ASFA Speech

Senator Andrew Bragg - Senator for New South Wales 

Address to Association of Superannuation Funds of Australia 

Wednesday 23 September 2020


Response to industry lies and name calling 

I’m not against super, it’s a good idea, but my position is well known when it comes to unbearable costs, howling conflicts of interests and rivers of gold flowing to the finance sector and union movement.

I want a better super deal for workers. Your industry feels threatened by a shake-up and you have resorted to name calling.  

  1. ASFA called me an “anti-vaxxer” (ABC News August 2019) 

Well, my answer to that is I am fully vaccinated, my family is vaccinated and I have volunteered myself for a post COVID study having contracted the virus earlier this year!

  1. ASFA said I want to “condemn people and in particular women to poverty in retirement...” (AFR July 2019) 

Sorry to be quoting an independent, credible source like the Grattan Institute but here’s what they say: 

“The best predictor today of poverty in retirement is whether retirees own their own homes.” 

42 percent of retired renters face poverty compared with 6 per cent for homeowners, and super makes home ownership so much harder. 

Wanting Australians to have a home, doesn’t condemn people to poverty. 

  1.  ASFA said I was “being obsessed with dismantling superannuation on ideological grounds”. (Investor Daily August 2020)

Wrong again. I am pragmatic. I just want to fix a system which is 30 years old and not delivering. 

I’ll live with the name calling if it means Australian workers get a better bang for their buck.

The super industry has the jitters because it’s grown complacent after basking in 29 years of world record growth.

The industry has only known an environment where the door opens and the money just falls in.

Let’s face it, the industry hasn’t had to work very hard to get its capital … just sit in a cosy office while a mandated 10 per cent of people’s pay drops into the coffers.

How is super going? 

Let’s assess the four key metrics that count.

  1. Pension reliance 

70 per cent reliance today and the 2015 Intergenerational Report says we will have 70 per cent of people on the pension in 2055.

Surely we need at least half the population off the pension.

  1. Budget impact

The super industry not only benefits from $32 billion in annual fees but also gets $40 billion worth of tax concessions. It only saves $9 billion according to ASFA. 

The system costs vastly more than it saves. No projection exists which says it will ever be budget positive. It is broken.

  1. National savings

According to the Australian Bureau of Statistics our 2018 national savings to GDP ratio was 24.7 per cent. 

Gross national savings were around 25 per cent in the 60s, they averaged around 18 per cent in the 90s. That means that even with a $3 trillion pool of super, we’re still not at the savings levels of the 60s on a relative basis.

  1. Foreign capital reliance

Australia is still heavily reliant upon foreign investment. 

Australia’s net inflow of foreign direct investment as a percentage of GDP has increased from almost 28 per cent in 1992 to more than 55 per cent in 2019. 

That’s 0 from 4: a big duck. 

The credibility gap 

There is a credibility gap that goes beyond the failure of the system.

The misinformation propagated by the super industry highlights the appalling self interest.

A recent report from ASFA claims super is supporting the Australian economy.

It claims that $350 billion is invested in unlisted assets, things like airports, roads, ports and the biggest wind farm in the southern hemisphere. A clear implication that $350 billion was invested in domestic infrastructure.

But APRA tells a different story. APRA’s figures show less than a third of the claimed amount, around $105 billion, is invested in ‘infrastructure assets’.

But it gets worse. Of that $105 billion actually invested in infrastructure, $33.5 billion is invested in international unlisted infrastructure according to APRA.

If the super industry can’t present the facts about their own investments honestly and accurately, what else are you fudging?

For a start, you are less than transparent when it comes to payments to the unions. 

Why have the funds been so secretive about pouring $13 million into the unions this year alone, a figure based on AEC data.

This will balloon to $31 million by the end of this decade. 

Worse, these payments are not disclosed to members in annual reports or websites. They should be.

Three ways to fix super

So let me offer three ideas to help the system deliver: 

  1. Get an objective. 

It beggars belief that we have a $3 trillion dollar system that doesn’t know where it’s going or what it wants to achieve. 

Surely, we should have a target and a timetable for how many people we get off the pension and when. 

  1. Be transparent and get serious about governance.

I can’t believe that a mandatory scheme like ours is so opaque. 

The incredible transfer of money to unions should be disclosed so that members are armed with the information. 

The incredible transfer of money to unions should be disclosed so that members are armed with the information. 

In annual reports and websites, super funds should simply disclose payments to unions and related financial institutions. 

  1. Cut your fees

Fees need to be cut in half. We are now paying $32 billion and I can’t see why it shouldn’t be closer to $16 billion. 

I had a 70 year old lady write to me recently to tell me that last year her account earned $528, the superannuation fund however took $476 in fees.

A simple default fund should be established: Super Guarantee Australia. This is the standard global practice where fees are literally half the Australian rate. 

SGA would collect contributions and outsource investment management to managers like the Future Fund. 

This approach would significantly reduce costs and duplication.

Thank you. 

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