With the new Assistant Treasurer flagging plans to change the rules governing default super funds, I joined Marius Benson on ABC NewsRadio to explain why industry funds are a good bet. Here's the transcript:
MONDAY, 19 JANUARY 2015
SUBJECT/S: Industry superannuation funds; global economic outlook.
MARIUS BENSON: Andrew Leigh, do you believe it's a legitimate exercise for the Government to review the role of union officials on super boards?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Marius, I think the Government ought to be most focused on making sure that the retirement security of Australians is assured. Rather than playing political games, they ought to be focusing on the returns. Now, the last time I looked at the numbers, the industry super funds were returning an average of seven per cent a year, retail super funds were returning an average of six per cent a year. So why the Government thinks that it ought to be a top priority to shift the playing field towards retail funds is beyond me. An extra one per cent a year translates into potentially tens of thousands of dollars more in retirement savings for workers. That's the goal the Government ought to be focused on.
BENSON: So are you saying those union officials on the boards are doing a better job, getting a better return than other board members in areas where union officials aren't represented?
LEIGH: I don't think it's about particular individuals. I think there is a benefit to having a diversity of experiences on a board, and certainly I think union officials have a place, as do business experts. But on the practical matter, if you're trying to tip the playing field towards the retail funds and deliberately skew away from the industry funds then the effect of that is to tip towards the lower-performing part of the sector. I'd really love to see the Treasurer and the Assistant Treasurer be less focused on what's good for their mates and more focused on what's good for all Australians in ensuring security in retirement.
BENSON: Is there not a cosy deal at the moment, where union officials are guaranteed a well-remunerated position on a superannuation board as one of the perks of office? Wouldn't superannuation funds be better served if that were not the case?
LEIGH: I think in many cases those union officials give the money back to their union rather than keep it themselves. And I think the principal issue is to ensure retirement security. That's got to be the number one issue in our superannuation system. One of the things we know very clearly is that industry funds have ensured that.
BENSON: Andrew Leigh, can I turn to another subject: Josh Frydenberg – your counterpart in the Government, the Assistant Treasurer – is heading off, has headed off, is at the beginning of a series of international economic forums and his general assessment is that, looking around the world, a cold wind is blowing in the international economy. Do you share that assessment?
LEIGH: I think it's a mix of temperatures when you look around the globe, Marius. I'm a little nervous about what's going on in Europe at the moment, I think it has constantly underperformed. The British economy seems to be going ok, but I've got real concerns about Continental Europe. With China, even though the growth rate has come off a bit, it is just a much larger economy than it was a decade ago so even a smaller percentage growth rate delivers more dollar returns. In the United States, the unemployment rate is now beginning to come down and the economic growth rate is going up, and in Latin America again, I think you're looking at a pretty optimistic story, as you are with Africa. So you want to be very careful about these kind of broad-brush generalisations. To look around at the detail of what's going on in the world, amidst all of that the Australian situation is solid. But you'd have to worry about the rise in unemployment that we've seen since the Abbott Government came to office.
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