Australian Money-Grab for Assets in Inactive Accounts

March 27, 2013

By: Kelly Diamond, Editor

Without any known or present problem with the existing rule, the Australian legislature rushed a law into effect taking the inactive period from seven years to three before they seize the assets.

This sudden change came as a surprise even to Australian banks, who find the arbitrary nature of this legislation to be indicative of a money grab more than anything.

Australia Money Grab Sieze Assets Inactive AccountsEarlier this year, Australian legislators passed… nay, RUSHED a bill through knocking the inactive period from seven years to three years on all bank accounts.  What happens after seven – and soon to be three – years?  Their federal government seizes the money for itself!  (Silver lining: there is a lengthy process by which you CAN get the money back.  Imagine the hoops of a mail-in rebate and multiply that by itself several times.)

The Australian banks and government both want to make money off the wealth contained in those accounts.  The banks want the capital to invest and lend.  The government wants the capital to spend and make up for shortfalls in their budget – which is headed toward $15 Billion AUS.

There seems to be quite a few mixed messages floating around from the Australian Treasurer, Wayne Swan, regarding this measure.  First, he promised a surplus.  Then, just before the end of 2012, he announced the surplus was not possible.  Then this benevolent measure is rushed through by their legislature to abbreviate the inactive time for bank accounts from seven to three years, in order to “help individuals reunite with their accounts”.

The legislature needed to RUSH a bill through which threatens to seize private funds because they want individuals reunited with their accounts?  Of everything on their to-do list, THIS deserved not just priority but a rush?  Because in Australia, one of the more pressing issues in their society is idle bank accounts?  Talk about first-world problems!

So what becomes of accounts like trusts?  College savings plans?  Retirement plans?  Bonds?  People HAVE to put money in or take it out within three years, or the government will take it?  You can’t take money out of some of those accounts without a penalty, so the only other option is to put money in.  And if they don’t have the money to do this?  Or have other things they would like to spend their money on?

I’m not particularly thrilled with the seven year rule either, but dropping it FOUR years and then giving folks a five month head start to do something about it, is terrible!  What’s to stop them from bumping it to one year?  Or six months?  Or daily!?  Much like Europe, once governments and central planners toss an absurd idea out there, it tells the general public where their head is at… and despite the political spin and rhetoric, no depths are too low.

The Australian government anticipates about $110 MILLION in additional – and potentially temporary – revenue from this legislation.  They are running a $15 BILLION deficit.  So they are willing to destroy any vestige of trust Australians had in their banks and chase the capital away for a one-time seizure of $110 MILLION? For LESS than 1% of their deficit?  I say “one-time” because once people start getting their accounts seized, it won’t be long before Australians decide to relocate their capital to a bank… or more importantly a country… that won’t seize their assets!  Every subsequent seizure will be considerably less than that.

Noticing a Pattern?

The desperation of governments around the world to compensate for their fiscal incompetence is becoming both dire and pervasive.  They rely on a responsible collective to prop them up and bail them out, and call it criminal when people try to avoid it.

Spain, Portugal, Ireland, and Greece received their bailout packages from the EU.  Cyprus recently wanted to help itself to anywhere from 6.7% to 9.9% of all the privately held accounts in their two largest banks to bail them out.  Now, to expedite things, and circumventing the legislature, they’re just facilitating anywhere from 30% to 100% money grab from those they deem “able to afford it”.  Australia is now putting a rush on seizing assets of private accounts as well.  The United States had its bailout known as TARP.

The desperation of individuals to seek out safe havens for their assets runs parity with the governments’ frenzy for more capital.  They look to metals (Argentina especially), but the central banks have a way of manipulating them with less-than-ethical trading practices.  They look to virtual currencies (Spain, for example), which are void of political or government influence (although now the EU and U.S. have turned their Sauron-esque eye toward virtual currency).

These blogs are not meant to incite a panic.  Panic is for uneducated or ignorant people with no savvy or foresight… like politicians!  These blogs are meant to make our readers aware of the depths to which governments will sink to keep up a stable appearance.  And like with any investment, we make it our business to know the risks, monitor the patterns and activity, and anticipate the outcomes.  When we see governments making hasty money-grabs, as in Cyprus or Australia, perhaps a reevaluation is in order.  So long as there is a market demand for an asset safe-haven, there will be a supplier.  The spontaneous order of the market is bigger than a bunch of central planners.  It is its own current.  It may take a little digging and looking.  It may take you to some innocuous little country in the middle of the Pacific.  But they absolutely exist, moreover they will emerge to meet the growing demand.

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