It’s been clear for some time that sections of the business community, and members of the Liberal Party, have decided it’s better to attack the entire superannuation sector than to allow the industry super sector to continue to grow.
That sentiment has now crystalised in the campaign, led by the minister responsible for superannuation, Jane Hume, and championed by backbench MPs like Andrew Bragg and Tim Wilson, to cancel the forthcoming increase in the superannuation guarantee level.
Bragg wants to go further and destroy the entire system of compulsory super — although it’s not so long since Bragg was an ardent supporter of compulsory super who wanted the rate lifted to 15% — just below the super level that he now enjoys as an MP, along with his colleagues.
The Liberals are continuing their long-term effort to undermine industry superannuation — the most recent being using the pandemic as cover for allowing people early access to super, and falsely telling journalists industry funds wouldn’t be able to pay up. But given the repeated failure of the government’s anti-industry funds strategies and the departure of the big four banks from wealth management, increasingly it seems the Liberals want to undermine the entire superannuation sector.
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Hume, who has repeatedly called industry super funds “unholy”, is now leading the campaign to block the increase in the compulsory super from 9.5% to 10% scheduled for July 1 next year.
It became clear during the Hayne royal commission, which ticked off on industry super funds while sealing the fate of bank-owned retail funds, that sections of the business community preferred to destroy super entirely. Bragg, then a Liberal Party apparatchik working for the Business Council, launched a campaign to smear industry funds as union war chests, backed by conservative business doyen Tony Shepherd. Shepherd repeated Bragg’s lie that industry funds “are the backers of the Labor Party. They provide cash and resources for elections”.
Why would the Liberals and sections of business take their hatred of industry super so far as to be willing to wreck the entire super system, harming their supporters in the retail fund and financial planning sector?
This is about more than traditional anti-union sentiment among business and their political representatives. It’s about power, and specifically the fact that industry super represents an alternative source of power, outside the control of the Liberals. It’s a power that, as smaller industry funds merge with larger ones, will become more concentrated in a smaller number of giant funds.
This power is wielded by both trade unions and employer groups, who jointly and equally control industry funds, but the Liberals and conservative business figures can only see one side of that pairing.
In controlling tens of billions in investments, industry super funds play a key role not just in funding companies and infrastructure, but in dictating investment policy and board seats. That power has been on display in recent weeks in relation to AMP and its multiple sexual harassment scandals.
The Australian Council of Superannuation Investors, representing industry and corporate funds, declared Boe Pahari’s position was untenable and that AMP had downplayed the scandals, and even after David Murray and John Fraser resigned, claimed AMP’s handling of the scandal was “inadequate“. Health industry super fund HESTA — with a strongly female membership — continued to criticise AMP ever after the departures as well. During the crisis, QSuper withdrew a $400 million ethical investment mandate from AMP.
Industry super funds weren’t the only ones lining up to take a whack at AMP. And in any event, their actions were entirely in accord with the views expressed by several Liberal MPs, including industry super enemy Tim Wilson, about the unacceptable nature of AMP’s conduct.
But in other areas, the power of industry funds is less to the taste of the Liberals. First State Super’s recent announcement of divestment of thermal was attacked by climate denialist resources minister Keith Pitt. HESTA announced it was dumping thermal coal in June. UniSuper has also dumped coal.
The country’s biggest super fund, Australian Super, is a member of the Climate100 investment group, along with a number of other major industry funds and the Greg Combet-chaired, industry super-owned infrastructure investment arm IFM, working to force coal mining companies to limit production. Even CBUS, backed by the pro-coal CFMEU, has put companies on notice that it wants them to slash their emissions.
At a time when the Liberal Party is trying to encourage investment in fossil fuels and especially coal mining, industry super funds are swinging their massive weight against it.
It’s not just industry funds — Telstra’s corporate fund, AMP and retail fund BT Financial are also part of Climate100. The entire super industry, representing trillions of dollars of investments, is shifting slowly against fossil fuels while the Liberals are trying to support them. All the more reason to blow up the entire sector. But industry funds are the biggest and most active, and their trade union links make them especially unpalatable.
Industry funds like Australian Super have also thrown their weight around on issues like Westpac’s money-laundering scandal, playing a key role in forcing CEO Brian Hartzer and chair Lindsay Maxsted out last year. That prompted one conservative analyst to lament “the world of top end of town executives is about to change, as industry super funds, which have largely been driven by the trade union movement, ultimately become the most important shareholders in the country”.
For a party used to using the power of government to look after its donors and business friends, industry super represents an intolerable threat. It’s why the government won’t stop coming after the sector, ever.
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Amusing really, as labour becomes capital, and sort of democratises capitalism. As industry funds grow and become an ever bigger chunk of the market, workers will end up owning and running their own companies. Now why would conservatives hate that?
If only they were smart enough to realise they would make more money – but they’re not.
The majority of the ‘Great Unwashed mainly have their super in Industry funds and probably don’t realize what these Nasty Lying Pricks are really doing to their super. MSM are quiet on this when it should be exposed fully. Corruption is in the DNA of this current lot……*sad*
The banking inquiry gave industry funds a good nod. Do you have more insight than the banking inquiry?
As the Government says . . . “we’re are all in this together.” Aren’t we?
It is extraordinary how the privileged self-entitled have it in for the rest of the great unwashed us, and the lengths they will go to to deprive us of progression – but so well illustrated here, in this case.
And how “It’s all for (y)our own good”???
Such poor managers are this government’s donor sponsors that they can’t stand competition – in their “free market”? Their puppet “free market” government have to run the nobble.
To what extent does the Super Industry underpin the basic wealth of the country in capital and incomes? What would the stock market look like today if compulsory Super was not introduced? What would corporate remuneration and pension incomes look like without Super being introduced? What would inter-generational wealth transfer look like without Super? How much did Super contribute to our record run of growth as a country?
I think Super has contributed enormously to the wealth of Australia. I’d hate to see that diminished. I’m happy to see changes/modifications to improve its benefits to Australian society but I wouldn’t want to see it neutered (if I may use that term). Utilise the industry more to compound the benefits to Australia.It’s a fantastic resource that we have. And at this point in time with our Covid recession we may need it more than ever.
If it was just the money they’d be fine with that.
But that money gives the hoi polloi a voice, power and input : a threat to their sense of ‘infallibility’ and ‘omnipotence’….. That could even show up their ruling class deficiencies.
David this is actually a question that deserves a much deeper debate. I’m not entirely convinced compulsory Super has been the boon it’s usually painted as. Not from an investment disposition PoV. Personally I would like to have seen capital do much more real growth work over the last two decades than it has, and my instinct is that a big compulsory inflow of captive capital flowing into glorified spiv hands – even the better industry ones – has maybe weakened, not strengthened, our finance sector’s capacity, appetite and eye for sustainable returns. Me, think the jury is still out on comp Super. Could be wrong. Be interested in people’s thoughts… T
I actually agree with you too Jack. Understanding what has actually taken place would be great to fully comprehend and could form an important road map for future individual and societal wealth generation. I don’t think that it has been optimal in its efficiency or effectiveness but I believe it has been beneficial. At worst, it appears to have created layers of capital over time which has enabled wealth to generate wealth and in that it has created a substantial base. If we could optimise it from understanding the good and the bad we could be on a real winner.
David, another big systemic concern ‘might’ be that, so far at least, it appears that overall the (at least wealthier?) retirees aren’t drawing down on their savings in retirement, but fairly aggressively (through tax, trust and property adroitness) preserving them to hand on to their kids. It was crystal clear from Tim Wilson’s odious franked divvy enquire submissions that many see superannuation as an estate accumulation tool. The (tax revenue and investment opportunity) cost to Australia is hugely regressive if that continues to ensue, and isn’t addressed. PJK and Hawke might have the stones to take on the Geoff Wilson brigade, but I doubt current and future ALP governments will.
Erasmus, I responded to your comment below on similar lines but it’s stuck in moderation.
It will be a delight to read, Jack, when it appears; hopefully tomorrow.
I’ve just rendered a tutorial on national debt to Murphy regarding his article : “how much will it cost”. The questions from the writers of Crikey ‘seem’ to becoming more complex (good) but the tentative answers (solutions?) are becoming damned irritating.