Industry super stalwarts have urged the sector to embrace its collective unionist roots and collaborate more closely on solving social problems like affordable housing and aged care.
“We as an industry need to continue to look forward to where we can collaborate to continue pushing forward together,” Catherine Bolger, who is an AIST board member and a trustee of coal miners’ industry fund Mine Wealth + Wellbeing, said.
Bolger and others made their comments during the Mavis Robertson Plenary at the Conference of Major Superannuation Funds 2017, held on the Gold Coast on March 22-24.
IFM Investors and Industry Super Holdings chair Garry Weaven said that the Australian Institute of Superannuation Trustees and its annual Conference of Major Superannuation Funds were two examples of the many collective organisations and events that facilitated effective collaboration between industry funds.
Other collectives Weaven noted were: Industry Fund Services, IFM Investors, Frontier Advisors, Industry Super Australia, Industry Super Property Trust, the Australian Council of Superannuation Investors, Women in Super, and ME Bank.
In the 1980s and 1990s Weaven played a formative role in the introduction of Australia’s superannuation guarantee, negotiating the deferred wages deal with the Hawke-Keating governments in his then-role as Australian Council of Trade Unions deputy chief.
Today the super sector is worth roughly $2.3 trillion, making it one of the largest pool of assets in the world, and is forecast to hit $6 trillion by 2030.
Tackling housing affordability
Weaven said the latest round of media speculation and public debate about whether young people should be allowed to tap their compulsory retirement savings was easily discredited. However, he agreed it highlighted the potential for the industry super sector to be more ambitious in taking collective action to address the nation’s social and affordable housing shortage.
He said the government dabbled with the idea of allowing early access to super for housing every few years because it would undoubtedly be popular.
“But all the boffins – actuaries, economists, analysts – inevitably show it would be crazy and it drops off the radar for a while.”
However, he said that acting collectively, the super fund sector might be able to play an important role in alleviating the social problems associated with rising housing costs.
“Housing is the biggest asset class we haven’t commoditised and we need to do it.”
First State Super chief executive Michael Dwyer agreed.
“The political debate [about early access to super for housing] has been killed off for a time, but is incumbent upon us as an industry to do something,” Dwyer said.
He said the obvious appetite from all state treasurers for super funds to take a more active role as investors in social and affordable housing indicated that it was possible.
Dwyer also said that by taking a stronger role in the provision of housing, the super industry could make itself more relevant to younger members, who tend to be quite disengaged with saving for a distant retirement.
“I have some sympathy for the idea of connecting members over something they care about. Plus, all the modelling shows that not owning the roof over your head in retirement is the biggest risk factor for living in poverty.”
Industry Super Australia chief executive David Whiteley said he believed the profit-to-member super sector had both the interest and the capacity to help provide a part of the solution to Australia’s housing affordability problem, but that it would be a hugely complex task.
“The sector, as a whole with the government, needs to prioritise it,” Whiteley said.
“If we were to find a fix it would have to be some elegant and complex mechanism that could really help address housing affordability, not a crude mechanism like letting people use their super for a house deposit.”
Aged care the next opportunity
Looking beyond the current debate over housing, the panel all agreed that aged care was the next big opportunity for industry funds to work collectively to improve their members’ lives.
It was also agreed that it would be very difficult for the industry to meet the challenge of developing the best possible comprehensive income products for retirement without working collectively to achieve economies of scale.
Bolger summed up a sentiment expressed by many members of the panel when she said that it was a shame the industry fund sector spent so much time reacting to “government attack”, and that it was difficult to dedicate adequate time and resources to developing more positive proposals.
Australian Council of Trade Unions president Ged Kearney said it worried her that some industry fund executives, who are increasingly hired from the retail financial services sector, do not share the same belief in collectivism that shaped the birth and early years of the sector.
“As trustees we have to be really careful to make sure people working in our funds understand the importance of collectivism,” she told delegates.
Kearney called on the profit-to-member super fund sector to step-up its coordination on efforts to take on companies that are not meeting their environmental, social and governance (ESG) obligations.
She said unions and industry funds must not forget that they are a social movement that exists “for the betterment” of their members. In addition to chasing financial returns, super funds have an obligation to try and stamp out harmful business practices in their portfolio companies, such as the use of child or slave labour in supply chains, Kearney argued.
She singled out ASX-listed Domino’s Pizza and Archer Capital-owned Aerocare as two local companies that had recently made headlines for exploiting workers.
“Do we as industry funds want to be a part of a company that mistreats workers like that?” Kearney questioned.
“Imagine if we all together took them to task.”
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