Treasury grilled on missing detail in super overhaul

Ms Kelly said the timing of the release of the regulations was “a matter for government”.

“A lot of the detail contained in the regulations was released in the policy information in October last year, and the consultations we’ve had have provided feedback in relation to that policy detail that will be included in regulations,” Ms Kelly said. 

“Similarly, the explanatory memorandum released with the legislation spoke in detail about the content to be included in regulations.”

Ms Kelly’s comments were contradicted by Australian Super chief Ian Silk’s remarks the previous day to the committee, with Mr Silk pointing out the reforms handed the government dangerous new powers to veto super fund investment strategy that had still not been fully fleshed out, with just three months until the laws were due to come into force.

“To introduce something as extraordinary as this I would have thought justified an extensive explanation and justification, but there is none. It’s as much as anything the unknown element of this — the details are apparently going to be covered in regulations, so we don’t know the criteria that will be applied to the use of this power,” Mr Silk said.

ACTU assistant secretary Scott Connolly echoed Mr Silk’s concerns that super fund investment in the post-COVID economic recovery could be hampered depending on the interpretation of the veto power, which allows direct intervention by the minister in super fund investment decisions, within the regulations.

“There’s a real risk that under these very unknown provisions, given we are yet to see the detail of how this proposal will be enacted, but at the moment as it reads, it is at the discretion of the minister and the forces that influence the minister,” Mr Connolly said. 

“You could see the risk of a situation where investors are averse in terms of making decisions to invest in the real economy, that there would be a potential shift from investment in real assets that we know play a massive role in our economy in terms of the impact they have and have also played a significant role in terms of enabling many businesses to survive the pandemic and hopefully prosper in years to come.”

Senator Walsh asked if the Treasury had been working to a deadline of next week for the release of the regulations, to which Ms Kelly responded that they would be released “shortly”.

“Treasury have been working on the regulations for some time, but the formulation and the timing of the release is a matter for government,” Ms Kelly said. 

“Following the release of the policy detail in October, we received submissions which we have released publicly, and many of those submissions went to the detail to be included in the regulations. We’ve also had informal conversations when we’ve been approached by stakeholders providing feedback in relation to the policy detail.

“I would also expect [the regulations] would be exposed for consultation.”

Senator Walsh further questioned Treasury acting assistant secretary of retirement income policy Alex Maevsky on the likely impact of performance benchmarking provisions on the super sector, with Mr Maevsky saying almost 20 per cent of the 16 million current accounts could be affected by the potential shutdown of underperforming funds in the first year of the reforms.

“As part of the development of the policy document, we’ve done some analysis and the policy benefits are informed by an estimate of how many funds would fail [benchmarking tests] based on data at the time and the number of accounts,” Mr Maevsky said. 

“There are 3 million accounts in underperforming products and $100 billion in assets in those products according to the policy document.”