Superannuation is the only industry in Australia where the door opens and the money simply falls in. The industry is fat and happy. Its indulgences have been well profiled: political donations, wasteful advertising and extremely high fees.
Perhaps its worst indulgence is the creation of an online newspaper called The New Daily, which has been established in the age of media disruption.
Newspapers have shrunk, news magazines have closed and television stations have been under enormous pressure.
Two things should happen in the coming months. First, the super funds shouldn’t be allowed to waste money on propaganda, and second, the ABC should think carefully about doing business with The New Daily.
First, the payments must stop.
In 2013, The New Daily was created by AustralianSuper, HESTA, LUCRF, United Super, First Super and Cbus super funds, which ploughed $12m in workers’ money into the newspaper.
A letter obtained by the banking royal commission with the initial pitch for cash from Industry Super Australia was revealing. It claimed The New Daily would be a biased news organisation and “would have a slight tilt towards using industry super spokespeople for quotes”.
It was also promised that “the proposal [would give] industry superannuation funds a greater share of the voice and positions funds as the trusted source of financial information”.
Yet it appears that by 2016, The New Daily had run out of dough. It was then “sold” by the super funds to an umbrella group known as Industry Super Holdings for “nil consideration”, or literally nothing.
By September 2020, Industry Super Holdings told parliament that The New Daily was a “valuable service to our shareholders”. But it also said: “The New Daily is currently in a loss-making position, we do provide capital, but it is a long-term investment.”
Yet prudential regulator APRA told me at Senate Estimates that some of the super funds treated their “investment” in The New Daily as an investment but others as an expense.
This shows that some of the funds have accepted the money has been spent and is gone. Others are pretending that after eight years and seemingly no prospect of generating commercial profits in a terrible economic environment for media businesses, The New Daily will somehow magically generate a return on investment for its shareholders.
The trouble is, super is an outsourced pension system, underpinned by taxpayer support, and there are strict rules that apply on investments the funds are allowed to make. The funds aren’t supposed to do this!
The “sole purpose test” in Section 62 of the Superannuation Industry Supervision Act requires that trustees ensure that funds are maintained “solely for the purpose of providing benefits to their members”.
The Hayne royal commission revealed APRA has never brought an action against a trustee for failing to comply with the sole purpose test. This is after 30 years of compulsory super and oodles of waste.
Accordingly, we are changing the rules. This year’s budget contains our new policy: “Consistent with the recommendation of the Productivity Commission to clarify what it means for a trustee to act in members’ best interests, the government will put beyond doubt that trustees must act in the best financial interests of members.” This means the super funds won’t be able to run propaganda outfits any longer.
Second, the ABC shouldn’t be doing business with an organisation that is likely to become an unlawful entity under the new “best financial interests” test.
I think the ABC does a good job, but sometimes makes bad judgments where bias is shown. Through Senate Estimates, I have been pursuing this with managing director David Anderson.
I can’t understand how the ABC thinks it’s appropriate to take money from The New Daily.
In response to my question seeking an explanation of the ABC’s arrangement, Anderson told me on October 21: “I know that we have on The New Daily, News in 90 Seconds, or we have a short clip version of it.” On November 9 he said the revenue was “commercial in confidence”.
The ABC is now obliged to provide the Senate with its commercial agreement with The New Daily.
Workers and taxpayers deserve to know why retirement savings are being used to create propaganda and why the ABC is a recipient. Both should stop.
Liberal senator Andrew Bragg is chair of the Select Committee on Financial Technology and Regulatory Technology