As part of the Your Future, Your Super legislation, the government will have the power to veto investments, with the ACTU’s assistant secretary Scott Connolly warning this change in power could hurt Australia’s transition to net zero emissions.

One of the government’s proposals under the Your Future, Your Super reforms is an amendment to Superannuation Industry Act 1993, which would change the best interests duty to specifically requiring trustees act in members’ “best financial interests” across all investment types and expenditures.

It will also bring in regulations allowing for certain payments or investments to be banned, even if superannuation funds argue it is in the best financial interests of members.

“The government and members of the backbench have already criticised industry super funds for investing in Australian media, new builds of renewable energy, and in nation-building infrastructure – this bill gives the minister the authority to ban these investments,” Mr Connolly told nestegg.

Mr Connolly explained that the uncertainty of the new legislation could see it block investments to important sectors of the economy, including stopping investments in clean green technology.

“Implementing these laws will take Australia backwards on the global stage by enabling ministers with no understanding of investment frameworks to declare consideration of clearly established and emerging global risks by fiduciaries irrelevant and not in members’ interests.”

The assistant secretary opined that investments that do not align with political ideology could potentially be blocked under the proposed veto rules, instead of being looked at for their long-term returns for members.

“The Hayne royal commission found industry superannuation funds already act in the best financial interests of members. Under these laws, the government is proposing a new unnecessary legislative standard for funds that this proposal explicitly excuses the government from complying with. It is both ludicrous and hypocritical that the government is not held to the same standards proposed for funds.” 

“If superannuation funds must act in the best financial interests of members, then so should the government. It is both ludicrous and hypocritical that the government is not held to the same standards,” Mr Connolly concluded.