Labor switches off the light on super spending

‘Sceptical minds might think that some industry funds, with links to Labor through their tight union relationships, have something to hide.’

It is a most curious state of affairs that the Albanese government has been in such a tremendous hurry to stop members of superannuation funds learning how their money is spent by those who run these funds. With nobbling disclosure topping the Labor government’s to-do list, sceptical minds might think that some industry funds, with links to Labor through their tight union relationships, have something to hide.

The timing of Labor’s changes makes this a very smelly story. The Morrison government’s enhanced disclosure requirements for super funds came into effect in March despite strenuous opposition from industry super funds. That means, with the end of the 2021-22 financial year, members of super funds would soon be due to receive a notice of annual meeting that, for the first time, would have included itemised details of political donations made by funds; itemised details of payments that funds frequently pay to a web of associated bodies; and itemised details of marketing and sponsorship expenses that funds, again frequently, outlay to various bodies using members’ money.

Under these sunlight-is-best reforms, members would have learned more than they have ever been allowed to know about how their money is spent by executives of super funds.

Once that level of information was in the public realm, funds would have had to explain how they use members’ money. Importantly, these new itemised disclosures of spending would have set a new, higher standard of transparency and therefore accountability for funds.

According to Deloittes, Australia’s total superannuation assets are projected to almost triple from $3.4 trillion to more than $9 trillion over the next two decades to 2041. The disclosure reforms were premised on the simple principle that with great power, amassed from Australia’s compulsory superannuation system, comes great responsibility.

Responsibility means funds should disclose the details of how they spend members’ money.

Faced with this fundamental change, Labor’s Assistant Treasurer, Stephen Jones, has acted very quickly to stop these disclosures. Jones has changed the regulations to remove itemised disclosure of political donations, of promotion, marketing and sponsorship expenses and of payments to industry bodies. Instead, Labor has said aggregate figures will do.

Let’s be clear. Indecipherable aggregate sums serve one purpose: to hide details of what members should know given it’s their money heading out the door of their savings fund.

Critically, Labor has also altered the requirement that super funds reveal payments to various connected and associated bodies by narrowing the disclosure requirement to cover only “related parties” as defined by the Australian Accounting Standards Board.

That single action, sold as aligning the disclosure requirements with accounting standards, has the effect of hiding all the payments made to myriad entities in the carefully structured industry fund ecosystem, bodies such as such as IFM (the industry funds’ pet, an owned and controlled fund manager), various training funds, unions and many other union movement and industry fund hangers-on. These entities have all been cunningly structured to profit from super behemoths and simultaneously fall outside the definition of “related parties” so disclosure of payments by or to them is not required.

The Morrison government deliberately broadened the disclosure net so members of industry super funds would know precisely which associated parties of the industry funds were getting paid, why they were getting paid and how much. Super funds and those associated bodies who are on the super fund gravy train must be very grateful for Labor’s breakneck speed to nobble these disclosure laws.

After the first reporting round of disclosures, it would have made for really rotten politics for Labor to dismantle that higher standard of transparency to suit industry super funds with their close links to unions.

What Labor has done still stinks to high heaven. One can only infer that the reason this upcoming disclosure has been so quickly snuffed out by the incoming government is that the disclosure would have been extraordinarily embarrassing.

What would it now take to prioritise members’ interests above the vested interest of those who spend members’ money? In short, 39 senators who care about the interests of workers over the interests of those who run super funds, and the associated bodies on the gravy train.

The new regulations hurriedly drafted by Treasury for Jones could be the subject of a notice to disallow them in the Senate. In the 76-seat Senate, Labor holds 26 seats, the Coalition 32, the Greens have 12 seats and there are six crossbenchers.

What are the industry funds afraid of? The probity of proving to members that you’re not wasting their money makes a mockery of the funds crying about the costs of disclosure.

This means the Coalition would need every single crossbench senator and one Greens senator to disallow Labor’s new regulations that allow super funds to hide details of their spending.

Labor will be counting on the Greens and David Pocock being its lackeys in the Senate on this. That support will stop dead in its tracks a disallowance motion to scuttle Labor’s return-to-the-dark regulations.

So, let’s see how seriously the Greens and the crossbench take their promises of virtue and integrity. What good reason can there possibly be to hide this information about payments to associated parties, and itemised disclosure, from members? Industry funds already have all this information and can easily disclose it. Itemised disclosure is necessary to know exactly who pockets members’ money and how much. What are the industry funds afraid of? The probity of proving to members that you’re not wasting their money makes a mockery of the funds crying about the costs of disclosure.

The Greens and crossbench independents are frequent fulminators about the need for greater integrity, transparency and honesty. Here’s their chance to put their money where their mouth so constantly is. Or is the problem that the Greens have been on this drip feed, too, and hope for more of it?

If they haven’t been suborned by the industry funds, surely we can expect impassioned speeches by various Green senators, and hopefully by Pocock too, demanding more disclosure, not less. Their speeches to disallow Labor’s changes could end with rousing declamations about sunlight being the best disinfectant and what on earth have industry funds got to fear from disclosure.

But if none of this happens, if the Greens and Pocock are woefully silent, we are entitled to ask a few questions about their real level of commitment to transparency and openness.