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All super funds have made bad investments.

RBF is certainly no exception.

The Hobart Airport investment via Tasmanian Gateway Consortium (TGC) was a classic example, predicated on the assumption that the good times would last forever as per Macquarie Bank’s crystal ball.

Macquarie came to town as part of Operation Stealing Candy from a Baby http://tasfintalk.blogspot.com.au/2012/12/hobart-airport-in-trouble.html#more and sweet talked RBF into parting with $100 million for a non controlling minority interest in an airport at nearly twice the going rate at 27 times earnings, which necessitated a high degree of leverage to achieve the required return, which in turn led to the fixing of interest rates to placate nervous financiers, which together with a management fee which approximated 15% of earnings for a bit of paper shuffling and a couple of long lunches with bankers, ended up removing all the investors’ gains.

RBF should have been extracting steady rents from the deal. It was in a good position as a cashed up fund with implicit State Government backing.

Instead it became the perfect partner for the financiers and deal makers as the latter locked in their returns ahead of RBF who ended up with an empty promise of blue sky.

Had RBF been unwilling, it would have been daylight robbery.

But there was worse.

Read more » on John Lawrence’s new blog: Tasfintalk, here

Related: Hobart Airport in trouble?

• RBF in $50 million blunder

NICK CLARK   |  January 04, 2013 12.01am

THE Auditor-General has blown the whistle on a $50 million reporting oversight by the Retirement Benefits Fund in its 2011-12 annual report.

In the report, the RBF failed to disclose that it had written down its investment in the Hobart airport by $50 million—half the original $99.8 million investment in 2008.

Rather, a table suggested that the airport investment had been written down from $113 million to $109.9 million.

However, in a review of state entity finances, Auditor-General Michael Blake drew attention to the writedown.

“The RBF board experienced writedowns during recent years, including a $50.493 million writedown of the board’s investment in the Hobart International Airport Pty Ltd (HIAPL) in 2011-12,” he said.

“It appears tables reported on pages 15-16 of the RBF annual report may be incorrect,” he told the Mercury.

Mr Blake’s report said the writedown “highlighted the need for improvement in policies around investment decisions and monitoring”.

RBF chief executive Philip Mussared said the oversight was regretted and “a formal incident will be recorded”.

Read the rest, Mercury here

• Meanwhile further examples of Tassie financial competence:

Rego rise is now likely

NICK CLARK   |  January 05, 2013 12.00am

THE motor vehicle premiums paid by Tasmanians as part of car registration will be examined in an investigation by the Economic Regulator of the pricing policies of the Motor Accident Insurance Board.

The investigation requested by Finance Minister Scott Bacon before Christmas comes in the wake of MAIB’s loss of $43.6 million before tax in 2011-12 nearly $100 million below MAIB’s own budget forecast.

The result compared with a before-tax profit of $69 million in 2010-11.

The loss was largely a result of investment revenue from MAIB’s $1.1 billion investment portfolio being $54 million below forecast.

The fund experienced a 2.2 per cent return for its investment, which chief executive Peter Roche said was “more than reasonable given the downturn in markets, particularly in the last quarter”.

The loss came despite the number of claims lodged per 1000 registered vehicles in Tasmania being the lowest ever recorded by the MAIB.

The insurer has pencilled in a 3.3 per cent rise for December, presently $344 for a motor car, as it seeks to lift its solvency level into the target range of 20 per cent.

MAIB chairman Don Challen said MAIB would review its premiums in November after the regulator made a decision on revenue.

Nick Clark, Mercury here

• Says Peter:

Not adjusted for inflation, of course, or poor returns

MOTOR ACCIDENTS INSURANCE BOARD (MAIB)
Chairman ($71,462 a year): Donald Challen.

Members ($33,913 a year): Kim Barker, Kate Brown, Danny McCarthy, Peter Roche, Mark Scanlon and Katrena Stephenson.

... Actually, the Don’s busier than I thought:

RETIREMENT BENEFITS FUND BOARD
Member ($35,100 a year): Donald Challen,

TASMANIAN PUBLIC FINANCE CORPORATION
Chairman ($105,303 a year): Donald Challen.

TRANSEND NETWORKS PTY LTD
Chairman ($105,303 a year): Donald Challen.

plus…
MOTOR ACCIDENTS INSURANCE BOARD (MAIB)
Chairman ($71,462 a year): Donald Challen.

Earlier on Tasmanian Times: Airport plunge fails super fund (includes links to earlier TT stories predicting this disaster)