Unveiling the Superfund Curtain: A Closer Look at Marketing Expenditure and Union Donations
Recent changes in legislation lift the shroud of secrecy surrounding industry superfund spending.
For the first time, these funds are obligated to reveal their marketing expenditures and affiliations with trade unions. The numbers show significant spending on sporting sponsorships and union ‘partnership’ fees.
Three of Australia's largest superannuation funds, AustralianSuper, Hostplus, and Cbus, have collectively spent no less than $3 million on various affiliation and partnership fees to unions in the fiscal year ending June 30.
These revelations are the result of regulations introduced by the Morrison Government, aiming to enhance transparency in the superannuation sector. The Liberal Party has long contended that industry superannuation funds use sponsorships of unions to indirectly channel funds into Labor-affiliated organizations. In response to these concerns, regulations were put in place to compel superannuation funds to detail their contributions to unions.
The push for transparency, now legally mandated, has brought to light the significant contributions to unions by these funds. Cbus, for instance, stands out as a generous benefactor, allocating $1.7 million in sponsorship fees over FY23, including $1.2 million to the CFMEU.
The irony lies in the revelation of industry funds' historical claims of superiority over retail funds due to their avoidance of financial adviser commissions. The recent exposure of substantial payments to trade unions prompts questions about the consistency and authenticity of these claims.
This doesn't necessarily diminish the overall performance of industry funds, but it underscores the importance of maintaining integrity in marketing messages. Trust in financial institutions is delicate, and any perception of inconsistency can erode it.
The traditional classification of funds as industry or retail, once a pivotal marketing strategy, now seems increasingly inconsequential. Instead, investors are better off focusing on tangible factors like fees, investment choices, and administrative capabilities.