The government is facing stiff resistance from the opposition and industry bodies as it pushes ahead with plans to reform superannuation.
The Your Future, Your Super draft legislation has been released along with promises from a number of backbench Liberals to clean up an industry accused of misusing member money. The legislation will be open to consultation until January. Funds will likely take issue with the government’s continued prioritisation of investment fees over administration fees, which a number of executives have described as a puzzling oversight.
But it’s also clear from the draft legislation that any attempt to prevent funds from advertising will be easily frustrated. It will be relatively simple for most trustees to justify marketing spend, so long as they can demonstrate that it brought more members into the fund, and Industry Super Australia (ISA) has already defended its own ads – slammed by Andrew Bragg as a “shocking waste” – as “a cost-effective way to attract and retain members” and a “useful financial literacy tool”.
However, the latter defence may fall foul of the laws if ISA member funds cannot prove that those tools created a quantifiable benefit to members. Political donations or spending on events will also be near impossible to justify – good news for an industry that suffered a rash of bad publicity due to Hostplus’ wildly inappropriate spending on the Australian Open.
But the laws will also make launching a media campaign against a potential super freeze that much harder. It will be extraordinarily difficult to justify that fighting for 12 per cent super is in the best financial interests of members when the Retirement Income Review found that 12 per cent super would likely leave them worse off in the short-term.
Labor’s Stephen Jones has labelled the draft legislation as “just another shameless attempt by Scott Morrison and the Liberals to halt the super guarantee and distort the market in favour of their mates”, suggesting that retail funds might be able to advertise using money not derived from their members. ISA also took a noticeably harder stance on the laws, warning against the impact that “politics and ideology” could have on member outcomes and noting that Kenneth Hayne saw little to be concerned about in its activities.
“Media reports have suggested the proposed changes to the sole purpose test are deliberately designed to disadvantage industry funds. ISA will carefully examine if the effect or intent of the legislation is to damage industry funds’ competitive position in the marketplace,” ISA said.