A report advocating for reduced union involvement in super funds was tabled on Thursday on behalf of Senator Andrew Bragg.
Tabled just after 5pm on Thursday, the third interim report of the 15-month inquiry into improving consumer experiences, choice and outcomes in Australia’s retirement system highlighted “shocking governance standards undermining the superannuation sector”, according to Bragg.
“This package of recommendations focuses on conflicts, competence and independence within the super sector,” Bragg said in a statement.
“These recommendations address the significant issues that have plagued Cbus and other super funds in recent months, on which Labor has been silent.”
The report, described by Labor senator Jess Walsh as “unserious”, makes seven recommendations, including requiring superannuation trustee boards to have a majority of independent directors, an independent chair, and a public skills matrix for director appointments.
It also suggests empowering the Australian Prudential Regulation Authority (APRA) to remove trustees with material conflicts of interest, mandating reporting on best financial interests duty (BFID) decisions, and requiring super funds to maintain separate funding for trustee misconduct costs.
Additionally, the government is urged to develop mandatory insurance service standards for super funds, in consultation with consumer advocates, regulators and industry stakeholders.
“Our recommendations prioritise consumers over shareholders,” Bragg said.
However, Walsh, deputy chair of the Senate economics references committee, did not agree, accusing Bragg of tailoring a report reflective of his “long-held loathing” of Australia’s superannuation system and unions’ role in it.
“Across three interim reports, the only suggestion Senator Bragg has offered for improving Australia’s retirement system is to dismantle the best thing about it – our world-leading superannuation system,” Walsh said in a statement.
“It is a waste of a 15-month inquiry for Senator Bragg to just rehash and reheat a position the Liberals held 10 years ago.”
What’s in the report?
The report dedicates an entire chapter to questioning the efficacy of the equal representation model in industry funds, citing the Cooper and Murray reviews, which suggested superannuation boards would benefit from a greater number of independent directors.
The report also dedicates several pages to Cbus, which has been embroiled in controversy over recent months, with APRA just this week announcing further action to address concerns identified within the fund, alongside an investigation into the possibility the fund breached the SIS Act.
Moreover, the report questions the effectiveness of the best financial interests duty, noting that APRA’s recent enforcement actions against Cbus Super and First Super highlight ongoing challenges with compliance, conflicts of interest, and governance practices under the BFID framework.
