South Australia's Budget Blown By Big Super Loss
16 July 2002
Green co-leader Rod Donald today told a Christchurch Rotary Club that Green opposition to the Government's superannuation fund has been vindicated, with news that the South Australian Government's Superannuation Fund is facing long-term losses of almost half a billion dollars.
Plunging world stockmarkets have caused the loss with preliminary end-of-financial-year figures showing the fund lost $30 million this year, delivering a minus four per cent result instead of the forecast profit of 7.5 per cent.
"The South Australian decision to invest its superannuation funds in offshore markets has been a disaster and is the bluntest warning yet to our own Government not to make the same mistake," said Mr Donald.
The South Australian Government now has a seriously crippled budget with Treasurer Kevin Foley scrambling to cut $30 million of spending to counter the losses and warning the public to expect 'a very, very hard State budget'.
Meanwhile Rod Donald told the Rotary Club that if Dr Cullen had invested the first $600 million of the superannuation fund on July 1 2001 in stocks listed on the UK FTSE and the US Dow Jones 30, they would have lost around a third of their value, and be worth only $399 million. The $600 million is still sitting in the Debt Management Office.
The Dow Jones has dropped 18.6 per cent during the last year and the FTSE has collapsed 30 per cent in the same period. However because the New Zealand dollar has appreciated 19.4 per cent against the US dollar and 7.8 per cent against the UK pound, anyone selling their Dow Jones and FTSE shares would take an exchange rate loss on top of the loss on their shares.
"Right from day one the Greens have warned the Labour / Alliance Government that it is foolish in the extreme to invest billions of taxpayers dollars on the global sharemarkets.
"It is just plain crazy to gamble public money on the casino economy because, as we are seeing right now, the risks are all too real.
"It is not too late for the Labour Government to agree with the Greens and invest instead in our own young people and our own economy."
A full copy of Rod's speech is available on request.