current account deficit<\/a> equals national saving minus national investment. So, invest more than you save during a period \u2013 as we almost always do \u2013 and your current account is in deficit. You fund that deficit by borrowing the savings of foreigners, or allowing them to own Australian shares, businesses or property.<\/p>\nWhich brings us to compulsory super. Keating and his ACTU mate Bill Kelty decided to introduce the \u201csuperannuation guarantee\u201d mainly to give ordinary workers something better than the age pension to live on in retirement, but also because the econocrats decided Australians should be saving more.<\/p>\n
The other rich countries had introduced national retirement schemes after World War II, but Keating\u2019s scheme was very different. Whereas their schemes had contributions going straight into the budget, and pension payments coming out of that year\u2019s budget, our contributions go to a private sector super fund for investment, with the same fund sending you regular payments once you\u2019re in \u201cpension mode\u201d.<\/p>\n
We\u2019re not only saving more than we used to, we\u2019re saving more than other rich debtor countries.<\/p>\n
It\u2019s mainly because our scheme has money invested and piling up in super funds, and because roughly half that money is invested on foreign sharemarkets, that our net foreign liabilities have fallen so far relative to GDP \u2013 and may one fall to the point where our foreign liabilities become our foreign assets. Our super savings now total $4.2 trillion, with O\u2019Mahony estimating they could be as high as $38 trillion by 2063.<\/p>\n
The national super scheme has been far more successful than expected in increasing Australia\u2019s rate of saving. We\u2019re not only saving more than we used to, we\u2019re saving more than other rich debtor countries.<\/p>\n
Largely as a consequence, we\u2019ve been running a surplus on our international trade in goods and services since June 2018. And although we still run a current account deficit, it\u2019s much smaller \u2013 about 2 per cent of GDP.<\/p>\n
Loading<\/p>\n
Back in the \u201980s and \u201990s, our net foreign liabilities were high because as well as our high and growing net foreign debt, we also had much foreign equity investment in Australia, particularly ownership of our mining industry.<\/p>\n
But this equity liability to foreign owners of Australian companies and shares has steadily been outweighed by our growing ownership of shares in foreign companies. In June this year, our net foreign equity assets of $760 billion offset our (still-growing) foreign debt of $1420 billion, to reduce our net foreign liabilities to $660 billion, a mere 24 per cent of GDP.<\/p>\n
And although it\u2019s had help from an undervalued Aussie dollar and an overvalued world share market, most of the credit for this \u201cextraordinary\u201d fall in our net liabilities to the rest of the world goes to our unusual national super scheme.<\/p>\n","protected":false},"excerpt":{"rendered":"The consternation continued until the ANU\u2019s Professor John Pitchford told the econocrats to wake up. All the international…\n","protected":false},"author":2,"featured_media":143187,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[11],"tags":[64,63,99,164],"class_list":["post-143186","post","type-post","status-publish","format-standard","has-post-thumbnail","category-economy","tag-au","tag-australia","tag-business","tag-economy"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/143186","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=143186"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/143186\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/143187"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=143186"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=143186"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=143186"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}