Legislative Assembly for the ACT: 2002 Week 12 Hansard (13 November) . . Page.. 3517..
MR HUMPHRIES (continuing):
A revised Strategic Asset Allocation (SAA), consistent with the investment objective, was endorsed during the year that will result in a much higher percentage of the total portfolio (85 per cent) being invested in growth assets (such as equities and property) and a much smaller percentage (15 per cent) of the portfolio being invested in defensive assets (such as cash and fixed interest investments). The previous SAA was 64 per cent growth and 36 per cent defensive. This new SAA will be implemented during 2002-03.
This higher risk approach was also confirmed by the then Under Treasurer-
MR SPEAKER: Mr Humphries, this question is starting to get outside the borders of being brief, as required by the standing orders.
MR HUMPHRIES: I am not aware of a standing order regarding being brief, Mr Speaker.
MR SPEAKER: Standing order 117 (a) says: "Questions shall be brief-
MR HUMPHRIES: It is certainly going to be a lot briefer than the answer, Mr Speaker. I can guarantee that. I will bring my question to a close.
Your statements, Mr Treasurer, in the budget papers suggest that the territory is taking a more high-risk approach. Your Under Treasurer confirmed that in the Estimates Committee, but the Acting Treasurer, Mr Stanhope, on 28 October, suggested that the territory was now in a more defensive position, with 58 per cent of its asset allocation in cash and fixed interest assets.
Which is right? There is a contradiction here. Are the budget papers correct in suggesting that a higher risk approach is now being taken, or was the Acting Treasurer right, on 28 October, when he said that a more defensive position was being taken?
MR QUINLAN: I remember a Jewish joke that ends with the punchline: "And you are right, too."I think you will find that the ACT investment portfolio outside the superannuation fund is conservative, as described by the Acting Treasurer.
A year ago we set out to fund at least 90 per cent of the superannuation liability over a period of 40 years, starting three years ago. To achieve that, it is necessary to generate a real return of 5 per cent, and to generate that return you have to take a longer view.
I have met with the advisory group that assists Treasury, and we discussed this right through-and the use of derivatives. We have debated in this place the vehicles to allow derivatives to be used, and I discussed with Treasury the process of using derivatives defensively.
The best answer, and the only answer I can give you, is based on the best advice available. This split will achieve the result in the longer term, and I am assured that it is a reasonably conservative position to take, given that you have got 15 per cent in defensive derivatives.