Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 268

Cuffelinks Newsletter Edition 268

  •   24 August 2018
  •      
  •   

Don Argus was Chief Executive of National Australia Bank from 1990 to 1999, a period of growth and rising share prices after the 1991 recession. In the Royal Commission's 10 days on superannuation, NAB was in the witness box an amazing five days. Banks such as Westpac and Macquarie did not appear at all. What did Argus tell The Australian about the evidence he had seen?

"There is a need for basic tenets of honesty, integrity and accountability. Regulations without a spirit of morality do not work ... Having a dense legalised disclosure statement for consumers to read, so organisations can protect themselves, is not the answer."

The worry is that Commissioner Hayne and regulators will stifle business and innovation in response to the poor behaviour, especially when added to the plans to embed regulators within major institutions. There is no doubt the Royal Commission will sharpen up some lazy boards and better principles of governance will be introduced, but regulation is not the only response needed.

Graeme Samuel was President of the National Competition Council in 2000, and he said:

"I defy the best legal minds to produce a set of rules that will compensate for negligence, ignorance, apathy or the many characteristics that will render a board of directors dysfunctional. No process of box ticking will overcome fundamental dysfunctionality of a board of directors."

It's difficult to place the Royal Commission revelations in historical context without sounding nostalgic about the good old days. Bankers were no angels in the nineties. Coincidentally, Cuffelinks' co-founder, Chris Cuffe, joined (Colonial) First State 30 years ago yesterday. As CEO for 12 years, he merged First State with Legal & General, Prudential and Colonial, and often made decisions to close inferior products, even when the margins on the old products were better. He worked on a principle of investor first and corporate second, regardless of the short-term impact on profit when new products were cheaper and better for clients. But Chris has not worked at CFS for 15 years now, and he is too modest to claim 'the old CFS would never have done that'. Indulge us a little on Chris's anniversary with Warren Bird's article on the 'old CFS'.

We have collected examples from two weeks on superannuation at the Royal Commission using dialogue from the witness box to allow readers to consider the evidence.

Politics and the need to plan for Labor policies

With the Liberal Party tearing itself apart in Canberra, investors should pay more attention to Labor policies. SMSFs in pension mode with heavy franking credit refunds are especially exposed, and companies like BHP with about $15 billion in franking credits may push them out to shareholders in advance of a change. Last week's detailed summary of this policy is here. Labor's Chris Bowen still says the policy will commence from 1 July 2019.

In this week's edition ...

Investors focus more on returns from investments than risk, but there is obviously a risk/return tradeoff in all portfolio decisions. Miles Staude makes the case for understanding risk better.

Exchange Traded Funds and index investing have been a success story of the last five years, often bringing lower costs and greater choice to investors. Dugald Higgins says that like managed funds, there are consequences if an ETF does not reach a critical size supported by a strong issuer. Then Winston Sammat gives a short summary of conditions in the Australian REIT sector.

The recent cap on concessional contributions for everyone at $25,000 a year will mean many people exceed this limit. Graeme Colley explains what happens next.

Lucy Brogden is Chair of the National Mental Health Commission, and Jeannene O'Dayinterviewed her on the links between mental and financial healthDonal Griffin takes us through the drama of the challenges to the will of famous author, Colleen McCullough.

This week's White Paper from Clarion Partners (a property affiliate of Legg Mason) shows how disruptive technologies are changing commercial real estate. This is an asset class worth knowing more about. The July 2018 Listed Investment Company Review from IIR below looks at small cap successes, how banks dragged down large caps and the growth of international.

Graham Hand, Managing Editor

 

Edition 268 | 24 Aug 2018 | Editorial | Newsletter

 


 

Leave a Comment:

     
banner

Most viewed in recent weeks

Australian house prices close in on world record

Sydney is set to become the world’s most expensive city for housing over the next 12 months, a new report shows. Our other major cities aren’t far behind unless there are major changes to improve housing affordability.

The case for the $3 million super tax

The Government's proposed tax has copped a lot of flack though I think it's a reasonable approach to improve the long-term sustainability of superannuation and the retirement income system. Here’s why.

The revolt against Baby Boomer wealth

The $3m super tax could be put down to the Government needing money and the wealthy being easy targets. It’s deeper than that though and this looks at the factors behind the policy and why more taxes on the wealthy are coming.

Meg on SMSFs: Withdrawing assets ahead of the $3m super tax

The super tax has caused an almighty scuffle, but for SMSFs impacted by the proposed tax, a big question remains: what should they do now? Here are ideas for those wanting to withdraw money from their SMSF.

Tariffs are a smokescreen to Trump's real endgame

Behind market volatility and tariff threats lies a deeper strategy. Trump’s real goal isn’t trade reform but managing America's massive debts, preserving bond market confidence, and preparing for potential QE.

The super tax and the defined benefits scandal

Australia's superannuation inequities date back to poor decisions made by Parliament two decades ago. If super for the wealthy needs resetting, so too does the defined benefits schemes for our public servants.

Latest Updates

Are franking credits hurting Australia’s economy?

Business investment and per capita GDP have languished over the past decade and the Labor Government is conducting inquiries to find out why. Franking credits should be part of the debate about our stalling economy.

Superannuation

7 examples of how the new super tax will be calculated

You've no doubt heard about Division 296. These case studies show what people at various levels above the $3 million threshold might need to pay the ATO, with examples ranging from under $500 to more than $35,000.

Have Apple and Google reached the beginning of the end?

It might be hard to imagine a world where Apple and Google aren’t dominant, but disruption often starts with tiny cracks. AI's emergence into the mainstream might have set the stage for a new generation of leaders.

Superannuation

Did retirees lose out when they accepted defined benefit schemes?

Defined benefit pensions were designed to offer security in retirement. But new tax policies and arbitrary limits now erode their value - especially for Australians who contributed their own savings to these plans.

Property

Why Australia's agricultural land boom has stalled

Farmland prices have flatlined, bringing one of the most dramatic rural property cycles in Australian history to an end. The market for agricultural land now seems to be entering a new and more nuanced phase.

Property

The retail property niche offering income and growth

Neighbourhood shopping centres have fought off one perceived threat after another. What's more, they continue to offer secure income from blue-chip firms and other tenants linked mostly to essential spending.

ASX plans to attract more IPOs don’t go far enough

High-profile Australian stock market listings, like Guzman Y Gomez's IPO in 2024, are rare. ASIC aims to streamline the IPO process to boost listings, but faces barriers like share structures and governance.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.