The new Minister for Superannuation, Victorian Senator Jane Hume, worked for an industry superannuation fund before entering politics. Does this mean that, finally, the decades-long Liberal war against industry super is over?
Yeah, nah.
Hume’s arrival in the Senate in 2016 was cause for some consternation among people in the Victorian Liberals, given she was a woman and had worked for AustralianSuper. As we know from Kelly O’Dwyer’s experience, some Victorian Liberal men prefer their women out of politics and certainly not threatening their cosy super arrangements.
But Hume had only briefly worked for AustralianSuper, from 2015-16, and had longer stints before that in retail and business banking, working for NAB and Deutsche Bank. She thus continues the proud Liberal tradition of appointing former big four bankers to manage superannuation — in just the last six years, Arthur Sinodinos, Josh Frydenberg and O’Dwyer have all ended up managing the banks they used to work for.
Hume has previously been chair of the Senate Standing Committee on Economics, in which role she’s led legislation inquiries, dissented from references inquiries and generally offered her wisdom on various financial services issues, including super — on which, naturally, she has strong views. Very strong. Biblical, in fact. Industry superannuation funds, trade unions and Labor form an “unholy trinity”, Hume wrote earlier this year, in a piece calling for the imposition of retail fund-style governance on the industry sector.
Hume is fond of the “unholy” line. She also appears to believe the primary problem in superannuation isn’t the massive underperformance of retail super funds — like the ones run by her former employers at NAB — or the gouging and rip-offs perpetrated by the big banks, AMP and IOOF on retail fund members, but industry super’s conflicts of interest.
“Inevitably, there is vested interest in the superannuation industry,” she told the senate in February. “Particularly from the Labor Party. The Labor Party is in an unholy alliance with the union movement and the industry superannuation movement. So it’s not ever going to be something easy to reform.”
Indeed for Hume, the very birth of compulsory super in Australia was evil. “There was an unholy accord, for want of a better expression, between Bill Kelty and Paul Keating back in about 1991 when they decided to introduce compulsory superannuation, rather than a pay rise, for the unionised workforces.”
Actually, compulsory super was introduced in the 1985 accord but let’s not sweat the small stuff. Compulsory superannuation was, Hume said, “very hard for employers”. Indeed, “that compulsory superannuation system actually put a lot of people out of work,” she insisted, though she has yet to go so far as to call for its abolition.
In 2017, in a speech in which Hume claimed compulsory superannuation had been introduced “during the death throes of a Labor government”, she argued that the existing industry super governance model, which has delivered returns for members far greater than retail super, was “entirely irrelevant, it is a legacy of the past”. It suffered from “uncritical group-think mentality” and needed to be replaced with the retail super fund governance model of independent directors — the model that would shortly be exposed by the Hayne royal commission as profoundly inadequate in protecting members’ interests.
Hume has also repeatedly and enthusiastically invoked David Murray’s views on superannuation in justifying her position, which augurs poorly given Murray — architect of the Commonwealth Bank’s push into retail super and funds management at the end of the 1990s — now chairs an AMP deeply scarred by the revelations of the royal commission.
As Crikey warned ahead of the election, the Coalition now wants to return to its plan to impose retail super governance on the industry sector. Treasurer Josh Frydenberg flagged after the election that the government wanted (yet another) review of superannuation and retirement incomes.
“There are a number of superannuation reforms that remain outstanding from the last term of government,” Frydenberg told The Australian Financial Review, including “a strong case for reform to strengthen accountability and governance”.
The ministers sent into battle may change, but the Liberal determination to attack industry super remains steadfast.
I get the distinct feeling that the Coalition see this surprise election victory as a last chance to introduce more of the IPA’s agenda before the jig is up. It’s Liberal party cream on the top. I expect a revisit of some of the nastiness we saw in the reviled 2014 budget…it’s back to Union busting, Employer enabling schemes to screw the workforce down a little more. The APS to be cut further, maybe some agencies sold/amalgamated and Australia to follow Trump into another war in the Middle East at the behest of Bibi and MBS. It’ll take about 12 months for the lie of the Adani jobs to come to light by which time the Liberals may have introduced some half arsed policy on renewables to try to take the heat out of that issue.
Your franking credits might be safe and you can still negatively gear until the cows come home but your grandchildren have been sold down the river.
Sigh!
At least three more years of this tripe.
And we have no-one to blame but ourselves.
Yes, of course everybody knows that the only thing Super is actually good for us guaranteeing a permanent source of stake for the spivs to play financial sector roulette with.
Nobody is ever actually going to need to live off the actual sustainable annual return your actual tax-subsidised fund accumulation generates, after all. For the tax-rort welfare upper class, that is what your tax-payer bulwarked franked divvies, your taxpayer-subsidised investment properties, your tax-minimising discretionary trust distributions and your tax-dodging Cayman Islands accounts are for. For the rest of us – give it a decade or so and we will all just be lumped in together in the gig economy underclass – we will all simply have to keep working in our PAYE serfdom until we drop.
So the actual performance of our compulsory super ‘as such’ – retail, industry, a weekly punt on the third at Dapto – is moot. Just so long as we keep dutifully presenting our tickets to our Spiv Overlords to get clipped along the way.
Class War? Oh dear me, you better believe it. Mercy help us all…
Yes, Jack, it’s been a nice little earner for the finance industry parasites. I can’t remember the figures, but I remember reading a report from the US that over there total profits in the finance industry (professional spivs shuffling money around) now greatly exceed the profits from the real economy – and they don’t even force all their peasants to play the game.
Aye, Peter. As with so many good progressive ideas badly implemented and carelessly managed going forward, compulsory super has evolved grotesquely into a domestic economy-trashing Frankenstein. The fact that vastly-swelled battalions of non-productive neo-spivs are skimming oodles from the financial sector’s now eye-watering array of arcane pump-clip-n-dump financial products is probably the least worst of it. We now have an entire generation of our executive class – two – who simply have no grasp of what capitalism is, and what it needs to do to survive and thrive: invest in real growth industries, creating real long term jobs, while setting return expectations realistically in a context of long term strategies, that include re-investment of profit regularly and often, rather than flinging the divvies about like manna from heaven.
Add in woeful regulation, vertically integrated financial institutions, insane tax incentives like full franking – cash handouts for excess, FFS – and all the quiet little SMSF portfolio management lurks, high speed/volume algorithmic trading, and the gulling, poker machine-like simplicity of online retail investor trading platforms…and voila! You have created a ticket clipper’s Shangri-la of unprecedented proportions.
The tragedy for Australia is that precisely at the moment we might have been retooling our local economy for a truly astounding shift into the thrilling new STEM/digital/new energy global one…we have convinced ourselves we can all get rich fast and easy by…investing in everyone else’s attempts to get rich fast and easy. A nation of (wannabe) rentier proles indeed, as Rundle put it. But who will actually…rent our wares?!
Each other! What could possibly go wrong.
Two decades of once-in-a-national-history, real wealth-earning/creating prosperity, pissed up against the walls of our overpriced brick veneers, and into the giant flashing pokie that is our ASX.
We are all broker than we can possibly yet begin to imagine. The churned returns will run out, of course; the poker machines will go dead, the club bouncers will kick us out at last, and while the spivs count their mountainous take in the VIP room upstairs, we’ll emerge into the grey dawn, wondering how it is that our credit card is so maxed out that we can’t even afford an Uber back to a home that, also inexplicably, is now worth 30% less than the mortgage we plonked heavily on it just a few partying years ago.
Oh well. How good is Orstraya, eh!
Jack, you describe an executive class of ticket clippers “who simply have no grasp of what capitalism is, and what it needs to do to survive and thrive”.
That looks about right – your whole analysis does. Perhaps “capitalism” needs to be qualified by “corporate” or some such – some from previous generations had an understanding that the state could play an essential role in the formation of capital, and in its productive direction – and even that the participation of labor organisations was beneficial.
But credit where credit is due – one thing the current generations of execs do know better than their forebears and the unions – how to organise networks at board level so as to get themselves paid.
All of this is one area where Australia seems right at the forefront of world trends.
On the ASX, advice to beginners is usually (1) diversify, (2) be interested in the activities of the companies you invest in and (3) look for good quality management. All complete BS. Six months’ exposure to “market forces” and the canny punter-kulak-hulak simplifies to the government-backed fully-franked big 4 banks. RCs notwithstanding. Another six months and s/he ditches the ANZ, WBC and NAB. The size of the ticket clip depends on how long the “advice” smokescreen holds sway.
Yes, Keith, in the interests of accuracy, some now call our current system ‘corporate fascism’ – it’s certainly nothing like the capitalist theory I read about in the Economics 101 story books we were fed at uni back in the ‘1970’s.
Jack, another detail of this sorry state of affairs swam into my dim-eyed view this morning. You are probably already aware of it. This from a John Kampert commenting in a thread in The Conversation:
“Whom do our politicians run fiscal and monetary policy for? Maybe the answer to that is provided by scrutiny of this 2018 enactment: The Financial Sector Legislation Amendment (Crisis Resolution Powers and Other Measures) Act. That act provides that in a banking crisis compulsory conversion of saving instruments into shares will happen. Debt instruments – peoples’ savings entrusted to banks – will be converted into shares in companies that have been run by extremely well paid senior managers! “
The outperformance of not-for-profit super funds over private funds – for more than 25 years – is the greatest real-time experimental proof that social enterprises are more efficient than profit-driven players when it comes to providing community services. That’s mainly due to the profit creamed off the top by the market players. Of course, a party representing those market players is going to do everything it can to punish an industry that exposes the Co-alition’s ideological obsession and lies about private market efficiency – no matter how hard the facts stare them in the face. Strap in – this is just the start of redistribution. Not by Labor, in the cause of reducing inequality – but by the Co-alition in the cause of ‘we have the power, the wealth, and the entitlements so we are taking more of what we want’.
AKA: Australia’s ‘Quiet Aspiration’ Class. Them’s Wot Wun It!
Shhhhhh…don’t give our dirty little tax-rorting secrets away now. How good is Orstraya!!!
How bloody good are quiet Australians today! (Stuart Robert addressing stockbrokers and financial planners as quiet Aussies).
Accumulating some capital and allowing a few union types to have a say in how it is invested – could it be that this is actually a threat to capitalism? From the doggedness of the right about this matter, you’d be forgiven for thinking so.
…you clearly haven’t caught on that the only tradies allowed to play spiv games with capital are those in hi-vis vests, Hiluxes & Hillsong, Keith…
Scrabbling to catch on, as usual – maybe with all those H’s we should dub them Hulaks.
the Australian voters are about to experience a real term under a liberal government with a mojority to do what it likes and a conservative government of right wing neo cons that likes nothing better than to punish the poor and reward the rich and to to punish the fools that voted for them, I cant wait to hear to the squeals as scomo turns on the screws and listen to the plaintive cries, of “dont blame me “I didn`t vote liberal” just like howards last term when the mugs gave him control of the senate and he flogged the fools with workchoices, bend over suckers here comes scomo with the rough end of that pineapple and its just for you suckers haaaaaa