APRA ‘must tackle super fund payments’, says Andrew Bragg
Senator Andrew Bragg has called on the Australian Prudential Regulatory Authority to step up its oversight of industry fund spending on sponsorships and payments to unions.
NSW Liberal senator Andrew Bragg has called on the Australian Prudential Regulatory Authority (APRA) to step up its oversight of industry fund spending on sponsorships and payments to unions.
In a speech to the Financial Services Council in Sydney, Senator Bragg, who is chair of the Senate Economics Committee, accused APRA of failing to clamp down on breaches of super funds’ duty to act in the best financial interests of their members.
Bragg wants APRA to more actively question industry funds over whether payments to unions and spending on sponsorships and advertising campaigns comply with the “best financial interest” duty which was introduced by the Liberal-National government as part of the Your Super, Your Future reforms, which came into effect on July 1, 2021.
The senator is a long-time critic of the increasing power of industry super funds and has called for caps on the size of shareholdings in listed companies by super funds in the wake of AustralianSuper’s move last year to block the takeover of Origin Energy by North American private equity interests.
“Big Super believes that your super belongs to them and their fellow travellers in the union movement and Labor Party,” he said. “For decades, we have witnessed Big Super use your money for propaganda advertising blitzes and large payments to unions.
“The best financial interests’ duty was designed to put an end to these dodgy transactions but so far they have continued.”
Senator Bragg said spending by industry funds “on items that are not supported by identifiable financial benefits to members” had been “running rife since the election of the Albanese Labor government”.
He said super funds had given unions $8m in 2021-22. More recent financial disclosures had shown that 10 super funds made more than $15m in payments to unions in the financial year to June 30, 2023, and more than $21m to the former superannuation lobby group, Industry Super Australia, he said.
Senator Bragg said APRA had mentioned in recent senate hearings that it was investigating a particular super fund over payments.
But the agency would not name the fund or detail the nature of the investigation.
“The best financial interests duty was implemented as part of the former Liberal government’s Your Future, Your Super reform package,” he said. “It requires super funds to demonstrate that their investment decisions are in the best financial interests of members. This shouldn’t be controversial.
“When Australians pay super, they expect it will be used to benefit them in retirement.”
Senator Bragg was also critical of the investments by the super fund sector in the online newspaper, The New Daily.
The paper is backed by industry super investment vehicle IFM Investors, which is owned by 17 major industry super funds.
“If the laws were being enforced as intended, these investments would not be allowed to continue,” Senator Bragg said.
He was also critical of corporate securities regulator, the Australian Securities & Investments Commission (ASIC), which he said had not launched enough criminal prosecutions.
He said the rate of prosecutions initiated by the Commonwealth Director of Public Prosecutions as a result of referrals from ASIC had fallen from 75 per cent in 2018 to 19 per cent in the last financial year.
Senator Bragg is calling on the government to launch a new inquiry into the Australian financial system along the lines of the Campbell committee under the Fraser government and the Wallis inquiry under the Howard government.
He said the current “twin peaks” model where regulation of the financial sector was overseen by both ASIC and APRA had “had its day”.
While he said the system had “served the country well” it was time for a “recalibration”.
“It has been almost a decade since the last financial systems inquiry,” he said.
“Given the litany of issues with twin peaks and the clear deficiencies with the present regulatory enforcement, Australia should have another inquiry.”
He said a new inquiry should look at the influence of super funds over the economy and the structure of the regulators.
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