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Tuesday, 6 June 1989
Page: 3416


Senator FOREMAN —My question is directed to the Minister representing the Treasurer. What evidence does the Government have that the expectation of the availability of imputation credits is resulting in a change in balance of investment away from foreign equities and into domestic equities?


Senator WALSH —Treasury has provided me with a table showing the change in the percentage of portfolio estimates of exposure in domestic and foreign equities of 18 superannuation funds between December 1987 and November 1988. It is a most instructive table and I table it. I also seek leave to have it incorporated in Hansard.


The PRESIDENT —Is leave granted?


Senator Chaney —Mr President, I have not seen the table and I would like to see it. I would also like the Minister to clarify whether this is a matter which is relevant to the discussions we are about to have in committee. I do not wish to object to the question on that basis, but I simply ask the Minister to clarify whether, in seeking leave, he is referring to the same matter he was referring to in debate on the superannuation legislation yesterday.


Senator WALSH —Mr President, I certainly do not mind Senator Chaney looking at it. The question seeks facts and I have some facts available about the changes in the balance of foreign and domestic equity investment. The table shows that the Australian Mutual Provident (AMP) Society increased its domestic equities from 25 to 28 per cent and its foreign equities declined from 17 to 13 per cent. Australian Eagle's domestic equities increased from 33 to 41 per cent and its foreign equities declined from 15 to 10 per cent. Hambros' domestic equities increased from 23 to 31 per cent and its foreign equities declined from 14 to 11 per cent. BT Australia Management, which is a significant name in the context of something that happened yesterday-not in the House I hasten to add-increased its portfolio exposure of domestic equities from 26 to 37 per cent and decreased its foreign equities from 26 to 13 per cent over the shorter period from December 1987 to June 1988.

Only a very few funds did not increase their holdings of domestic equities relative to foreign equities over that period. One which did not increase its holding of domestic equities over foreign was Baring International, which held no domestic equities in either period. I understand that that firm is or was advised by Dr Hewson. Another one which decreased its holdings of domestic equities in that period was Elders. It decreased its domestic equities from 16 per cent of its total portfolio to 13 per cent.

The figures flatly refute a tatty little table prepared by some management consultant and eagerly hawked around the Press Gallery yesterday afternoon by Mr Connolly. I also table, as it has some relevance to this issue, a letter I received today from Rothschild Australia. It says on the bottom of the letter that copies have been distributed to Mr Connolly, Senator Bishop and Senator Haines. I also have an article from the Australian Super Review of January 1989 on the mix of equities. The article gives the views of some 27 fund managers. I will quote just a few. The AMP referred to `Not selling out of shares after the ``crash'' and holding a high proportion of quality shares paying franked dividends'; Armstrong Jones spoke of a `Slight reduction in exposure to equities; increased emphasis on quality of equities and imputation shares'; and Barclays spoke of `Reduced exposure to overseas equities; increased liquidity arising mainly through reduction in fixed interest investments'. As I mentioned before, Baring International does not have any domestic equities. BT Australia Management stated:

Apart from changes to investment decisions due to changes in the overall economic environment, clearly the most important exogenous impact on investment decisions was the May Statement. The result of this was not to change our overall investment style. It has clearly made Australian stocks paying high franked dividends more attractive to superannuation funds.

I recommend that article to both Mr Connolly and Senator Bishop for their study and edification.


The PRESIDENT —Is leave granted for the table to be incorporated in Hansard?


Senator Chaney —Yes.

Leave granted.

The table read as follows-

INVESTMENTS IN DOMESTIC AND OFFSHORE SHARES BY SUPERANNUATION FUNDS

Summary of figures extracted from Australian Super Review Article of January 1989 (copy attached)

Fund

Size

December 1987

Domestic

Offshore

November 1988

Domestic

Offshore

$

%

%

%

%

AMP Society ...

6617

25

17

28

13

Australian Eagle ...

1000

33

15

41

10

Barclays ...

250

23

22

26

18

Baring International ...

80

0

80

0

94

BT Aust Management ...

6045

26

14

37*

13*

Citicorp ...

200

32

20

40

12

Elders ...

2000

16

19

13

9

Friends' Provident Life ...

309

35

14

28

10

Hambros ...

70

23

14

31

11

J.P. Morgan ...

812

21

14

29

11

Maple-Brown Abbot ...

80

35

15

40

15

National Australia ...

560

39

16

38

10

Occidental Life ...

253

29

7

19

2

PNC International ...

73

40

9

32

13

Prudential Assurance ...

1200

22

8

29

8

Rothschild Australia ...

1401

27

22

42

12

Sun Alliance Life ...

148

45

16

33

13

Westpac ...

5600

30

30

28

24

* June 1988