Miserable Investment Schemes

The failure of Great Southern and their competitor Timbercorp will be mourned only by their investors and their greedy financial brokers. The Managed Investment Schemes (MIS) were a blight; an awful piece of government policy that fueled uneconomic plantings and helped tip the winegrape industry into chronic oversupply.

The artificiality of a scheme offering tax advantages unavailable elsewhere was always going to cause problems Everyone in the agriculture industry knows that a return on investment of 20%+ is extraordinary in these times. Yet MIS schemes were in the market projecting 25% plus for investors. Overlay substantial management fees, extravagant in some cases and ridiculous commissions for financial brokers; it just did not stack up. The Australian today covered the increases in executive salaries months before the collapse. I am so surprised.

Investors were either completely taken in or were 100% in it for the tax benefit. Why was the government in such a hurry to hasten plantings? They just distorted the economics of the agricultural industry and handed huge sums of money to rapacious and unscrupulous entrepreneurs. Who lobbied the government to implement these tax breaks? Now that these ill-conceived schemes have been exposed, there should be a parliamentary inquiry into how this all came about.

Pictured are John Young, who ‘earned’ a $2 million retirement bonus from the company last year, and Peter Mansell, a Great Southern non-executive director and former Chairman of West Australian Newspapers.

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7 Comments

  1. I just went to Sexpo and found partyhighpills. Will that work? Turn your Torana into guarana.

  2. Joint Parliamentary Inquiry announced today into MIS schemes. Hopefully the terms of reference will uncover who was advocating them as well as why they failed.

  3. This article and its comments are highly misleading, what about Insurance commissions where up to 150% paid up front and then a trail. Would these investors prefer fee for service and get chrges $150 -$200 per hour for consultationms and telephone calls, would cost most a lot more. Also a large number of Authorised reps and referring Accountants rebated the commissions (or part thereof) to the clients.

    There are a lot of uninformed people with hidden agendas here, including a great majority of journalists whose headline grabbing articles become more and more unbelievable.

  4. Hi Mark; I’m not sure what parts you think are misleading. I don’t comment on insurance commissions; they may be excessive for all I know. From your email address you look like you’re in the financial products industry. Would be interested if you could provide a justification for the fees charged.

    My point was that the agricultural ventures were fundamentally not profitable enough to pay investors the projected returns. let alone the financial commissions and the scheme developers.

    This was obvious from the outset. Who pushed it as tax policy?

    I agree completely with Brian Burke (*rolls eyes*) that the parliamentary inquiry should address how these schemes got government support. The fact is, the scheme promoters and the brokers made huge profits and the dumb bunny investors were not protected by regulatory system.

    Now that these schemes have collapsed, who owns the (massive) water licenses? I’m betting my left one it’s the promoters and not the investors. What a cock-up.

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