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‘Sole purpose test doesn’t work’, senator says

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Liberal senator Andrew Bragg has accused industry super funds of misusing members’ money for operating a media outlet and advertising campaigns, saying it reflects the failings of legislation and APRA’s policing.

Speaking in a debate hosted by the Association of Superannuation Funds of Australia (ASFA), Senator Bragg referred to Industry Super Holding’s ownership of the New Daily, as well as its television adverts.

He argued there had been no consequences for using member reserves to power the media and advertising, despite a clash with funds’ responsibility to maintain members’ money for the sole purpose of providing retirement benefits. The sole purpose test outlines the requirement under the SIS Act. 

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“Clearly the sole purpose test doesn’t work,” Mr Bragg said. 

“So the legal frame is that it’s basically there for retirement and it’s basically there for people’s savings. And the administration of it has been that no one has ever been pulled up for doing the wrong thing. 

“I would say we should prescribe things that definitely can’t be done. I mean, you certainly can’t set up a newspaper, you can’t set up whatever they’re doing now, running all these ads.”

The senator commented he had no issues with companies advertising their products, but the messaging from super funds had been political.

“Saying aren’t I great, that I’m running this great system and spending all your money on telling you how great it is – I mean this is crazy that we’re allowing this to happen,” Mr Bragg said.

“In terms of APRA, I mean it needs to be run by people that are prepared to enforce the law.”

But Labor MP Daniel Mulino refuted the comments from Mr Bragg, which he noted had been echoed by other Liberal politicians, namely, Liberal MP Tim Wilson, who chairs the House of Economics standing committee on economics. Dr Mulino is a member on the committee.

“It is a bit ironic, not just Andrew, but there are others like Tim Wilson, who I think often bang on about parts of the public communications or parts of the sector that bother them,” Dr Mulino said.

“But at the same time, they say they want a system with more transparency, they want a system with more choice, with consumer awareness. So to me, it kind of flies in the face of where they want to take the system, where they want organisations to reach out to their members, they want organisations to raise their brand awareness so that they can get new members.

“And yet they pick and choose where they have a real problem with companies or funds communicating, and it seems very uneven.”

Mr Wilson recently grilled executives from Industry Super Holdings about the New Daily, blasting the organisation for being opaque around its entities. 

The media outlet was examined by the royal commission, which concluded there were no issues in terms of best interests and sole purpose. 

“I think it’s an example of a publication which raises financial literacy,” Dr Mulino said.

“It’s an example of a publication which when you look at the cost, has absolutely no impact on funds, which year after year after year have beaten benchmarks. I just think it’s an example of focusing on… what I might say is ideological issues.”

Mr Bragg also said he had endured “name-calling” from the industry after pushing for reforms and challenging super in his book, Bad Egg, published earlier this year. 

He referred to when ASFA had called him an anti-vaxxer in August last year, to which he said he had been fully vaccinated and volunteered for a post-COVID study after contracting the virus.

ASFA had also allegedly claimed the senator wanted to condemn people, and in particular, women to poverty in retirement as well as being “obsessed with dismantling super on ideological grounds”. 

“I’m a pragmatist, and I want to fix a system which is 30 years old and not delivering,” Mr Bragg said.  

In July, Mr Bragg questioned ASIC around potential breaches of sole purpose test by Hostplus and AustralianSuper, with the corporate regulator saying the SIS Act fell within APRA’s remit. 

The senator also challenged the prudential watchdog over its response to a Sunsuper payment to the Labor Party, sponsoring a corporate event.

 

‘Sole purpose test doesn’t work’, senator says
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Sarah Simpkins

Sarah Simpkins

Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth. 

Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio. 

You can contact her on [email protected].

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