The inquiry into “the implications of capital concentration and common ownership in Australia”, which was announced on Monday, will look at the high concentration of ownership of the nation’s top listed companies by “an increasingly small number of mega-funds”, according to committee chair Tim Wilson.
“The House Economics Committee has been asking regulators about these risks for nearly a year,” Mr Wilson said.
“Recently the chair of the ACCC informed the committee common ownership posed threats to competition when it hits 10 per cent, yet some [funds] have already hit 30 per cent [ownership].
“We don’t want a stock exchange where a handful of ‘mega funds’ make all the decisions, and ordinary investors are locked out and higher costs are paid by Australians. Some ‘mega funds’ have already said that as their ownership increases they’d de-list public companies.”
Mr Wilson said the flow-on risks of common ownership included “higher prices and collusion, corporates imposing public policy agendas while bypassing democracy, and disempowering ordinary investors”.
However the super sector’s peak body ASFA said that following a year of record returns across the industry, the announcement of the inquiry was “clearly an act of political theatre”.
“The inquiry into the implications of common ownership on Australia’s legal framework and consumer harm will be the 13th comprehensive inquiry into the superannuation sector in the last decade,” the industry body said.
“Following a year in which superannuation funds generated a median return of 18 per cent for their members, and recapitalised Australian businesses, funds – and therefore crucially, fund members – are now going to be lumbered with the costs of replying to endless questions on notice and preparing for seemingly pointless committee hearings.”
ASFA also pointed out that given the government’s recent Your Future, Your Super reforms had focused on encouraging consolidation in the super sector, having an inquiry into the risks of consolidated ownership did not make a lot of sense.
“As investors acting in the best financial interests of their members, superannuation funds are proactive in holding corporate Australia to account and in ensuring strong and effective governance,” ASFA chief executive Martin Fahy said.
“The last 18 months has shown Australian superannuation funds to be highly capable in calling out inefficiency and shareholder value destruction.
“It would be a more efficient use of the parliament’s time to explore the regulatory impact on consumers and funds from continuous tinkering to the system and whether this constant change has created regulatory arbitrage with other parts of the system.”