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New government, new rules
The Federal Election has not just produced a change of Government but a change in the channels of industry influence – something which will test the lobbying skills of those representing the interests of the industry funds.
Notwithstanding the many Coalition criticisms of the relationship which existed between the former Labor Government and industry superannuation funds, people such as Industry Super Network (ISN) chief executive David Whiteley have said they believe they can work with an Abbott Government.
Whiteley, attending a recent function hosted by Super Review, said he believed a sound working relationship had existed between the ISN and the Shadow Assistant Treasurer, Senator Mathias Cormann.
The soundness of that relationship will soon be put to the test as will the consequences of the ISN’s role in financial services policy development over the past six years.
Any reading of Hansard over the past three years would reveal comments by Cormann and other senior Coalition politicians critical of the closeness of the relationship which existed between the industry super funds and the Labor Government.
Those Hansard transcripts would reveal the shadow minister’s frequent references to the Government looking after its mates in the trade unions and the industry funds.
Most of those statements referencing the close relationship between the industry funds and the Australian Labor Party revolved around the Government’s handling of default funds under modern awards – but equally, there were references to those elements of the Cooper Review recommendations which were not included in the Stronger Super legislation, particularly the make-up of trustee boards and the need for independent directors.
Given the size and influence of industry superannuation funds, the newly-elected Coalition Government would be foolish to needlessly act to alienate the sector but, importantly, any new Minister for Financial Services will be cognizant of the expectations of other sectors of the financial services industry.
And those expectations are that a Coalition Government will look to counter the perceived undue influence the industry funds were held to have exercised on the Labor Government, particularly while the financial services portfolio was being run by former Australian Workers Union boss, Bill Shorten.
While it is true that many of the major institutional players, conscious of the mandates they extract from industry funds, will remain pragmatic about what a Coalition Government can sensibly do, other elements of the financial services industry will be looking for pay-back.
And while that “pay-back” may not prove to be as draconian as some people would like, the industry funds should expect that, at a minimum, the Coalition Government will act early on the status of default funds under modern awards in order to minimize the role of the industrial judiciary and allow the inclusion of all qualifying MySuper products.
As well, the industry funds should brace themselves for the imposition of the Coalition’s policy approach to super fund governance – with all its implications for those holding multiple directorships.
But the greater threat to industry funds will likely not even evolve out of the financial services portfolio but from within the portfolios of the Attorney-General and the Minister for Workplace Relations.
Nothing goes further to the core of the relationship between the ALP and industry funds than the linkages which exist between the trade unions and the industry funds, including the number of senior union officials who are super fund trustee directors.
Thus, if the Government were to launch an inquiry into the trade union movement, there would be inevitable consequences for industry funds.
The Government has not specifically signaled its intention to conduct an inquiry into the trade union movement, but the scandals which have beset the Australian Services Union, the Independent Commission Against Corruption hearings in NSW and the allegations which were leveled against former Prime Minister, Julia Gillard with respect to the Australian Workers Union provide a convenient excuse.
Looked at from an historical perspective, the default funds under modern awards regime represented a distinctly ALP policy manifestation. The Coalition was never likely to support continuing down this track.
Where super fund governance is concerned, no one will be surprised that a Coalition Government is intent upon pursuing one of the key recommendations of the Labor-established Cooper review – independent directors – when its implementation will serve to undermine what has been perceived as undue influence by particular individuals.
The superannuation landscape will change markedly over the next three years, with the greatest challenges likely to be encountered not so much by the industry funds themselves but those who purport to represent them.
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