Shorten ‘favours union monopoly on all funds’

The Weekend Australian - - OUTLOOK CONFERENCE 2018 - SCOTT MUR­DOCH

Bill Shorten’s plan to in­tro­duce in­de­pen­dent trustees to re­tail su­per­an­nu­a­tion funds run by the big banks is un­der fire for favour­ing in­dus­try funds and adding a new layer of reg­u­la­tion to the na­tion’s $2.6 tril­lion re­tire­ment sav­ings sys­tem.

The Op­po­si­tion Leader told The Aus­tralian’s Out­look Con­fer­ence this week that La­bor would con­tem­plate forc­ing for-profit funds to out­source the trustee­ship to an in­de­pen­dent or­gan­i­sa­tion to help im­prove their op­er­a­tions and cut back on con­flicts of in­ter­ests be­tween mem­bers and share­hold­ers.

He also said reg­u­la­tors would need to help en­force the pro­posed new rules to lift the “gen­uine in­de­pen­dence” of for-profit funds which have been heav­ily crit­i­cised for their un­der-per­for­mance.

How­ever, Josh Fry­den­berg was quick to down­play the con­cept and said Mr Shorten’s plan showed La­bor was de­ter­mined to favour union-backed funds by adding new reg­u­la­tion to for-profit funds.

“In float­ing new reg­u­la­tions that would ap­ply to re­tail su­per­an­nu­a­tion funds only, La­bor have made clear their real agenda on su­per­an­nu­a­tion — they sup­port a monopoly for union-run in­dus­try funds,” the Trea­surer said.

“Bill Shorten must clar­ify for the Aus­tralian peo­ple whether he thinks monopoly union con­trol of their com­pul­sory sav­ings would be his am­bi­tion as prime min­is­ter.

“The govern­ment has a num­ber of bills in front of par­lia­ment that puts mem­bers’ in­ter­est first such as strength­en­ing APRA’s pow­ers to hold un­der-per­form­ing funds to ac­count ir­re­spec­tive of what sec­tor they are from, and en­hanc­ing gov­er­nance by en­sur­ing there are more in­de­pen­dent direc­tors across all su­per­an­nu­a­tion funds whether re­tail or in­dus­try.”

As­so­ci­a­tion of Su­per­an­nu­a­tion Funds Aus­tralia chief ex­ec­u­tive Martin Fa­hey said the in­dus­try be­lieved funds be­ing forced to out­source to in­de­pen­dent trustee­ship would not be an ef­fec­tive re­form.

Dr Fa­hey said he be­lieved that rather than be­ing forced to have in­de­pen­dent trustees, stricter rules around manag­ing con­flicts of in­ter­est were needed.

ASFA has cam­paigned for clearer de­mar­ca­tions in gov­er­nance struc­tures of trustee boards and re­lated par­ties.

“The re­tail funds are al­ready re­quired to have 50 per cent of their direc­tors be­ing in­de­pen­dent and there’s no doubt that they play an im­por­tant role,” he said.

“So do the ex­ec­u­tive direc­tors sit­ting on that board. Our pref­er­ence is that funds not be man­dated to ad­here to a par­tic­u­lar struc­ture — we don’t think that is the so­lu­tion.”

Aus­tralian In­sti­tute of Su­per­an­nu­a­tion Trustees chief ex­ec­u­tive Eva Scheer­linck said the struc­ture of bank-run funds was ex­pected to change fol­low­ing the royal com­mis­sion.

The AIST is the peak body for the $700 bil­lion not-for-profit funds, and cov­ers in­dus­try, pub­lic sec­tor and com­pany staff funds.

‘Re­tail funds are al­ready re­quired to have 50 per cent of their direc­tors be­ing in­de­pen­dent’ MARTIN FA­HEY ASFA

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