(03) 9020 2905PORTFOLIO POINT: Bill Shorten and APRA stats.
Should Australia’s superannuation industry be fearful or welcoming of Bill Shorten?
The former Victorian union leader was sworn in yesterday as the new Superannuation Minister to serve under Julia Gillard’s minority government.
While Shorten is a tough nut, a seasoned media performer, engaging and ambitious, he’s been most famous recently as one of the “faceless men” of the ALP responsible for removing former PM Kevin Rudd from the top job and installing fellow Victorian Julia Gillard.
Shorten’s political star has only just started to rise. Barring some disaster – which he seems almost too cluey to allow to happen – he’s a long way from having peaked. He was probably due a promotion to minister – up from parliamentary secretary – whether it was Rudd or Gillard who led the party out of this election.
He’s seen as future leadership material – he just needs some more time serving in senior roles – but what should we make of him in this stepping stone of superannuation minister?
There are a few things to note.
Is he at least well credentialled to be Superannuation Minister? Yes.
Shorten has a history with the topic. For a start, he’s a former director of the Superannuation Trust of Australia (now AustralianSuper, one of Australia’s largest industry super funds). And he’s also been on the board of the Victorian Funds Management Corporation, which provides services and advice to Victorian government super funds and insurers.
That gives him more relevant experience than his immediate predecessor Chris Bowen, but probably less than Nick Sherry, who was shadow minister in and around superannuation for many years before Labor came to power.
Will Shorten get the opportunity to be any good for Australia’s superannuation industry? Will he be around in the role for long? And by that, there are two different suggestions.
For a start, Shorten is Australia’s fourth Superannuation Minister in less than three years. Chris Pearce was responsible for it under the Coalition until Rudd toppled Howard. Following that, Senator Nick Sherry held it for about 18 months and Chris Bowen has had it for about 15 months.
It’s clearly seen as a “first ministry”, a training ground. If you don’t mess it up, you’ll get promoted. You’ll get your head around figures, as part of the broader Treasury portfolios.
If Shorten is as good as his backers suggest, he could be moving on up to a much “bigger” portfolio sooner rather than later, potentially in the potential mid-term reshuffle (I only say that because there inevitably seems to be one).
Alternatively, he might have his own “super” promotion before too long.
And by that I mean the big one.
In the days following last month’s election and the hung parliament, the punters installed Shorten as “favourite to lead the ALP into the next election”. Sure, this was in the first couple of days and it was 50-50 as to whether the ALP or the Coalition would form government.
But there’s a lot of money from people who are willing to bet that the next ALP leader, or ALP Prime Minister, will be Shorten. It’s just a matter of time, apparently, for the man who is seen as the heir apparent.
A far more interesting question is in regards to where super sits in a minority-alliance government? Due to its lack of real vote-pulling power, will super fall from “lacking importance” to “completely irrelevant”, as a minority government focuses on rural and regional Australia, broadband policy and trying to stay in government?
There’s plenty on the table. The government announced major changes, in response to Ripoll, Cooper and Henry. Someone needs to implement those changes, which will face challenge and opposition from parts of the industry.
I doubt any other government has launched that many inquiries into super in one parliament. Any further inquiries would only test everyone’s patience. This term has to be about implementation on super (and a few other portfolios too, many would argue), the good and the bad. And that could be enough of a challenge for Shorten.
Let’s give him some time.
But you can mark this down as a definite. Any hope held by Eureka Report readers that there might have been a change of heart on concessional contribution limits being lifted can be safely kissed goodbye. The only likely change there is the 50-50-500 rule being implemented – however, as pointed out in previous columns (click here for May 19, 2010), we are still spectacularly short of detail there.
*****
When sworn in soon, Shorten will be taking charge of a smaller superannuation cake.
The Australian Prudential Regulation Authority has reported that the total size of Australia’s superannuation funds fell by 2.5% in the June quarter to $1.23 trillion, due largely to market movements. For the full financial year of 2010, however, the asset base increased by 14.1%.
Interestingly, for the quarter, industry funds assets fell by 0.5%, public sector funds fell by 1.2%, SMSF’s fell by 2.6%, retail funds dropped 3.5% and corporate funds slumped 7.8%. No explanation is given.
Other interesting stats from the APRA periodical included:
- The June 2010 quarter was the first negative quarterly return for five quarters.
- Retail super fund members make the largest member contributions as a percentage of overal funds flow, followed by public sector employees, industry funds and then corporate fund members.
- Public sector and corporate super funds suffered net outflows for the quarter, while retail and industry funds gained net inflows.
Bruce Brammall is director of Castellan Financial Consulting and author of Debt Man Walking.