‘Concerning’ as APRA ‘leaves door open’ for political payments, says Senator Andrew Bragg

Funds with one source of capital – the members – should not be making political payments, says Liberal Senator Andrew Bragg.

“I don’t think the sole purpose test is working; I don’t think it’s protecting the members,” says Liberal Senator for NSW Andrew Bragg. Picture: AAP

The prudential regulator has given the green light for not-for-profit funds to sponsor political events by treating the payments differently to direct political donations, according to Liberal Senator Andrew Bragg, who is calling for legal reform of the sole purpose test to expressly ban any transfer of funds for political purposes.

Speaking to The Australian following correspondence with the Australian Prudential Regulation Authority, in which deputy chair Helen Rowell said payments for events with political affiliations could be justified on the basis of advertising or brand awareness, Mr Bragg argued that it opened up another avenue for funds to make political donations.

“The fact that the regulator has left the door open (for political payments), is quite concerning,” Mr Bragg said.

“I don’t think the sole purpose test is working; I don’t think it’s protecting the members.”

In a letter sent to Mr Bragg this week, Ms Rowell argued that APRA’s view was that it was “difficult to envisage circumstances in which a direct political donation would be consistent with the sole purpose test,” but that other types of payments “where there may be some political affiliation, such as a payment for a business liaison event or sponsorship for example, may reasonably be argued to be a payment for advertising and brand awareness”.

Under a grilling from Mr Bragg at a Senate Estimates hearing in March over an $11,000 donation Sunsuper made to the Queensland Labor Party last year, Ms Rowell said the regulator did not have a view about super funds making political donations and that the amount donated was “immaterial in the context of a very large superannuation fund”.

Sunsuper’s donation late in 2019 sponsored a state budget breakfast event two months before the fund, whose chairman, Andrew Fraser, is a former Labor state treasurer, confirmed it was in discussions with Queensland’s public servant fund, QSuper, regarding a potential merger that would create the nation’s largest super fund with $180bn in assets under management.

The fund earlier this month issued a mea culpa over the event, saying its internal investigation of the issue concluded it had breached its own policies, despite a probe by the prudential regulator finding no fault with the transfer.

“We have examined this matter closely and … APRA’s view is that it would be difficult to demonstrate objectively that the payment breached the sole purpose test,” Ms Rowell said in her latest correspondence.

“The fact that the payment has been determined by Sunsuper to be a breach of its internal policies does not mean that it is a breach of the sole purpose test.”

APRA needed to either re-clarify its position to prohibit such payments, or there would need to be legal reform of the sole purpose test to explicitly ban any politically-related transfers, Mr Bragg said.

“If they’re not going to clarify that this is out of order, which I don’t think they will, then I think we should consider a much clearer sole purpose test in legislation that rules this out.

“Funds with one source of capital – ie the members – should not be making political payments.”