Tony Abbott a 'pre-Copernican obscurantist,' former prime minister Paul Keating says.
FORMER prime minister Paul Keating has called on Australia's $1.4 trillion of superannuation savings to be used for home loans - as superannuation funds had their worst month in more than two years.
Speaking at an investment conference in Melbourne, Mr Keating said one way to reduce banks' reliance on skittish international funding markets - which they have blamed for not passing on all the Reserve Bank's interest rate cuts - was for super funds to fund the housing mortgages of Australian banks.
''Our banks should be doing less touting on the international markets and fulfilling their funding at home by having the superannuation assets, some of them, directed towards the books of the Australian major four banks,'' Mr Keating said. ''I would prefer that than having the banks out there funding half their books in these soggy international markets.''
He said that although between 55 to 58 per cent of the big four banks' funding now came from deposits, this would likely fall to about 50 per cent once Australia's current savings boom comes to an end. If that happened it would leave the big four more exposed if credit markets seized up again during another crisis.
In the depths of the financial crisis in 2008, Australian banks were able to use the Commonwealth's AAA rating for a fee.
The Australian Bankers' Association chief Steve Munchenberg said ''super funds should look more carefully at fixed interest products, particularly as we've got more people approaching retirement'', but should not be directed to do so.
The comments come as super funds posted their worst monthly return in two years last month after the European debt crisis pummelled sharemarkets, including a 7.3 per cent fall on the ASX200 benchmark index.
The median balanced growth fund sank 2.3 per cent in May, following a 0.4 per cent increase in April, according to super fund tracking group Chant West, which defines growth funds, the most common allocation in Australia, as those with 61 to 80 per cent of their investments held in growth assets.
In other comments, Mr Keating described Opposition Leader Tony Abbott as a ''pre-Copernican obscurantist'' for his relentless opposition to the carbon tax, but said Labor had failed to create a compelling narrative for its time in office.
Now working with advisory and private equity firm Lazard, Mr Keating also labelled German Chancellor Angela Merkel as ''intellectually limited'' and the US Republican Party as ''completely mad''.
In a typically spirited question and answer session, he said the US had lost its mojo due to an ''unconscionable distribution'' of wealth over the past decade, in which corporate profits had soared at the expense of wages.
He said China was ''very frightened by their circumstances'' and were now focused on infrastructure and green energy rather than domestic consumption or exports to developed countries.
He added that the European ''elites'' had failed to recognise that Europeans preferred nationalism to a fiscal union, and would be better off waving the Mediterranean nations goodbye.