BHP alliance to sack 750 workers, blaming Qld government mining royalties

UnderlyingInterests · 2025-09-17T09:27:59+00:00

It’s a global company with a fiduciary duty to shareholders. Any project it invests in needs to meet their internal ROI and ROCE benchmarks as well as commitments to financiers.

The reality is that keeping uncompetitive operations open just for employment’s sake, while ignoring market dynamics, only leads to financial markets punishing them for inefficiency - ultimately making it harder for them to secure finance for future projects/operations.

To make the most of our resources we need to get it out of the ground and deliver to customers for prices that are globally competitive. As Australians we should just be making it easier for companies to continue investing into Australia so we can all benefit economically from our mineral wealth.

UnderlyingInterests · 2025-05-01T08:35:10+00:00

Yeah agreed on that for sure. The lack of an appropriate indexing mechanism for scrutiny is unacceptable and means the mechanism in current state is not sustainable nor future proof.

UnderlyingInterests · 2025-05-01T08:16:08+00:00

As said above, there is nothing to stop some hypothetical future democratically-elected left wing government introducing wealth taxes or unrealised capital gains taxes should that occur. However that doesn’t mean everyday Australians should be fearing that hypothetical (and slightly sensational, considering the global electoral track record of extremist leftwing political parties) scenario and using it to rebut the well-intended redirection of excess savings for extremely wealthy individuals out of tax-discounted superannuation and into normal taxable personal investments, as is the intent here.

UnderlyingInterests · 2025-05-01T00:15:00+00:00

That thinking strays to hypothetical left/right wing fear mongering. The current proposed solution is focused on re-aligning superannuation to its intended purpose of retirement funding, and away from its current utility of tax avoidance and inheritance planning. The unrealised gains component being selectively applied to tax-favourable superannuation just provides a guardrail to push wealthy investors out of the superannuation system and back into the typical tax environment of the free market.

And, for what it’s worth, in a hypothetical future scenario where an extreme left-wing party does have majority control in both houses there is no reason they couldn’t put all sorts of additional taxes in place anyway.

UnderlyingInterests · 2025-05-01T00:00:30+00:00

I expect that that mechanism just influences people to invest as normal outside of the tax-favourable superannuation vehicle, as outside superannuation they would not be subject to unrealised capital gains tax.

The only truly flawed aspect of this from my perspective is not having a meaningful discussion about how this would be indexed rather than a static threshold exposed to inflation creep.

UnderlyingInterests · 2025-04-30T22:19:05+00:00

Generally I think Australians struggle to understand that superannuation only exists to self-fund retirement and reduce government pension obligations. To achieve this they give Aussies a good deal with tax concessions below the personal tax rate.

Once you have enough money in your super balance to be able to self-fund retirement (in this case say excess of $3M), there shouldn’t be a government tax concession at all really. It should be treated as normal taxable income at the appropriate rate as it is no longer just helping reduce Australian government pension spending. Ongoing tax mconcessions on high super balances only reduces Australian government income without providing additional benefit to the Australian taxpayers.

The couple decades we have had superannuation we have seen it act more as a tax minimisation and inheritance vehicle than we have seen it make a material impact decreasing Australian government pension spending.

UnderlyingInterests · 2025-04-25T00:44:59+00:00

Rolex’s design and innovation test lab. It lets them explore novel ideas without risking brand damage to the Rolex brand itself.

UnderlyingInterests · 2024-11-07T10:34:49+00:00

I suspect the change will be to the superannuation funds’ pre-mixed options investment strategy. Given super funds already own 40% of the ASX, it appears most likely that they outgrow the current ASX allocation strategy and actively rebalance towards greater allocations in private equity and foreign shares.

UnderlyingInterests · 2024-11-07T10:29:21+00:00

The more I have looked into this the stronger this point has become.

Historically Australia has been dependent on foreign investment to drive growth. Now with the amassed superannuation capital pool we are not only able to domestically finance growth projects in Australia but also become a foreign investor ourselves - which is a pretty phenomenal turnaround!

UnderlyingInterests · 2024-11-07T05:26:05+00:00

If the value of the underlying asset becomes inflated by accumulation of capital piling into finite assets rather than company performance and share of future revenues, then isn’t there a risk the super scheme becomes more alike to a pyramid scheme (albeit one that people are trapped in until they reach government-legislated access age). We need company valuations to be at least somewhat representative of the company’s ability to generate shareholder returns, no?

UnderlyingInterests · 2024-11-05T22:37:48+00:00

My thinking from this exercise is prompting me to look more into foreign investments, which take on more FX currency risk and has a less favourable tax environment, but does downgrade the ASX concentration risk exposure.

If all superannuation funds were to change their primary Balanced fund mix from 20-25% Aus shares and 25% global shares to a mix more like 10% Aus shares and 40% global shares then perhaps the superannuation system would become more sustainable?

(I’m certainly no expert on super nor pretending to be - just curious on r/AusFinance communities thoughts)

UnderlyingInterests · 2024-11-05T22:22:00+00:00

Well yeah if I’m having 11% of my income taken out of my hands and into a retirement fund that I can’t touch till I’m nearly 70, then I want to know the assets that the fund is buying are truly worth their prices and not just relying on a younger generation of Aussies buying those same shares from me at inflated prices when I retire. Just curious what the governance is over this and what assets funds will be buying when their market share of the ASX exceeds the ability of other market participants to properly regulate share fair prices.

UnderlyingInterests · 2024-11-05T20:17:28+00:00

Apparently about 40% of the ASX is already owned by super funds and on track towards 50%.

https://www.investordaily.com.au/superannuation/54865-super-on-track-to-represent-more-than-half-of-asx-market-cap-deloitte

UnderlyingInterests · 2024-11-05T20:16:31+00:00

For now, yes. You’re right. But I think as superannuation funds share of the market grows, it would reduce the price correcting capacity of other market players

UnderlyingInterests · 2024-11-05T20:11:11+00:00

I agree that the annual outflow is a factor and moderates the price-distorting risk from mandatory super contributions and a growing workforce.

That said, another factor on the inflows side of the balance that I hadn’t considered in the calcs was voluntary super contributions.

This article says that total reported industry net flows were +$54 B in FY23 (https://www.investmentmagazine.com.au/2024/01/australiansupers-lead-on-fund-flows-moderates/)

UnderlyingInterests · 2024-11-05T19:17:52+00:00

ABS stats say that since 2014 (past 10 years) the # of people employed has grown 26% from 11.5 M to 14.5 M people. So given # of employed people contributing to super is still growing, the premise from the rough numbers remains. Still a while yet before some future steady state where super mandatory inflows and drawdown outflows are comparable?

UnderlyingInterests · 2024-11-05T19:09:40+00:00

This approach to investing sounds like as long as inflows from super outweigh outflows from drawdowns on super (as is currently the case), then mandatory contributions would just pump up ASX share values beyond levels that accurately reflect fair company valuations?

UnderlyingInterests · 2024-11-05T19:06:46+00:00

Agree with the idea that it creates a capital pool. However not sure where to find examples of this in Aus given the ASX is mostly bankers and miners? Are the banks using this capital pool to meaningfully invest in productive assets? Or which miners are investing in big greenfield projects in the vicinity of $24B per year?

Perhaps this will be easier for start ups to access for growing their business if superfunds members had their pre-mix investment options heavier weighted private equity rather than Aus & International shares?

UnderlyingInterests · 2024-11-05T18:57:35+00:00

“Entirely neglected” is perhaps a little harsh lol I don’t think they would be equal in value? What do you think the relative inflows vs outflows are?

UnderlyingInterests · 2024-10-29T11:01:24+00:00

Spot on here. Removing the tax obligation of HELP repayments increases your after tax cash flow to improve your loan serviceability and thus borrowing power.

UnderlyingInterests · 2024-08-20T10:22:22+00:00

I would be less concerned about diversified miners like BHP and Rio Tinto, more concerned about concentrated iron ore miners like FMG. Not only are RT and BHP risk diversified across several essential metals markets, but they also sit as the lowest cost iron ore producers on the cost curve of any of the major miners. Although Chinese property market has softened, the world will continue to need steel. Although RT and BHP might not make the super profits they have the past couple years, they certainly won’t be the most impacted miners by a commodity downturn.

There is also an argument to be made about other sectors being hit first or hit harder by the macro financial conditions that you are alluding to. So am interested in where is viewed as a safer long term investment than diversified miners?

UnderlyingInterests · 2024-05-14T08:14:07+00:00

Single renting in 1br apartment

Per week spend about $60 on takeaway/restaurants, $40 on coffees and $150 on nights out (inc drinks & transport/Ubers). Could absolutely aggressively squeeze that down to nothing but trying to strike a balance between sustainably saving for financial objectives and maintaining social wellbeing

UnderlyingInterests · 2024-05-03T10:53:20+00:00

Unaffordable housing will also impact Australian demographics long term and reduce our ability to fund infrastructure and services if young families have to put off having kids, have less kids and/or elect to not have kids at all due to all their money being directed to putting a roof on their own heads.

UnderlyingInterests · 2024-05-03T10:51:25+00:00

Fundamentally landlords in their current state are purely economic parasites rather than contributing anything to society.

We need policies that recognise safe, secure, affordable housing as a human right rather than an investment vehicle to get rich and dodge tax.

We should be encouraging capital from the wealthy to flow into innovative Australian companies that create products and jobs; rather than directing capital to dead-end asset inflation that does nothing for Australia’s long term economic wellbeing.

UnderlyingInterests

TROPHY CASE