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Corruption viewed within fine print of super reforms

Australia’s union movement has steadfastly rejected the Morrison government’s latest proposed reforms on superannuation on the grounds that workers would be worse off if choices about such accounts were left to the banks rather than to themselves or their employers.

And in addition to leaving Australia’s working classes potentially being worse off for retirement, the proposed reforms would leave the banks richer and grant the government’s superannuation minister – presently, Jane Hume – with a set of new powers that would go unchecked and with zero accountability.

In essence, the government seeks to use its Parliamentary and legislative powers to overhaul the superannuation system.

And doing so in a manner that leaves a trail of corruption in its wake, especially after the Australian Council of Trade Unions (ACTU) has recently called for an ending of a freeze on superannuation rates that have been an LNP government policy staple since 2014.

“The union movement stands ready to resist any attacks on workers’ retirement savings. Like with Medicare, we need to improve and strengthen our retirement system, which is already the envy of the world – not tear it down,” Michele O’Neil, the ACTU’s president, said last month when defending the status quo of the superannuation system.

Under the government’s reform proposals, whose exposure drafts and explanatory materials are being weighed up in the midst of a Federal Senate Inquiry on the Superannuation Sector, would take the rights of choice among superannuation funds away from workers, particularly those new to the workforce or to a new employer, and be steered towards any for-profit funds run by the banks.

The ACTU, by labelling these reforms as “predatory”, views the suggested reforms as being politically motivated and as an attack based on ideology, and have unsurprisingly called for their legislative defeat.

“The federal government’s superannuation reforms will shortchange workers and erode the hard-won retirement savings of millions of Australians,” Scott Connolly, the ACTU’s national assistant secretary, said on Monday.

“A worker could be locked into an underperforming for-profit fund that is funnelling money to shareholders through exorbitant administration fees – and be misled by the Government that they are in a good fund,” added Connolly.

The ACTU juxtaposes the Industry Super network of superannuation funds against the perils of the banking-based for-profit funds advocated by the LNP and the Morrison government, due to the fact that Industry Super-linked funds perform better via all profits going to each of its respective fund’s members.

However, under the government’s reforms, that would change, thereby leaving workers worse off in the long run towards planning their retirements.

“If these laws are passed, for-profit funds will have a systemic advantage over all-profit-to-member funds, leaving workers worse off,” said Connolly.

“The exposure draft legislation represents an attack on working people, their retirement savings, and the best performing and best-governed superannuation funds,” he added.

As the superannuation sector inquiry is scheduled to resume in the Senate next month when the federal Parliament returns from its summer break, and expected to wrap up in March, the Department of the Treasury highlights its reform package to include:

  • Members being given notification upon whenever a superannuation fund fails an annual transparency performance test administered by the Australian Prudential Review Authority (APRA), and if this occurs two years in a row, trustees for such superannuation products are prohibited from accepting new beneficiaries into the product
  • Providing certainty and transparency about the basis by which superannuation products will be ranked and published on a website maintained by the ATO
  • Invoking a new set of standards to ensure that superannuation trustees work in a manner upholding its members’ best interests

Employers will still be required to make contributions to an employee’s single nominated superannuation fund. However, wrinkles are being proposed to ensure that unnecessary fees and insurance premiums are not paid on unintended multiple superannuation accounts.

“It is no coincidence that administration fees are excluded from benchmark proposals, as for-profit funds performances will be overstated to members and potential members,” said Connolly.

The ACTU has also brought the recent memories of the Banking Royal Commission into recall, as the proposed superannuation reforms would grant extended powers to whomever its minister would be.

As Hume currently holds the portfolio for superannuation, as she has within the Morrison government since 2019, a bit of background about her history is required – especially since she is facing the prospect of having her powers expanded in a big way.

Although Hume served as a senior strategic policy advisor with Australian Super prior to her ascension to politics as a Senator for Victoria in 2016, she possesses a storied past in the banking sector.

Hume was a former Deutsche Bank Australia vice president in 2008-09 after previously working as a National Australia Bank sales and marketing research manager, investment manager and a private banker from 1995-99 before moving on to Rothschild Australia as a senior business development manager in the asset management division, and briefly as a key accounts manager from 2000-2002.

Any superannuation minister, present or future, would be given the power to possess the authority to deem as illegal any expense, investment, or activity, by any fund, at any time, as well as extending the preference for a single superannuation fund over any or all others while lacking the transparency is not required to give notice nor reason for those actions.

Moreover, the decisions of the minister nor any new regulations undertaking under the minister’s watch do not require to be challenged in court.

Given the context of what the Banking Royal Commission revealed, Connolly and the ACTU have called out the rogue nature of these reforms – as well as the extended, unchecked powers of any current or future superannuation minister for the government of the day.

“Despite the Banking Royal Commission finding for-profit funds blatantly rorting members, the government continues to favour them by making benchmarking based on net investment return,” said Connolly.

 

 

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6 comments

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  1. John Hanna

    Jane Hume as an Ex banker herself has a vested interest in directing the trillions towards the banking system, she probably has a post parliament sweetener lined up if successful. Lets not forget Josh is an ex banker too, never really goes out of their blood.

  2. Phil Pryor

    These slimy conservative sluts for money, future position, notice, pose, networking, cronyisms galore, are the most filthy pox going around and without a decency vaccine in sight. Steady thieving is their game, with a little bent diplomacy, murdering, general thieving, supremacist righteousness and whitey superstitious triumphalism usually present to assert what supremacy is needed. The great self appointed conservative ruling, abusing, domineering party is inside all the political ones, inside corporations, banks, boards, commands, committees, lobby groups, bullshit fascist “think tanks” of turds, all to exploit, dominate, run the plantation, Mighty Maggoting Misfits. Can you imagine a bloated bowel like George the Manila masturbator and member for misinformation actually telling you something useful, honest, relevant, intelligent? C Kelly, a Blob of Bowelburst blasting is a trained liar, self deceiver, career crook, intellectual pygmy, a blot on Australia’s receding reputation. But, with a P M, a Poxed Misfit in charge of the BIG POSE, the celluloid LIE, what effing next??

  3. Matters Not

    Re:

    never really goes out of their blood.

    Indeed! And at any number of levels. A safe bet they’ve all read Rand’s The Virtue of Selfishness and accepted without question (or perhaps even recognition) all the underlying (philosophic) assumptions with respect to the Nature of Man; the Nature of Society and the right and proper relationships between same. Etc.

    Thus it’s their common sense that the private sector (individualism at work) is inherently superior to the public sector (collectivism in action) and if it demonstrably isn’t (at a particular moment in time) it will soon right itself. And if it doesn’t, then it at least ought to. QED.

    Nevertheless, Jane Hume is an effective politician. Not to be underestimated.

  4. Andrew J. Smith

    Labor, employees, SMSFs and retirees need to be vigilant on this sustained attack on super for commercial and ideological reasons; backgrounded by sub-optimal research and responses to the same.

    Like the rest of the world with ageing populations, the dependency ratio of tax payers in the workforce vs retiree or pensioners is inverting, more of the latter vs. former… hence, already many nations’ budgets and/or pension systems are unsustainable (vs. Oz deemed to be in the top 5 for retirement income); supported by our significant high NOM net overseas migration ‘churn over’ of temporaries who are net financial contributors to budgets for pensions and services.

    Banks see industry and non profit funds as a commercial threat vs. being able to both ‘clip’ and divert funds in their own super funds into their own financial products; LNP and IPA see industry and non profits as an ideological and collective power threat.

    Further, Labor, unions and super funds need to be wary of the Grattan Institute ‘research’ which claims super is not in workers’ interests and they need the money now. However, that is only true if tax and pension means & assets test stay the same, which is highly unlikely e.g. expensive homes excluded and tax incentives now for wealthier contributors.

    Disappointing that Australian media follow the narratives but do nothing to scrutinise e.g. comparing with other nations.

    PS Matters Not, apparently Ayn Rand the queen of libertarian ideology and need for no government interference finished up dependent upon social security…… there is another one like her in the weird Anglo white nativist, climate/Covid science ‘expertise’ and libertarian eco-system i.e. US novelist Lionel Shriver. Shriver lives in the UK, but is also patron of the Ehrlich and Tanton informed Population Matters (linked with Sustainable Population Australia) and turns up on panel shows in Oz and UK to create confusion or doubts round climate science.

  5. New England Cocky

    @Phil Pryor: Naughty Phil!! How many times do you have to be told that accurately describing the politicians of the Australian misgovernment is a little beyond their comprehension. Such literary excellence!!

    @Andrew J Smith: Wise words of caution. The COALition NEVER consider the best interests of workers and the superannuation money-pot has been quietly brewing away since the ALP Hawke Keating government introduced it about 30+ years ago.

  6. wam

    Despite:
    the Banking Royal Commission finding for-profit funds blatantly rorting members
    the indue card contains 80% of welfare money with a huge advantage to the company for keeping it for as long as possible.
    the disappearing penalty rates and tax cuts with no jobs
    the sports rorts, funny business with women and craig kelly
    Women spray paints cook and cops $1760 fine rio tinto destroys a sacred site and cops $150000
    These people are close to food kitchens for all perceived labor voters and as the fukwits cannot be elected without labor people this might just backfire oops I’m dreaming again.
    Of course it is certain that destruction of preferential voting will likely favour the conservative and will reverse the current lnp strategy of frightening workers into labor scaring the retired.

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