The impact of the global financial crisis has exposed how overly reliant Australia is on foreign capital, National Australia Bank (NAB) group chief executive Cameron Clyne has said.
To address this issue, NAB would push for superannuation contributions to be increased to 12-15 per cent in its submission to the Henry Review, he told delegates at MLC’s Professional Advice Congress in Cairns last week.
“I’m urging him [Dr Ken Henry] also to think about potentially providing tax incentives for other forms of retirement savings. The reason being that every marginal dollar we get, the Australian banks are in the foreign markets for about $100 billion every year,” he said.
“Now if we can get superannuation as an example up to 12-15 per cent, I think it will bias domestic managers towards greater fixed income products which will flow its way into supporting the banks, making us therefore rely on Australian savings and not foreign savings.”
He said while the success of Australia’s economic resilience should be celebrated, the global economic picture remained fragile.
“The Americans need to save more, China needs to spend more – particularly domestically – and Europe is a mess. It’s bureaucratic and it’s in conflict between the new and the old,” he said.
“The new emerging economies of Eastern Europe are high growth, and that high growth is being funded by the old Europe and has not been necessarily done in a safe fashion, and that’s going to potentially blow out at some point.”
Clyne said toxic debt issues needed to be dealt with on both private and public balance sheets.
