23 August 2022

Interview with Tom Connell, NewsDay, Sky News

Note

Subjects: Indonesia investment delegation, superannuation

TOM CONNELL:

The government is on a bit of a mission at the moment to drum up potential support from Australian super funds within our region. It’s also though talking about more investment in things such as Australian infrastructure. Joining me live is Assistant Treasurer Stephen Jones, who is in Indonesia at the moment as he leads this delegation of super funds in Indonesia and Singapore. Thanks for your time. So, the delegation is going over there. You will be talking about investing overseas at the same time as there’s talk from the Treasurer here about investing more in Australia. Are these 2 sort of competing interests?

STEPHEN JONES:

Look, we’re blessed, Tom, with the fact that we’ve got a $3.4 trillion pool of Australian superannuation savings. That number is likely to double over the next decade. Increasingly, we are going to have to find investment opportunities abroad. That is as beneficial to Australia as if we are exporting iron ore, coal, wheat or any other commodity because as we’re investing over shore we’re bringing back income overseas. We’re also looking for where we can deepen and strengthen our relationships with our near neighbours, particularly Indonesia. We’ve been talking for over 2 decades now about the need for us to deepen our economic ties and, frankly, we really haven’t progressed that well enough. And there’s a deep interest from the Indonesia interest, President Widodo down and the Prime Minister to deepen those economic ties. When he was here in June, he announced that he’d be sending up a delegation of Australia’s largest superannuation funds to look for investment opportunities, particularly in infrastructure, and that’s what we’re doing this this week.

CONNELL:

So I guess what’s interesting about this is we always talk about spending in our region and it being impossible to actually counter the sheer size of China’s soft power. Do the size of our super funds actually give us a chance at that, that it’s not just about government spending, but you see this as a bit of a soft power exercise as well?

JONES:

It is about deepening our economic relationships. We’ve got good government-to-government relationships. We’ve also got quite extensive people-to-people relationships. There are literally thousands of Indonesians who are in very senior positions in business and in government who have fond memories of their time attending university in Australia and their personal exchanges. Where we really haven’t kicked it out of the park is in the business investment both ways, and that’s what we really want turn the dial up on, we want to change. Our superannuation funds give us a great advantage – long-term patient capital. Now, our super funds generally are investing not for the returns over the next year or 2 but they’re looking at decade and multi-decade investment which really does lend itself to the sorts of deals that the Indonesia Government is interested in exploring and we’re interested in partnering with them on.

CONNELL:

Yeah, it’s a big pot of money, so I’m sure it could be a soft power tool even if they’re my words, not yours. I want to ask you about this draft regulation you’ve released. So, this is to do with super funds at the moment and what they have to detail in terms of their spending. What you’re possibly going to change is instead of them having to itemise spending on things such as corporate events or donations, it would just be a figure at the end. Why is that a good change?

JONES:

Yeah, thanks for raising it, Tom. Frankly, some of the stuff that the previous government did in this area was a bit kooky. We’re up for ensuring that we have proper transparent declarations of all the important stuff, and I started a consultation about what went in the meeting notices because when we had a look at it, it looked pretty strange that meeting notices could be literally dozens and dozens and dozens of pages because of the way they were requiring funds to make declarations. There was also the way they put the regulations together. There was double-counting, all of it premised on the fact that there are donations going from superannuation funds into political parties. And when I asked APRA, the regulator, which pores through this stuff for over a decade now line by line by line, they have assured me that there isn’t donations going on. So, I said, well, what’s the point of this? How can we ensure we get better transparency, streamline the reporting arrangements? We put some regs out there to consult on. We’re getting good feedback and on the basis of that feedback, I think we might need to do more things than we initially intended to do. We want to ensure that we have good meaningful disclosure, and we want to ensure that it is disclosed in the right place. For example, why if something is really important for people for members of a fund to know about, are we putting that information in a meeting notice instead of in the annual report? That just sounds kooky to me. So, we’re going to have a look at that. We’re listening to the feedback, and we will be responding in the near future.

CONNELL:

So, just to clarify what this will end up as in terms of what will be required, you’re saying the meeting notice, they wouldn’t have to put in things such as donations, but the annual report, would that have to list individual donations? One example, First Super paying the CFMEU almost $4 million in 2021 – that would still need to be specifically disclosed, would it?

JONES:

Look, I haven’t put out a final response to the consultation we get back. But I’m minded to look at that specific issue of donations in detail. If this is the thing that everybody is really excited about, the regulator tells me that donations actually aren’t happening. And let’s be very clear: there’s a difference between a donation that is made and a fee‑for‑service arrangement that is made, if there’s a contractual arrangements done in the best financial interests of members, whether that’s done with a company, whether that’s done with a union, an employer organisation; that is a very different thing from a political donation. I’m minded to treat those 2 things –

CONNELL:

Shouldn’t they both have to be listed, though –

JONES:

– and ensure –

CONNELL:

– whether it’s an arrangement or a donation? Sorry.

JONES:

Sorry, Tom, I missed that.

CONNELL:

A donation – sorry, you’re just breaking up a little bit. I’m just going to clarify. You’re saying that if there’s some sort of arrangement that’s in best financial interests, the super fund wouldn’t have to list it as an item, but if it is a donation, they would. Is that what you’re saying?

JONES:

I’m looking at the response to the feedback, Tom, and I’ll go through it in detail and I’ll report – and I’ll respond appropriately after discussing it with the stakeholders and, you know, a whole bunch of stuff has been thrown up by this about what is required to be reported on and what is not required to be reported on and where you’re reporting it, whether it’s reported in an annual member meeting notice or whether it’s reported in the annual report. Pretty weird stuff, frankly, has gone on under the previous government in that respect and a whole heap of double-counting and a whole heap of, frankly, paranoid, frankly, weird stuff. We will have transparency. We’ll have appropriate levels of disclosure and to your point –

CONNELL:

I guess I’m just trying to clarify –

JONES:

I just want to make the point, Tom, I want to finish if I could. To your point, I don’t think members in their annual member meeting notice want to see a line-by-line declaration of every contract that a superannuation fund has made over the last 12 months. Bearing in mind that these are organisations which are investing in excess of $200 billion worth of funds on an annual basis, are we really saying that we want to report on a line-by-line item every single contract that these funds have with service providers, with marketing providers, with sort of any other organisation? That’s kooky. That’s not transparency. That is bombing people with information under the guise of transparency. We will ensure that members know what they can and should need to know about what their fund is doing. And, in addition to that, we’ll ensure that our regulators have all the power that they need to dig out and unearth and chase down anything that is done which is improper. That is the main thing.

CONNELL:

Well, we’re running very short on time. If I can just get you, I guess, where you’re sitting as a principle on this. I know you keep mentioning where things might be and your view that the previous requirements were kooky. In an annual report, would a super fund have to detail specifically any donations it made to another – to a political entity?

JONES:

Tom, you’ll have to wait until I’ve published the response on this after I’ve gone through the consultations and considered all the consultations of all the stakeholders, but what –

CONNELL:

That seemed like a pretty basic question though –

JONES:

What you can be assured of –

CONNELL:

– First Super paying the CFMEU $4 million in a year, would that be listed?

JONES:

– there will be complete disclosure of any donations. You can be absolutely assured.

CONNELL:

Okay. All right. We’ve clarified that. There’s a bit more to go through in this. I know it’s sort of a wonky space that some people inhabit, but we always like talking policy here on NewsDay. So, we might catch up when there’s more detail, Minister. Appreciate your time.