The Australian government wants to impose bank control over superannuation

Contributed by Joe Montero

Superannuation funds have become significant players in in Australian economy and a large part of the money they old, comes from contributions made by wage earners.

Together the hold $534 billion in assets,making them a key sector of the financial and overall economy. What they do has an immense impact.

The availability of an accessible and cheap reserve of investment fund of this size  is hugely attractive to the banks and other corporations, whose lifeblood is investment funds. Superannuation is relatively cheap because it enables corporations to collectively reclaim a portion of the outlay in wages, as a means to fund operations and expansion.

For the employee, this is a vehicle towards more retirement money. Society also has a stake in that its interest is that the funds are used in a way that results in the greatest social benefit.

These conflicting interests create tension that pulls in different directions. The goal of the corporations to have ready access ot funds for their own purposes does not always accord with the other competing interests.

But since the industry super funds are managed by boards made up of representatives of the private sector, government and the unions, corporate interests are more likely to be under challenge by those who push for the greatest benefit for the retiree, ethical investment and a much greater emphasis on community investment.

Funds could be denied, for example, to those businesses regarded to be taking out too much, or behaving unethically in terms of their labour practices and pollution. They could be directed to building new sustainable technologies and industries and they could provide seeding funds for the establishment of cooperatives.

This has created grounds for the existence of two kinds of funds. The industry funds that on top of representative management are also not for profit and the private for profit funds, directly under the control  by the banks and fund managers.

Already in the pipeline, is the intention of the government to remove union representation. Its Productivity Commission report in March this year, proposed that employers should be given greater scope to choose which fund their employees would join. This opens the way to shift over to for profit and non-union represented funds.

Evidence shows that these for profit or ‘default funds’ reduce a retiree’s balance by $25,000 on average.

However, it is the capacity to gain greater control that is most attractive to the corporate sector.

The government has now announced its intention to set up a government appointed panel, to select which funds will be available for employees, who have not self-selected a fund. This makes up two-thirds of wage earners.

Unions and the industry superannuation funds say that there is at the least, the risk of bias towards the private for profit funds.

The Australian Council of Trade Unions has warned that putting superannuation in the control of funds that are largely in the hands of the banks and wealth managers would be wrong.

“We live in a partisan political world where many senior political figures have avowed prejudices. How could any objective observer believe that the selection process won’t be corrupted?” the ACTU said.

A further argument is that superannuation, although its upfront objective is to produce income for retirees, is also an important instrument for government monetary policy. And can be used to meet important economic and social objectives concerned with use and distribution of resources, meeting investment needs in the face of market failure and to support important matters like community development and sustainability.  These needs stand a much better chance of being met with industry funds than their alternative.







6 Comments on "The Australian government wants to impose bank control over superannuation"

  1. Eamonn Wolfe | 4 May 2017 at 1:34 pm | Reply

    Getting hold of the hard working people’s superannuation is a wet dream of the banks and the conservatives , just look how the banks conduct business and then transfer that culture of thief and robbery across to our superannuation
    Their wet dream our nightmare…..

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