APRA says that political donations don’t meet the sole purpose test, but that it can’t take action to stop super funds from making them.
Questioned by standing committee chair Tim Wilson on whether it would take action on a number of political donations made to the Labor Party by groups including Industry Super Holdings (ISH), APRA warned that while it was “difficult to envisage circumstances” in which donations met the sole purpose test, its hands were effectively tied.
“Many of the specific examples within the question relate to the activities of Industry Super Australia/Industry Super Network, Industry Super Holdings and Industry Fund Services. These are not APRA-regulated entities, and not subject to the sole purpose test. The sole purpose test also does not apply to ME Bank,” APRA said.
Political donations made in this manner – i.e. through holding companies – would be difficult to regulate, even under the Your Future, Your Super reforms. However, APRA is undertaking a review of trustee expenditure to ensure that they are meeting their best interests obligations and will take “appropriate action” to ensure deficiencies are addressed.
“The reporting standards to implement the expanded data collection requirements are expected to be finalised in the first half of 2021, with the first data collection due in late 2021. This enhanced data will better enable APRA to identify, investigate and take appropriate action in relation to any expenditure that may not be consistent with the sole purpose test,” APRA said.
APRA has recently come under fire by a number of Coalition politicians for apparent deficiencies in how it handles breaches of the sole purpose test, with senator Andrew Bragg accusing industry funds of treating the test – which is supposed to ensure that funds are providing benefit to members upon retirement – with “contempt”.
“APRA will have to improve its performance as a regulator. Failing to bring a single action to enforce the sole purpose test in the 30 years of compulsory super is a shocking indictment on APRA,” Mr Bragg said.