Labor tries to weaken superannuation fund safeguards

The Liberal Party provided APRA with those tools, including a stronger best interests test and a reverse onus for trustees wanting to spend your money. It is hard to see this any other way.

In June last year, the biggest shake-up to Australia’s $3 trillion superannuation system passed the Senate. It wasn’t easy, but the idea was vital: to hold the most privileged industry in Australia to account.

The Liberal Party fought hard to protect retirement savings from endless ticket-clipping. We prioritised your future and your money. As one of its first policies in a new term, Labor’s priorities are clear: the unions and super funds.

Our reforms mean superannuation funds face annual performance tests and must only spend your money if it is in your “best financial interests”. Previously the gravy train went unchecked. The super fund merely had to open the door and the money would fall in.

In the dark, your balance would be eaten up through a series of rorts and loopholes.

The reforms were bitterly contested. Labor voted against it. In fact, Stephen Jones wrote to 90 Coalition MPs begging them not to go through with the reforms to protect your future.

Seven weeks in power and Mr Jones, now Financial Services Minister, has directed the Treasury to review the Your Future, Your Super reforms.

Mr Jones said the pause was the “right outcome for consumers”.

I couldn’t agree less. There are two main reasons this is the worst thing that could happen to your hard-earned retirement dollars.

Firstly, Mr Jones is flagging that he will gut the “no materiality” test in the “best financial interests duty”.

A materiality threshold is important. In Senate Estimates in 2020, I asked Australian Prudential Regulation Authority deputy chair Helen Rowell time and time again about an $11,000 Sunsuper donation made to the Queensland Labor Party.

NSW Liberal senator Andrew Bragg.

The Australian Prudential Regulation Authority said it 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”. This position was completely ridiculous and so we legislated.

It doesn’t matter if these funds are worth billions of dollars – a cent spent on something illegitimate is a cent spent on something illegitimate.

An outsourced pension scheme underpinned by tax concessions should not be making political payments.

We ensured the new “best financial interests duty” was not subject to any materiality threshold. We created a rule that was “catch all”, ensuring every dollar wasted would be stamped out. The explanatory statement says: “To be clear, the best financial interests duty is not subject to any materiality threshold.”

Secondly, if the government wants to change the test, by definition, it would be a weaker test. What type of payments would it like to permit? What is it exactly that Labor wants super funds to be able to pay for that they aren’t currently able to? Would APRA’s investigation into unions be abandoned because the test had changed? Or would super funds be able to invest more of your money in a media boondoggle like The New Daily?

If a super fund wishes to sponsor a football team or engage in advertising – I truly couldn’t care less. As long as they are able to quantify and demonstrate how exactly this is going to benefit their members through improved returns.

Honestly, I would really struggle to believe that a payment to a political party is going to benefit your retirement savings in any way.

Mr Jones’ real agenda appears to be to stop a new inquiry by super regulator APRA into payments from super funds to unions, which reached $12.9m in 2020-21. This will balloon to $30m by decade’s end.

There are examples of small super funds spending over $1m a year on union payments. Some of the smaller funds are effectively shell companies which have been maintained as conduits for payments to unions. APRA is currently investigating these bloated, untransparent payments.

Mr Jones would prefer this investigation fell over and the best way to drive that outcome would be to weaken the law.

APRA wanted a stronger tool kit to ensure the superannuation pool was better protected from vested interests. The Liberal Party provided APRA with those tools, including a stronger best interests test and a reverse onus for trustees wanting to spend your money. It is hard to see this any other way.

Separately, Mr Jones has the Treasury working on hiding the payments from super funds to the ALP and unions with draft regulations he released at 5.30pm on a Friday afternoon.

Surely the only reason to gut the regulatory tool kit is to drive more money into the hands of vested interests – the unions in this case.

So if your super fund isn’t working overtime for you, what is its purpose? The law was broken. The Liberals fixed it, and now Labor is undoing it. The Senate should reject any attempts to weaken the law.

Andrew Bragg is a Liberal Party senator for NSW.