AustralianSuper chief executive Ian Silk has justified his fund’s investment in The New Daily to the banking royal commission, saying the purpose of the publication was to engage with members and increase financial literacy.
He said the publication was not intended to be a “thoughtless cheerleader” for industry super funds, though he said it would promote the “positive features” of industry funds “when the facts warrant it”.
The New Daily was launched in 2013 with money from AustralianSuper, Industry Super Holdings and a number of other industry super funds. Ownership was later transferred exclusively to Industry Super Holdings, which is part-owned by AustralianSuper.
AustralianSuper itself invested $2 million in the publication.
Mr Silk was grilled on the justification for using members’ money to invest in a news publication.
He said this $2 million was not an investment because the money came out of the fund’s marketing budget, which was funded by the $1.50 a week administration fee.
“The intention was to provide an online publication that was directed at … middle Australia,” Mr Silk said.
“[It is] directed at the sort of people who are the bread and butter members of the industry funds, and in our case members of AustralianSuper,” he said, describing this group as “not working class, but working Australia”.
He said the owners hoped the publication would “seek to demystify superannuation for the sceptics”, providing readers with information “by which members can increase super savings, practical actions they can take to increase their super savings and have a better lump sum at the point of retirement.”
Mr Silk said AustralianSuper declined to provide direct funding to The New Daily when the publication requested a second round of funds, at which point funding duties transferred exclusively to Industry Super Holdings.
Mr Silk was asked why the fund felt it was in the members’ interest to become owners of an online media publication as opposed to reducing the member administration fee.
Mr Silk responded that the investment in The New Daily had no effect on the administration fee, and a decision not to fund the publication would not have reduced it.
He said the funding of The New Daily cost members 20 cents per annum.
“We don’t splash around members money lightly,” Mr Silk said.
“It was made on the basis that our judgement that relatively small amount of money in the context of our multi-pronged approach was worth spending.”
Fox in the henhouse
Mr Silk was also grilled on an advertisement by Industry Super Australia – a marketing and lobbying group also owned by Industry Super Holdings – that attacked the big banks.
The ‘Fox in the Henhouse’ campaign first aired in 2017. It compared the big banks to foxes, and superannuation savings to chickens.
“The big banks want to get their hands on your super, and they’re putting pressure on our federal politicians to let them in. Banks aren’t super,” the ad’s voiceover ran.
The royal commission heard that the ad was an attempt by the industry fund movement to resist pressure to allow employers to pick for a default superannuation fund any provider they want, as long as it is MySuper compliant.
Currently employers are generally limited to super funds listed either in their relevant Fair Work Commission award, or a specially negotiated enterprise bargaining agreement.
“The selection of a default fund is critically important to the retirement outcome of individuals,” Mr Silk said, a fact he said was illustrated “with all the subtlety of a sledgehammer” by the Productivity Commission report in May.
“They [the PC] had what they call cameos which were examples, and one example with all … the assumptions being identical between the two cases was for a 21 year old starting salary of $50,000 retiring at 67, if they went into a top quartile performing fund versus a bottom quartile performing fund, they would receive $570,000 at retirement in the case of the bottom quartile fund and $1.2 million for the top quartile fund,” Mr Silk said.
He said the proposals supported by the big banks and, at the time of the ad, the government would “essentially strip superannuation from the industrial system and allow employers the unfettered right to choose the default fund that would apply at their workplace”.
The result, he said, would be that many members would join “poorer performing retail funds”, leaving the vulnerable to the “mis-selling, cross-selling and conflicts of interest” of these bank-owned funds.
Mr Silk said the ad was therefore in the interest of members, and was worth the money.