Opinion Pieces

Big Super’s Propaganda Payments Must Stop

Jun 22, 2021 – 11.57 am

Super will be completely refashioned, as the most significant structural reform in 30 years has finally passed the Parliament.

Lower fees, better performance and less waste will be the dividend of the “Your Future Your Super” reforms,  announced in last year’s federal budget by Treasurer Josh Frydenberg.

A new super structure is long overdue. The system has been a failure so far.

No economist or actuary can present data which shows super ever becoming budget positive and most Australians will still be on the pension in 2055.

Next week’s Intergenerational Report might show this disastrous situation has been improved, but it appears unlikely. Without long-term savings to the budget or a largely self sufficient population in retirement, how can it be working?

The truth is, the people who say it is working are typically working somewhere in the super labyrinth or have been hoodwinked by endless super advertising propaganda.

There is lots of super propaganda. Just the largest few funds spent $100 million on advertising last year.

After 30 years, there will finally be some sort of structure.

Long-serving Treasury official Paul Tilley wrote in his history of the Treasury Department about the 1992 super laws: “(The) Treasury was actually not well equipped to do the necessary long-term modelling work”, which was “back of an envelope which had been thrown out”.

This says it all.

Finally, there will be a structure to drive out the dud funds and promote systemic efficiency. Thirty years late is better than never.

There are two key things that must happen for there to be success: the law must rub out political-style payments; and the laws must be enforced.

First, the new “best financial interests” test means that superannuation money must not be wasted. It seeks to preserve superannuation for the members, not for vested interests.

This test has been toughened by reversing the onus of proof. The new law states “it is presumed that a trustee did not perform the trustee’s duties and exercise the trustee’s powers in the best financial interests of beneficiaries, unless the trustee adduced evidence to the contrary”.

These are tough tests and they must be applied to political payments.

Super funds will send more than $15 million to unions this financial year.

This will balloon to $30 million by 2030 according to Australian Electoral Commission data. This is a large sum of money to be given to political campaigners for non-superannuation purposes.

The only reason we know about these payments is because the AEC publishes data on payments received by unions affiliated with the Labor Party.

I have argued this data should be disclosed to members on websites and in annual reports.

The super funds have ignored this suggestion, probably hoping that we would never pass laws that would either require transparency or demand justification for such payments.

But we are now past this point. I simply don’t believe super funds should be making political payments to campaigners as defined by the Australian Electoral Commission.

Unions and large employer groups shouldn’t be kept afloat by workers’ super.

Taking the political money out of super would not only increase returns, but remove conflicts of interest.

Second, the Australian Prudential Regulation Authority has been exposed through Parliamentary oversight to have been asleep at the wheel on super. It must now step up.

Bizarrely, APRA has said that super funds donating to political parties could be immaterial. On that basis, a super fund could purchase narcotics if it was immaterial. In a $3 trillion system, everything seems immaterial.

APRA now has every possible tool in the kitbag to pursue trustees who are failing the workers.

The reverse onus means APRA’s enforcement process can stop pet projects that are not in the best financial interests of members.

For example, the super funds have already wasted $26 million on a propaganda outfit called the New Daily.

Hilariously, some funds have treated it as an expense and others as an investment - and APRA has allowed it to happen!

All public records show the New Daily has burnt through all its cash and it needs to be constantly recapitalised - by the super funds.

If it is an investment, it has been a bad one, which has been running at a loss for almost a decade.

If it’s an expense, does it meet the best financial interests test?

Its activities are to provide freely available news and propaganda about super. It runs columns every day which are critical of the Liberal Party. I have no problem with criticism, but it shouldn’t be paid for with workers’ savings.

It’s now over to APRA to show the market how the new laws are to be enforced.

It shouldn’t be difficult, but it will require much more enforcement action.

Andrew Bragg is a Liberal senator for NSW.

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