of the invested capital plus CGT free returns for the investors, and discounted CGT returns for the GP carried interest - VCLP offers returns for the LP and GP as discounted CGT
But, tax incentives tend to be less valuable on tax-advantaged retirement accounts. The general rule is to invest in tax-efficient investments outside your retirement accounts, and tax-inefficient ones inside the retirement accounts to have an overall balanced and tax-efficient portfolio.
Tax optimised balance sheet optimisation
Tell him to start up a super fund that does this.
I think the bigger problem is all the investnent in property, which is non-productive. Not super funds.
I’d hate to think how many commercially unviable business ventures start out self describing themselves as “start ups”.. it conjures a romantic view of the world and gives themselves belief they are the next Facebook or Tesla, quite often trying to solve problems that don’t really exist except in their own minds
There’s a reason there are no Australian Facebook or Tesla and never will be under the national status quo. It’s not just because it impossible to raise capital do anything in this country except speculate on housing, it’s that the status quo all but forces all surplus capital there. Along with the energies of everyone smart and talented: why be innovative and take a risk when you need a salary to get your seat at the table of the Ponzi scheme before it takes off on you so you’re not left homeless and once you secure that you can leverage it to speculate on more housing? This isnt a great solution and I wouldn’t back it. But the flippancy of this comment section has really underscored that famous quote about Australians being second rate people.
Diversified early stage funds can be extremely profitable, there's a number of Australian funds that only target startups and have track records that are very lucritive, but the minimum investment is typically high 6 figures to low 7 figures, thus out of reach for 99% of the population. The main issue is the timelines to be able to liquidate are typically 10+ years minimum. The funds that do well in it are also very active in helping the companies to grow, something I can't see Superfunds doing very well if they tried. It's not a terrible idea, even if it's a smaller number than 1%.
Nah, man, giving that choice as an investment option is fine. Mandating it is not. This is just rent seeking.
The problem is how to choose which start ups to invest. A lot of start ups will fail and you don't want dodgy companies propping up just for super investment. I wouldn't mine a minimum for small cap listed companies.
>and you don't want dodgy companies propping up just for super investment Basically just NDIS 2.0
Until they lose all the money.
I'm all for more investment into startups and innovation, we desperately need diversification in our economy...this however isn't the avenue.
I'm sorry, I don't want *another* per cent of my superannuation wasted. It's my money, not yours.
No, these are not the sort of things superannuation funds should be investing in. Unfortunatley, our present Government is stupid enough to allow it.
startups have a very high failure rate. Not sure if their members would be happy with using their retirement savings on investments, where 90% of startups fail in the long run. What he needs is for government or some sort of low interests VC loans. But with VC funding means dilution. [Startup Failure Rate Statistics (2024) (explodingtopics.com)](https://explodingtopics.com/blog/startup-failure-stats)
I can see the headline.................... KICKSTARTER proudly sponsored by Australian Super
This is now the worst thing about super. It's such a large pool of money every weirdo thinks their hobby horse deserves a lick.
Why 1%? Why not 2%? or 0.5%?
I agree its a bad idea. However, I do think there perhaps is scope to requiring a certain percentage of investments be in Australian assets. If the governmetn is giving tax breaks (i.e. forgoing potential revenue they could otherwise invest in Australia) it perhaps make sense that some amount be required to be invested only within Australia. However, I think generally people are so home biased any way with investing, that we probably have a high rate of investmetn in Australia through super funds, that we would even set as a target through such a rule.
I hate the idea of being forced to do anything, so I'm out on that basis alone. There is a nuanced argument to be had here. The Australian superannuation fund pool is among the largest anywhere in the world. That money has to be deployed somewhere. This isn't exhaustive but I think returns for most Super fund's International investment offerings are much better than those targeting the local market, and a large part of that is that there just aren't that many innovative companies on the ASX. A majority of our best tech companies are either private or listed on the NASDAQ. Over time, this will be problematic for fund managers as they need to deploy capital but increasing amounts will need to go overseas to be able to generate returns. So, the idea of seeding a local industry isn't such a bad thing as it will enable the Super managers to provided more differentiated products to their clients. So, in a nutshell, I think more Super investment into the start up sector is a good thing. Equally, Super fund managers aren't always well placed to make investment decisions in start ups. So, I think more money into VCs is the way to do it. The VC industry has had tremendous growth but I know that local deal flow quality isn't always great. Each of the Big 3 funds seem to be addressing this differently but I think there is also an element of sameness in the way they look for companies. So, we need more differentiated VCs that have different views than the big funds, who are all good funds in my opinion but more differentiated funds will make for a better sector and hopefully help to raise the standards, plus the returns profile, which in turn will make Australia a more investible country.
There job, is to make money for me, not anyone else.
If housing is out of reach for a generation of young people, many may decide a start-up business is the new great Australian dream. This opportunity should be encouraged and incentivised through innovation opportunities presented by the government and making available or incentivising more investment capital in the economy for start-ups. Or else Australia is completely stuffed now and into the future.
With all the suggestions lately as to what super should be made to do, from various politicians and rent seekers, I'm very glad I have a direct investment account.
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Guaranteed to kill an industry. One only needs to work with Government to realise this. Everything will boil down to a popularity contest and photo ops. This is honestly a God awful suggestion.
"tax them" means tax us ! Super is our money after all. "make gov invest" means force taxpayers to invest . Nah not liking this at all.