Speaking to the Senate economics legislation committee, AustralianSuper CEO Ian Silk has highlighted the unique powers the Parliament could exercise over a fund's investment choices if the proposed reforms are legislated.
The CEO of Australia’s largest superannuation fund expressed his disdain with the new investment veto powers, opining that not only are they "bizarre and entirely unjustified", similar veto powers are only ever seen in “terrorism legislation”.
“Superannuation decision making is now going to be regarded in the same breath as terrorism offences – it’s quite extraordinary,” he said.
“The whole provision smacks of ideological fervour gone absolutely mad.”
ACTU assistant secretary Scott Connolly shared similar concerns during the senate economics briefing, highlighting how 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.
“There are very real risks under these unknown provisions, but as [the legislation] reads, it is at the discretion of the minister and the forces that influence the minister,” he explained.
“There would be a potential shift from investment in real assets that we know play a massive role in our real economy and help many businesses survive the pandemic.”
“Those things are being put in jeopardy by the prospects of those decisions being overturned by the minister because there’s a whim of the industry they are working in,” he said.
Using the example of the clean energy and environmental movement, Mr Connolly explained how real investments could be wiped due to this legislation.
“We know there’s particular views about that with some members of government, and we very much feel it’s a real risk we will lose that opportunity [to invest in these assets],” he said.
Mr Silk also warned that the reforms would introduce sovereign risk to the $3 trillion superannuation sector for the first time, with international investors potentially thinking twice about partnering with a fund due to fears that “politicians might override a decision to enter a contract that’s been made in good faith”.
“Superannuation funds are big investors. They make big investments with joint venture partners, and I would say an international investor will think twice,” the CEO opined.
“To introduce something as extraordinary as this, I would have thought justified an extensive explanation and justification, but there is none. It’s as much as anything the unknown element of this – the details are apparently going to be covered in regulations, so we don’t know the criteria that will be applied to the use of this power.”
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