The contradictions at the heart of the Government’s proposals for scrapping default awards and prescribing at least a third of independent trustees on superannuation boards have been highlighted by the AIST.
Tom Garcia, chief executive of the AIST, made the comments to Investment Magazine, but used a similar logic when speaking before the Senate Economics Legislation Committee Inquiry yesterday, to make the case on why forcing all superannuation funds to have one third independent trustees was wrong.
Garcia pointed out that the Liberal Government has a track record of rejecting the use of quotas – most recently over electoral candidates for its own party, but was effectively insisting on a quota of independents onto industry superannuation boards.
And he highlighted that while ASX guidelines encourage the appointment of independent directors, the ASX takes a principles-based approach. There are no quotas around independents.
And he pointed out that given APRA’s powers to monitor the skills matrix of superannuation boards and the oversight of its fit and proper policy, then there was already an ability to alter the composition of boards, if there were felt to be weaknesses or conflicts of interest.
He also saw a contradiction of seeking the end of the default awards system and thereby providing greater choice for employers, but mandating the way in which funds must choose their trustees.
“There seems to be this urgent push for full choice and full competition, but there is irony of the government saying ‘we are going to mandate the construction of boards and you are all going to look the same’,” he said. “So we have pro liberal policy on one side and an anti-liberal policy on the other.”
Garcia’s main direction for the Government was that it prioritise legislating the objective of superannuation and tax reform to improve the fairness of the retirement income system. This, he felt, were the changes that will deliver real long-term benefit to members.