Government defends super fund independence amid US investment pact

Labor’s finance minister has dismissed claims the government directs super fund investments after questions over Australia’s new US deal.

Finance Minister Katy Gallagher has rejected suggestions that the government is directing where superannuation funds invest, following questions in the Senate about Australia’s new critical minerals and superannuation investment framework with the US.

The partnership, signed in Washington earlier this month, commits both governments to boosting private capital flows into strategic sectors, including clean energy and critical minerals.

The White House said Australian superannuation funds are expected to increase investments in the US to US$1.44 trillion (about $2.2 trillion) by 2035, as part of a broader push to strengthen bilateral economic and supply chain ties.

The framework forms part of a larger strategic effort to align the two countries’ investment systems, positioning Australian capital to support energy transition projects and infrastructure in the US, while opening new opportunities for Australian institutional investors in the world’s largest capital market.

During Senate question time, One Nation senator Tyron Whitten asked whether the government has “the right or the authority to dictate where superannuation funds invest hardworking Australians’ super.”

Gallagher said superannuation funds operate under existing legislation and make independent investment decisions in the interests of members.

“Superannuation funds are regulated by the superannuation industry act and other pieces of legislation,” she said. “They are governed by those laws. They have responsibilities to their members and to ensure the members’ interests are put first and foremost.

“As to individual decisions that are made by the funds about where they invest, those are made by the board of directors, usually, of each individual superannuation fund.”

Whitten cited the White House statement, saying it implied a level of government involvement in investment allocation.

“Superannuation is not the government’s money to use; it belongs to the Australian people and should be invested only for the benefit of its members,” Senator Whitten said. “Why is the government using the Australian people’s super as a political football?”

Gallagher dismissed the claim, saying: “I don’t accept the question and the imputation in the question as outlined by Senator Whitten. Superannuation funds have accumulated significant amounts of capital, and it is appropriate that those funds make decisions in their members’ interests about where those investments are.”

Instead, Minister Gallagher said global diversification has long been part of fund strategy.

“If you look at any superannuation fund’s information that they provide readily to members, you will see that there are typically – in fact, almost always – investments made overseas,” Gallagher said.

“We do believe that superannuation investments in the US will continue to grow, and that is a good thing. It’s a good thing for the members, whose funds are being invested, ultimately, for their retirement income.”

Whitten also referenced a tweet by Australia’s ambassador to Washington, Kevin Rudd, who said Australian super funds are “supercharging economic growth in the United States.”

In response, Gallagher reaffirmed Labor’s commitment to the independence and integrity of the super system.

“The Labor party is the party that established compulsory superannuation,” she said. “We’re the party that continues to back compulsory super… so that Australian citizens have access to funds that allow them to live a dignified retirement.”

She pointed to measures such as raising the super guarantee to 12 per cent, reinstating the Low Income Superannuation Tax Offset (LISTO), and paying super on paid parental leave as examples of Labor’s continued support for workers’ retirement outcomes.

“That is the position of federal Labor,” Gallagher said. “And we will continue to invest in super and in the superannuation benefits for these same people.”