Abbott attacks industry super

At the last count, 49 of the 50 strongest super fund performers were from the not-for-profit sector – yet Tony Abbott belittles them as a “gravy train” for union officials.

Opposition leader Tony Abbott has staked out his territory for an attack on the industry super sector in the next federal election campaign, describing them as “a gravy train for union officials”.

According to The Australian newspaper “the Opposition Leader took aim at the ‘venality’ of the links between unions and super funds in his strongest sign that he wants to overhaul the sector and turn super into a major election issue”.

Abbott has a long history of opposition to the industry super sector, with its model of shared corporate governance between employers and workers’ representatives.

A year after becoming an MP in 1995, he described compulsory superannuation as “one of the biggest con jobs ever foisted by government on the Australian people”.

The opposition leader’s most recent attack was met by a chorus of criticism from leaders in the super sector.

Industry Super Network Chief Executive David Whiteley
Industry Super Network Chief Executive David Whiteley

Industry Super Network Chief Executive, David Whiteley, said industry funds, or other non-profit funds, made up 49 of the 50 strongest performers of the eight years to June last year.

“The strength of the system is that it’s a joint initiative between representatives of employers and employees to manage retirement savings,” he said. “And the strength is evidenced by the performance data.”

Ideological attack

Australian Institute of Superannuation Trustees CEO, Fiona Reynolds, said Tony Abbott needed to get his facts straight and focus on what really mattered to the Australian public about super and the nation’s retirement incomes policy.

“Mr Abbott’s view on super seems to be driven by ideology rather than what’s really going to benefit Australians in retirement,” she said. “The Coalition didn’t support super in the beginning, they didn’t support the increase in the super guarantee from 9 to 12 per cent, and now they want to dismantle the very funds that are serving their members so well.”

Fiona Reynolds said all the performance data showed that industry funds had outperformed retail funds, year after year. This included research from the industry regulator, the Australian Prudential Regulation Authority (APRA), as well as from universities and rating agencies.

Fiona Reynolds said it was ludicrous to label these funds as “union-controlled”.

“This is just plain wrong as, by law, industry funds must have equal numbers of employer and employee directors on their boards. And, by law, they must act solely in the interests of their members, not in the interests of banks or organisations that are seeking to make profits out of the super system,” she said. “Furthermore, all board decisions require a two thirds majority of the board, which does not allow one side to dominate the other.”

Figures from the Australian Prudential Regulation Authority show that industry funds are continuing to outperform retail funds with a 9% rate of return versus 6.5% in the past year, and 4.5% versus 2.9% over 10 years.

Meanwhile, a new national poll has found that 75% of Australians support lifting superannuation to 12%. The poll of 1000 respondents was conducted by Essential Media. Of those polled, 35% thought the phase-in from 9% to 12% was too slow and 36% thought the phase-in was about right.