Funds could face stricter regulation if they hurt small investors, says Bragg

In the wake of AusSuper’s block on the Origin takeover, industry super funds have been put ‘on notice’ if they damage the interests of small shareholders, says Liberal senator Andrew Bragg.

Senator Andrew Bragg. Picture: Martin Ollman

NSW Liberal senator Andrew Bragg has warned that industry superannuation funds are “on notice” for potential stricter regulation if they are seen to be damaging the interests of small shareholders.

Commenting on the move by the $300bn AustralianSuper to block a bid by Canadian investment giant Brookfield and its US partner EIG for Origin Energy, Senator Bragg said super funds should not be taking action which could damage the interests of small shareholders.

AustralianSuper’s aggressive strategy of increasing its stake in Origin from 13 per cent to 17.5 per cent to block the bid, could see the offer of $9.43 a share rejected in a shareholder vote next Monday, despite the backing of the Origin board.

While some retail shareholders want Origin to remain listed, others have been angry that the AustralianSuper move has played a key role in blocking them from receiving the takeover offer.

“Super funds only exist because of Canberra, so they need to exercise extreme care in all dealings,” Senator Bragg, a former staffer with the Financial Services Council, told The Australian on Thursday.

“If super funds are routinely damaging the interests of small retail shareholders, we will consider law reform,” he said. “They are on notice.”

The Brookfield consortium has said it is willing to invest some $20bn to $30bn to help accelerate the rollout of Origin’s renewable energy exposure.

Senator Bragg said Australia had been relying on foreign investment “since the First Fleet”.

“We therefore welcome foreign investment – particularly into the energy sector as it embarks on an expensive transition,” he said.

“If big super funds are going out of their way to damage the interests of small retail investors, then we would look to restrain their influence in the capital markets,” he said.

Senator Bragg said stricter regulation of the role of super funds in takeover deals could be achieved by an amendment to the Corporations Act.

He said the election of a Labor government had “emboldened” the industry super funds to become more active.

“In terms of influence, clearly the Labor government has emboldened the super funds to do what they want,” he said.

“Wayne Swan is president of the Labor Party and (construction industry super fund) Cbus, for example,” he said.

“They are at the epicentre of the Labor government.”

Senator Bragg said he did not have a problem with Australian super funds investing offshore as long as they were doing it in a way that was consistent with their duty to act in the best financial interests of their members.

The senator has been pushing for members to have access to super fund money to help buy their homes.

The chair of the Senate Economics References Committee, Senator Bragg this week moved for the establishment of an inquiry into “improving consumers’ experience, choice and outcomes in Australia’s retirement system”.

Senator Bragg said the inquiry, which is due to report by June 30 next year, was “focusing on retirement outcomes and the best way to get a secure retirement”.

“I am unashamedly a believer in Darryl Kerrigan’s belief that it’s not a house, it’s a home.

“Home ownership will be at the centre of our work – we will be looking at how super can secure home ownership for younger Australians – especially Millennials and Generation Z.

“I would be very grateful if (super funds) would open their minds to how super could help people with housing,” he said.

“Super funds under the current law can invest in any house except that of their owner.”