Industry superannuation is set to control capital worth half of Australia's economic output within five years.
This development is a serious worry to the Conservative Party because union-aligned funds will increasingly use their financial clout to drive socialist/Green agendas - damaging the Australian economy and industry.
The Australian Financial Review reports, some industry funds are aligning themselves to pro-union and "progressive" agendas on topics such as workplace relations and climate change, threatening the freedom of business decision-making.
Treasurer Josh Frydenberg has written to the Australian Prudential Regulation Authority expressing alarm about union demands in February that 30 industry funds use their leverage as investors to pressure BHP to save the jobs of about 80 sacked seafarers.
He said this was a "dangerous development" warning that superannuation was "not a plaything for union bosses nor a platform for pushing their industrial relations agenda".
Glencore has agreed to cap coal production after coming under pressure from investor action group Climate Change 100+.
While there is a legitimate case for shareholders to pressure boards on long-term investment risks such as climate change where they could materially hurt a company's future profits, performance and, possibly, corporate reputation, there is rising alarm in business ranks where funds cross into progressive activism for causes that undermine shareholder returns for political agendas.
Where the line is drawn between justifiable shareholder engagement and political activism that erodes the returns of fund members will be a critical issue for super fund trustees under their environmental, social and corporate governance (ESG) frameworks.
Greg Combet, the former Labor minister and union leader who now chairs both Industry Super Australia and IFM Investors, says the industry is preparing to exercise its voting rights and influence with governments and the public.
Labor is quietly rubbing its hands with glee about the rise of industry super and the downfall of bank-owned retail funds.
It explains why some Liberals are attracted to the idea to set up a low-fee and less conflicted government-owned default super fund, such as the Future Fund, to compete against industry and wounded retail funds.
The unions are gaining too much non-democratic control over the major inputs into industry. That must be confronted now or the economy will become so heavily influenced it will be difficult to disassemble.
And Labor is promising to introduce four tax proposals to channel even more “mum'n'dad” investor savings into industry super going forward.
- Denial of cash refunds for franking credits
- Halving the Capital Gains Tax discount (for individuals, but curiously, not for super funds)
- Abolishing negative gearing (except for new housing) and
- Taxing discretionary trusts like companies (at the 30% rate)
The Morrison government has refused to deal with the insidious problem of union control fearing a vicious backlash by cashed-up union-controlled industry funds could hurt the Coalition.
Morrison's political timidity ignores the fact that assets held by industry funds will surpass $1 trillion in 2024 and hit $1.7 trillion in 2033.
By then, the union dominated industry super goliath will be so much more formidable.
Only a Conservative Party-dominate Senate crossbench can stand in the way of Labor's socialist plans for our nation. That's why it is critical that you vote "1" for the Australian Conservatives in the Senate at the next federal election.
To read John Kehoe's full article, click here.
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