The appointment of Sydney businesswoman and women’s advocate Sam Mostyn as Governor-General represents a high watermark for the $1.3 trillion industry super fund sector.
Mostyn was appointed as chair of one of the country’s largest super funds, the $160bn Aware Super, in March last year – a job which she has had to give up because of her new role.
The role of governor-general has historically been held by someone with a military background, and this is the first time someone in a senior role with an industry super fund has been chosen for the role.
This is a Labor appointment, a reflection of the Albanese government’s broader connections in business and the community – and yet another sign that the industry super fund sector has become part of the New Establishment.
ALP president Wayne Swan is chairman of the $85bn construction industry super fund Cbus.
Former ACTU official and government minister, Greg Combet, was chair of Industry Super Australia and industry super investment vehicle, IFM Investors, from 2018 until last year, when he moved to head up the federal government’s Net Zero Economy Agency.
His experience overseeing IFM Investors, which has assets of more than $210bn and invests on a global scale, has provided credentials and experience for his new role as chair of the $212bn Future Fund, which he takes over later this year.
Elana Rubin, the former chair of Australia’s largest super fund, AustralianSuper, was one of two appointments to the Reserve Bank board made last year by Treasurer Jim Chalmers.
Rubin, who also worked for the ACTU early in her career, was chair of AustralianSuper from 2007 to 2013, and a director of industry super fund bank ME for four years until 2020.
Her experience at AustralianSuper was useful for her subsequent chairmanship of buy now, pay later start-up Afterpay from 2016 to 2022.
Rubin took up her five-year RBA role in August last year.
It will be interesting to see what role she plays at the Reserve Bank in future when the government moves to set up two boards for the central bank – one for governance and a second, more powerful monetary policy committee.
It will also be interesting to see whether the industry super fund sector is represented in any of the six new people Chalmers is set to appoint to the two RBA boards later this year.
The Albanese government also appointed the former chief executive of QSuper, Rosemary Vilgan, for a five-year term as a guardian of the Future Fund from February this year.
Vilgan is a former chair of super industry lobby group, the Association of Superannuation Funds of Australia, and is currently chair of the Commonwealth Bank Officers Superannuation Corporation.
The dramatic growth of the compulsory superannuation sector, which is now more than 30 years old, has provided a training ground for many professionals in the finance sector, including women who have benefited from the expanding role of super while other more traditional sectors have been more male-dominated.
The sheer size and importance of the sector has made it a major player in the boardroom. AustralianSuper used its 17 per cent stake in Origin Energy last year to block a takeover offer from Brookfield, and there are now debates about whether industry super funds should be able to ask for seats on the boards of companies they invest in.
Some funds, such as health industry fund HESTA, are making it clear they will back or oppose certain directors at annual meetings as a result of their stand on issues such as the energy transition.
HESTA’s role in the April 24 annual meeting of gas company Woodside will be closely watched, given comments that it had “put forward director candidates” for chairman Richard Goyder to consider – despite the fact that it has less than 1 per cent of the company.
Mostyn’s role as chair of Aware saw her visit London last year for the opening of the fund’s first overseas office, an example of industry super’s offshore investment expansion.
The celebrations saw Mostyn, Aware CEO Deanne Stewart, and Aware’s head of international, Damien Webb, welcomed by British officials who are keen to encourage more investment in their country.
It also saw Stewart attend a reception at Buckingham Palace meeting King Charles, alongside global investment heavyweights, JPMorgan chief executive Jamie Dimon and the co-founder of private capital giant Blackstone, Stephen Schwarzman.
Mostyn was also a member of the newly established Super Members Council Australia, a lobby group from the industry super sector.
Her appointment now means Aware Super is on the lookout for a new chair.
Aware CEO Stewart said the fund was “saddened” to be losing Mostyn who, she said, had “brought great dedication to the role of chair, and brought with it a passion for the issues that matter to Aware Super’s 1.1 million members, such as enhancing their retirement outcomes and improving equity in the superannuation system, particularly for women”.
Women’s groups including Chief Executive Women, which Mostyn was president of from 2021 to 2022, have long championed the payment of superannuation on paid parental leave as a key measure to improve the financial position of women.
While conservative parties have their own pool of talent in business to tap for key roles, the industry super sector is providing a talent pool for Labor, given its roots in the union movement and its foundation as a result of the policies of the Hawke-Keating government.
The sector’s growing financial firepower has brought it to centre stage in providing capital for Australian business.
Turning up at Buckingham Palace or living in Government House in Canberra are just another sign of the times.
Learning from the US
As the Business Council of Australia calls on the federal government to provide some incentives to counter the Biden Administration’s lucrative Inflation Reduction Act, ASX-listed battery materials company Novonix has announced that it has received a $US103m tax credit under the IRA to help ramp up production of critical battery materials from its new Riverside plant in Chattanooga, Tennessee.
The deal is the second benefit it has received for the plant under the Act, following a $US150m grant from the US Department of Energy in October 2022.
Given that the plant itself is estimated to cost some $US400m, the grant, and the tax credit, have provided a big tailwind for the project.
Novonix CEO Chris Burns, who is based in Canada, says while the situation in Australia is very different from the US, there is much the federal government could learn from the US if it wants to develop the supply chain in Australia in critical areas.
The IRA covers a broad range of incentives, including some for the development of clean energy projects. Part of its goal is to encourage the development of supply chains which can reduce American dependence on China – hence its backing for Novonix’s plans to produce materials for the battery sector in the US. In an interview with the Australian, Burns said it was important that the federal government looked at structuring its incentive packages in a way that took account of what was happening in supply chains globally, particularly in countries like the US.
He says the Australian government should look at backing projects which produce goods such as critical minerals that could be sold into the US market, given the policy of encouraging supplies from friendly countries.
“For a smaller country like Australia, the most important thing is to understand how local policies are going to align with the larger market opportunities which will come from companies operating in Australia – whether it is mining, lithium mining, or graphite,” he says. “There is a need to export these materials to support large markets. Australia is well qualified to do this (with US buyers) as a friendly trade nation.”
Burns also recommends the government use its limited financial firepower to back projects that are viable, not just well-intentioned.
In Novonix’s case it was already developing its plant in Tennessee, which is ready to scale up as demand increases from its major customers such as Japan’s Panasonic Energy.
“The government needs to ensure it is incentivising part of the sector which can stand up the fastest and have the highest probability of impact,” he says.
“It will take significantly longer for Australia to become a significant player in battery cell manufacturing, for example, than it will be to bolster the resources side of the economy and supporting the downstream part of the supply chain.”
No one expects that the Albanese government to match the US IRA but the law, which has been in place for the past two years, can provide lessons on how to best use limited funds to encourage the development of local supply chains and local processing of resources.
IFM Investors has also received support under the IRA for a solar project in Pennsylvania on the site of a former coal mine.
The first hand knowledge of IFM and Novonix of the IRA could be useful in structuring an effective response locally.
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