UNIVERSITY OF WESTERN SYDNEY

MONDAY, 13 DECEMBER 2021
 
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I begin today by acknowledging the Darug people, the traditional custodians of the land on which we meet and pay my respects to their elders past, present and emerging.

I also acknowledge any indigenous Australians present here today.

A big thanks to the University of Western Sydney for putting on this forum.

The subject of ethical investing is not just an important topic but a timely one.

The Government’s Your Future, Your Super legislation has been in operation for almost six months.

And while I think we are still some way off from a full understanding of its effect, some negative consequences have begun to emerge already.

Among those is one that is right at the heart of what we are talking about today, ethical investing, especially investing tied to religious values.

As many here would be aware, the Your Future Your Super changes introduced a performance benchmark which most super funds now have to meet.

Let me say from the outset, Labor believes super funds must be held accountable for delivering high performance for members.

That’s why we fought hard to ensure that administration fees were included in the benchmark because we didn’t want to see excessive fees eroding members’ nest eggs.

High performance means high balances for members at retirement and Labor that is Labor’s focus.

We are also in favour of choice within the system.

Contrary to what some would have you believe, Labor believes a healthy superannuation system is one that offers a variety of options to members.

Be it industry funds, retail funds, self-managed funds or the flourishing variety of sub-groups within those categories, Labor sees them all as important.

We recognise the Australian workforce is a diverse.

Therefore we understand a diverse range of super funds is the best way to meet the needs of that workforce.

In an ideal world these two priorities, real choice for members and an insistence on high performance, would be in total harmony.

But in the real world they are not.

For entirely understandable reasons, many Australians would like the choice to not invest in certain companies even if those companies are offering high returns.

The government’s new system does not offer this choice.

Instead, the Morrison Government insists that high returns be sought where ever they lie without regard to even deepest religious beliefs of the investor.

This is not theoretical.

The fact is, sin, for want of a better word, is profitable.

We cannot ignore that fact that gambling, the production of alcohol and tobacco, the manufacturing of weapons or the technology that guides them and other such activities are a good way to make a buck.

Indeed, companies which engage in these activities make up a substantial proportion of the ASX here and of equities indexes in other countries.

For most investors and most Australians, that’s not a problem.

They just want to know their money is getting the best return.

There’s nothing wrong with that.

But in observing that point, we must also understand there is a substantial minority of Australians who do object to their money being invested in such companies for religious or moral reasons.

Labor feels these Australian’ choices must be respected by our government and reflected in our super policies.

Instead, the government’s Your Future, Your Super actively discriminates against super funds members’ religious or ethical choices.

It applies the performance benchmark to all registered superannuation entities regardless of their investment parameters.

If a fund fails the benchmark twice, it is closed off to new members, effectively closing it down all together.

This means funds who base their investment decisions in religious values face a real existential threat by excluding deliberately excluding certain high-performing investments from their portfolio.

Where mainstream funds can use those investments to bolster returns and meet the benchmark, religious funds cannot.

That could in turn see them being shut down according to “two strike” rule in the Your Future, Your Super legislation.

Such an outcome would place members of Christian Super or Crescent Wealth in an invidious position if their fund of choice was forced to close.

Given the compulsory nature of our super contributions, members of these funds would be forced to relocated into either a self-managed super fund or a fund that does not take into account their religious wishes.

The first is not a realistic option unless you have a significant balance in the order of $100,000.

If you have a balance less than that, you’ll be paying set-price fees that amount to a very high percentage of your balance and will erode your savings quickly.

The second places you in moral peril according to your religious faith.

Even Australians who aren’t religious can see what a terrible situation this is for their fellow Aussies of faith.

The rules clearly discriminate against those who practice a religion.

And they work to close down funds who’s only transgression is to avoid certain investments on moral grounds.

If elected, Labor will not allow this discrimination to continue.

That’s why I’m happy to announce that an Albanese Labor Government would change the rules to direct APRA to take into account religious faith into account when assessing funds’ performance against the new benchmark.

This would give APRA the flexibility it needs to allow faith-based super funds to continue to offer their members a low-fee way to invest their money in accordance with their beliefs.

There are a variety of ways of doing this in practice and in government we would seek to work with APRA and the funds to find the best, most efficient solution.

But make no mistake, we will end the discrimination that currently exists.

We will do so because at the end of the day, we recognise that investing is about peace of mind.

For the majority of Australians, that peace of mind comes in the simple form of high returns.

But for a large number of Australians that peace of mind also involves knowing that their money and their investment choices are helping to create a better world.

Government should not be in the business of discriminating against those wishes.

It should not be in the business of closing down the only investment avenues open to faith-based workers’ super contributions.

My hope is that in this announcement, Australians of faith will see Labor has their back.

The changes I have announced today aren’t just words.

They are a real-life, practical example of how Labor gets it.

And they’ll have a real financial and moral impact on religious Australians lives.

We’re not going to put anyone in a position where they are being told where to invest their money.

We’re going to give people a real choice.

And we’ll give them a real way to invest that respects their values and reflects their financial needs.

ENDS