Group hugs all round – for now
The Industry Super Network appears to have positioned itself for life under a Coalition Government, but Mike Taylor questions whether recent history can be so readily forgotten.
Given the state of the major opinion polls, Australia will likely see the election of a Coalition Government this Saturday.
With the election of a Liberal/National Party Government will come a different approach to policy as it impacts the financial services industry – and the major industry groupings have been positioning themselves accordingly, ensuring that their lines of communication are open to people such as the Shadow Assistant Treasurer, Senator Mathias Cormann, Tasmania Liberal Senator, David Bushby or senior Liberal backbencher, Paul Fletcher.
Cormann has been so successful as the Shadow Assistant Treasurer and Opposition spokesman on Financial Services that there has been speculation that he may actually be granted a more senior portfolio in the first Abbott Cabinet.
However, if that is the case, then the financial services industry will lose little if either Bushby or Fletcher are handed the portfolio.
There has been a widely held assumption that in the event of a Coalition victory on Saturday, much of the political influence which accrued to industry superannuation funds during the six years of Labor administration will be stripped away.
There is a belief that a Coalition Government will not only follow through on promised amendments to the Future of Financial Advice (FOFA) legislation but that it will also look to strip back the advantage granted to particular industry funds via the default funds under the modern awards regime, and will by way of legislation alter the superannuation fund governance requirements.
However, while a Coalition Government will undoubtedly deliver on its Future of Financial Advice promises, the financial services industry should not accept that a diminution in the influence of the industry superannuation funds and, in particular, the Industry Super Network (ISN), is a fait accompli.
The past two months have revealed clear signs of the manner in which the ISN has sought to change its image and, confronted by the inevitability of a change of Government, be seen to be a part of the middle ground.
First up there was the policy formulation arrangement with the Financial Services Council (FSC). Then, more recently, there has been the announcement that the new chairman of the ISN is none other than former NSW Liberal Treasurer, Peter Collins.
Thus, in the space of a few short weeks, the chief executive of the ISN, David Whiteley, has managed to be seen in the friendly company of FSC chief executive, John Brogden, who is a former NSW Liberal Opposition leader, and Peter Collins, who was both State Treasurer and an Attorney General.
Of course anyone who understands the nuances of the Liberal Party will know that, not unlike the Australian Labor Party, it boasts its factions and that there are those in the NSW party who were always less pragmatic than former Prime Minister, John Howard, or current Opposition leader, Tony Abbott.
Nonetheless, the presence of Collins as ISN chairman will ensure that some doors which might have been slammed shut will remain open.
The policy arrangement between the ISN and FSC, while tactically interesting for both bodies, may only benefit the industry funds to the extent that it benefits the FSC’s major stakeholders – the banks and other large financial institutions.
The arrangement, announced by Whiteley and Brogden at the FSC’s recent national conference in Brisbane, represented an exercise in pragmatism on the part of the FSC stakeholders – a recognition of the multi-billion dollar value of the mandates extracted from the industry funds each year.
Simply put, it will not be in the long-term interests of the major institutions and fund managers to see the removal of a substantial source of funds flows.
Therefore, while the Coalition can be expected to fulfil much of its agenda with respect to FOFA – default funds under modern awards and fund governance – no one should expect that it will act to undermine the actual economic value of the industry funds.
The challenge for the ISN will be finding a way to navigate the inevitable policy changes without finding itself a primary victim.
Despite all its recent manoeuvring, the danger for the ISN lies in its status as a political lobbying arm – and a new Government’s ability to deal directly with industry funds rather than with it.
It is a measure of the political times that no one would have conceived of the ISN having a former Liberal Party politician as chairman five years ago, or of the ISN and the FSC agreeing to discuss policy formulation.
The ISN has certainly opened a dialogue with sections of the Liberal Party, but will that conversation mean anything in an Abbott Government Cabinet room?
AUTHOR
Staff Writer
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