Australia’s superannuation sector needs to start practising what it preaches.
THE drama around Rupert Murdoch’s News Corporation has resonated with investors in the Australian share market, notably because the Delaware-based media group remains a big part of the local bourse.
There are lots of calls for Mr Murdoch’s head because the “buck has to stop with the CEO or the chair and Rupert Murdoch is both”. At least that is what Australian Council of Super Investors chief executive Ann Byrne reportedly said.
As the ACSI represents funds that control around $300 billion, it is worth hearing what it has to say.
But I’d also be keen to see the superannuation industry practise what it preaches.
The ACSI, from what I can tell, mainly represents industry funds, some of the least democratic or transparent financial services entities in Australia.
Many of the people who are on the boards of these types of industry funds are appointed by industry bodies or unions, often given a role because of their past service to those organisations rather than any great knowledge of superannuation or investment.
Members, the ultimate beneficiaries of the work of these people, typically have little direct say in such appointments. While the same may be said for those that put their super in retail funds, such funds are usually connected to large listed entities such as banks, which have the sort of corporate governance that ASCI is calling for.
Industry funds seem to have used their lobbying clout with the federal Labor government to change industry awards laws, which means that businesses and employers have much less choice in where they direct the superannuation entitlements of those who don’t nominate a fund. It is very cosy that industry funds now dominate the default funds, where an enormous amount of super money is directed.
Personally, I’ve encountered many examples of where the funds management sector lacks the corporate governance that it expects of the companies it invests in. I find this surprising given their increasingly activist stances on corporate governance issues such as executive pay.
What I have noticed is an ever-diminishing amount of detail provided in annual reports, which come nowhere near reaching the standards set for ASX entities.
An interesting example is the near extinction of that rare species – a Western Australian industry fund.
For instance, the largest WA super fund outside of state-owned GESB is Westscheme, which was absorbed at the start of this month into AusSuper to form a $40 billion giant.
While the writing might have been on the wall, Westscheme’s sudden disappearance was done without the members having a say in where the administration of their $3 billion in funds was shifted. In fact, they don’t even have the right to a board position on AusSuper; all they received was commitment for the merged fund giant to have a WA representative.
Presumably, that is why UnionsWA secretary Simone McGurk is now on the board as a representative, nominated by the Australian Council of Trade Unions. She joins other ACTU nominees: Australian Workers’ Union national secretary Paul Howes; Liquor, Hospitality and Miscellaneous Union national president Brian Daley; ACTU secretary Jeff Lawrence; Australian Manufacturing Workers national secretary Dave Oliver; and chair Elana Rubin, who appears to be a professional non-executive director after being involved in the industry fund sector at an executive level.
Australian Industry Group chief executive Helen Ridout is one of six employer directors nominated by AI Group.
I am not saying there is anything wrong with the merger or any rules were broken, I just found it oddly opaque – especially as I knew Westscheme’s biggest single investments were in a Brisbane CBD tower and the Loy Yang coal-fired power stations now considered enemy number one in Australia as part of our rush to decarbonise our economy.
At the time of the announcement, Westscheme’s then CEO Howard Rosario said the impetus for the merger was not performance related but a view taken by the board of the fund’s trustee that delivering cost-effective services to members was becoming increasingly difficult for a fund of its size.
Both are part of the industry fund sector, which has suffered badly in terms of performance as a result of the belated impact of the GFC on their favoured infrastructure investments. Westscheme went as far as closing its ‘target return’ option to new business as a result of the difficulty in meeting objectives once viewed as relatively simple in the pre-GFC environment.
At least Westscheme’s former members have a choice to leave AusSuper. Members of the state government’s GESB fund don’t have that level of choice – despite years of promises.
TO continue on the theme of the scandal embroiling Rupert Murdoch’s News Corporation, I can’t help feeling that audience divergence is a big part of the media empire’s woes.
The tabloid world Mr Murdoch’s now-defunct News of World dominated (but includes plenty of other media beyond UK newspapers) is fixated on a particularly large group of consumers that have a seemingly unquenchable thirst for celebrity gossip.
So demanding is this group, and so willing to consume this tripe served up as news, that media in this field resorted to questionable and illegal tactics such as intercepting and accessing voicemails to get a scoop.
It seems that the general public tolerated this because celebrities were fair game; they used the media to promote themselves and their products, be it music, books, movies or many businesses or causes with which they associated.
In effect, the celebrity world was a large self-consuming bubble that the rest of the world didn’t really care about.
But when the tactics of celebrity media were adopted for non-celebrity stories, such as stealing information about the victims of terrorism, normal news consumers were horrified that the senseless world of celebrity had infected other media.
I have never been interested in celebrity gossip. For instance, I was largely unaware about the dramas of recently deceased UK singer Amy Winehouse.
Nevertheless I have long-recognised there are two clear and distinct markets out there – celebrity news and real news. Apart from the besmirching of the journalistic profession, which sits fairly low anyway, I never really considered the former represented a danger to the latter.
Clearly it does and I suggest a simple remedy. It is time the media simply stopped covering celebrities.
I’m sure all those musicians, movie stars, royal families and non-entity hangers-on would appreciate the reprieve from the limelight and being allowed to get on with their lives without worrying about being pried upon.