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It's all a touch unsettling for retiring types

A certain lack of interest takes the gloss off what was a super idea at the time, writes Michael West.

A certain lack of interest takes the gloss off what was a super idea at the time, writes Michael West.

POOR old self-funded retirees! All they have to show from Australian shares over the past five years is a total return of zero.

And to think it all looked so good for a while since the super system came into being in 1992, annual compound growth used to run at 15 per cent. You could live off that!

Now the 20-year return on superannuation averages less than 10 per cent, and the 10-year return roughly 6.5 per cent. Unless you were a tinned-food, atomic shelter-type hoarding your gold bars, it has been a rough ride of late. But amid all the despair, there are some good things:

One: pressure off mortgages. Interest rates are headed lower.

Two: pressure off petrol prices.

Three: the strong $A is great for overseas travel. For retirees though, who are not supposed to have a mortgage and probably cannot afford much overseas travel, it's all a bit glum. And as interest rates fall, so do bond yields and returns on fixed-interest investments.

Although retired investors generally back their well-remunerated company boards when it comes to annual meetings, things could get a little more terse this year when AGM season rolls around.

Qantas rumblings

THINGS will definitely be a tad terse at the Qantas annual meeting. This reporter has some degree of sympathy for anybody running an airline. Huge staff, myriad stakeholders, high fixed costs and so on.

And in view of the economic turmoil and high oil prices, chief executive Alan Joyce has not exactly had clear skies. Nonetheless, the dogs are barking or the rats are hissing, perhaps.

Don't be surprised if a resolution turns up in the notice of meeting this year seeking to depose Joyce, and perhaps chairman Leigh Clifford. Such is the level of antipathy among some shareholders that a vote of no confidence is potentially in the mix. Although Qantas won a few plaudits this week for trying to do something big, there is some downside.

Firstly, the shift offshore will not endear management to Canberra. The capital has had an unwritten compact with the national carrier for decades.

Qantas lounge memberships, Qantas promises on unprofitable rural routes, government protection on the Pacific route, big government travel budgets, etc.

That compact might not be so solid any more. It was always expected the Qantas cost base would be a bit higher and the jobs kept at home. There is also the strategic issue that, in case of war, Qantas heavy engineering needed to be entirely in Australia.

On Joyce's other flank is a resurgent Virgin Blue, led by the bridesmaid for the top job at Qantas, John Borghetti. Alan Joyce might have beaten Borghetti for CEO but Borghetti has since won the affection of the investment community for his strategic nous.

Now, as if unions, the share price and the global aviation markets aren't enough, Joyce has Borghetti trying to nick his government and top corporate accounts, to boot.


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