Former politicians commonly go on to become company directors or ambassadors for charities when they retire, but few would expect a one-time Liberal member of parliament to pop up on the board of an industry superannuation fund.
The 2006 appointment of former New South Wales Liberal party leader, Peter Collins, as an independent director of HOSTPLUS was the first of its kind and he is now into his third three-year term. As well as this role, he is deputy chairman of Industry Super Network (ISN), the lobby group that represents industry funds including AustralianSuper, Cbus and HOSTPLUS.
Last year on the HOSTPLUS board, Collins was joined by former deputy prime minister, Mark Vaile, who is one of three employer representatives nominated by the Australian Hoteliers Association.
HOSTPLUS does not have a “decorative board”, Collins says. “I’ve served on boards where directors didn’t make decisions, but boards need to take responsibility for their decisions and endorsements, otherwise why be there?” he says. “It’s a board of strong personalities and no shrinking violets. Everyone is expected to have an opinion.”
An unlikely Liberal
Collins is proud of its governance structure, which has had three employee representatives, three employer representatives and three independent trustees since 2003.
This model was recommended in the Cooper Review commissioned by the federal government, but not all ISN members have adopted it, admits Collins, and shadow financial services minister Mathias Cormann is vowing to enshrine it in legislation if the opposition wins the September election – an outcome Collins is certain about.
“Tony Abbott will be prime minister,” he says, “but the resurrection of Kevin Rudd has saved the Labor Party from catastrophe and totally reenergised an otherwise dead campaign. The election will be much closer than it would’ve been under Julia Gillard.”
Despite his deep Liberal Party roots, Collins praises the Hawke/Keating government for the introduction of the superannuation guarantee.
“Compulsory super is a policy initiative which has had a lasting impact and created much wealth for Australians,” he said. “Industry funds would not exist without the vision of the Keating government and the ACTU. The Howard government then went on to build significantly on that structure.”
Those comments contain a gentle warning to Canberra to think carefully before making further unnecessary changes to superannuation, namely, Cormann’s proposal to allow any MySuper product to become a default fund for employers. That would curb the distribution of superannuation through awards, which industry and government super funds have been the key recipients and beneficiaries of.
“Stronger Super provides more options for members who want to play an active role in the management of their superannuation, but the average person just wants to know that their money is safe and the fees they pay are low. The question is how much will all these additional products cost and do they add value for members with low account balances?”
“The whole industry is suffering from fatigue and everyone needs a break to allow things to settle and stability return to superannuation,” Collins said.
However, the former army and navy reserve officer can sense an intense battle coming. He reckons competition will only ramp up after the election and will ultimately lead to a “shake-out” of sub-scale players: small funds with less than $1 billion under management will struggle under the Australian Prudential Regulation Authority’s new regulatory regime and will be forced to merge.
“Industry funds are very savvy and up to any challenge, but we don’t want to engage in an eye-gouging session with the Financial Services Council (FSC) on every matter because we actually agree with it on many matters. Furthermore, it would be bad policy for any Australian government to focus on industry funds while ignoring the perils of self-managed superannuation. We’ve seen the heavy promotion of SMSFs by the banks, retail funds and financial advisers, and if there’s an area where people will be badly burned in the next decade, it’s the SMSF space.”
Collins hopes that the not-for-profit and commercial sectors will work more closely together in the same way he believes superannuation should have bipartisan support. He was pleased to see ISN chief executive David Whiteley and Financial Services Council boss John Brogden share the stage at the FSC’s August conference in Brisbane.
“It was significant that the FSC and ISN shared that platform together for the first time to say what unites us is greater than what divides us,” he said.
“It was a big step forward and it sent a message to both sides of Australian politics. It said, we’ve built something great together.”
The handle on HOSTPLUS
After seven years as a HOSTPLUS trustee, Collins is still having fun. The fund has more than doubled in size since 2006, with $13 billion under management and 1 million members. It is the fifth-largest industry fund, with quiet aspirations of cracking the top three in the next decade.
That will require both organic growth and mergers with smaller funds.
HOSTPLUS’ challenges and opportunities are unique. As the industry fund for people working in the hospitality sector, the average age of a HOSTPLUS member is 26 and so the average account balance is relatively low. While other mega funds are building retirement-income solutions and trying to persuade wealthy members not to leave and start SMSFs, HOSTPLUS is focused on getting members to engage.
It also spends a lot of its resources on member retention. “Our members typically start out working part-time in bars and restaurants or in the sporting industry, and may end up in a profession or commerce. We need to educate them so they know they can stay with us for the rest of their lives.
“We’re totally passionate about our mission, which is to maximise the retirement savings of ordinary Australians.”
Collins credits much of the fund’s success to date to HOSTPLUS chief executive David Elia, the driving force behind its decision to sponsor rugby league football team, Melbourne Storm, a partnership that has undeniably boosted the fund’s profile among its core membership.
Elia has also bolstered HOSTPLUS’ management team, hiring former Russell director Sam Sicilia as the fund’s inaugural chief investment officer in 2008 and chief operating officer Stephen Rowbottom.
With Elia at the helm, the fund has also won a swag of industry awards. “David is responsible for creating HOSTPLUS’ strong culture and he’s made it an exciting place to work. He has grown, and continues to grow his management team, and kept pace with all the reforms,” Collins said.
As the father of five children Collins feels strongly about “intergenerational equity”. He is acutely aware that if the super system doesn’t measure up, then the burden will be imposed on future generations to pay pensions as taxpayers.