Action call on energy ads

THE federal opposition has stepped up calls for the finance regulator to investigate whether a planned advertising blitz by industry-backed superannuation funds can be considered politically motivated.

By InvestSMART · 8 Sep 2011

By InvestSMART ·
8 Sep 2011

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The Age last month reported that a business owned by the 16 industry superannuation funds was planning a multimillion-dollar advertising campaign highlighting investments in clean energy.

The campaign has been planned to coincide with the Gillard government's own advertising campaign on the carbon tax.

Opposition finance spokesman Andrew Robb has written to the Australian Prudential Regulation Authority chairman, John Laker, arguing such a campaign could erode confidence in the nation's superannuation system.

The $2 million advertising blitz is to be fronted by Industry Funds Management, an asset manager that is owned by the nation's 16 industry superannuation funds. IFM manages almost $30 billion in retirement savings on behalf of five million members.

It owns several clean energy companies such as Pacific Hydro and wind farms.

"Any suggestions that industry funds or their subsidiaries are planning advertising campaigns that could be deemed to be politically motivated without the approval of members, serves only to erode public confidence in the system," Mr Robb said in the letter, obtained by The Age.

"Unlike individual holdings in listed companies where shareholders have the option to simply sell shares in entities, which act in ways that do not meet their approval or performance expectations, the members of industry superannuation funds held in trust do not have that same flexibility," he said.

A spokesman for APRA declined to comment on the letter.

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Frequently Asked Questions about this Article…

What is the planned advertising blitz by industry superannuation funds about?

The article says industry-backed superannuation funds, via a business owned by the 16 industry funds, planned a multimillion-dollar advertising blitz highlighting their investments in clean energy. The $2 million campaign was to showcase holdings such as Pacific Hydro and wind farms.

Who has called for a regulator to investigate the advertising campaign and why?

Opposition finance spokesman Andrew Robb has written to APRA chairman John Laker asking the finance regulator to investigate whether the campaign is politically motivated. He argues such ads, especially if run without member approval, could erode confidence in the superannuation system.

Which regulator was asked to look into the industry funds' advertising and what is its role?

Robb asked the Australian Prudential Regulation Authority (APRA) to investigate. APRA is the national regulator responsible for overseeing superannuation prudential standards, and Robb sought its scrutiny over potential political motivation and impacts on member confidence.

Who is Industry Funds Management (IFM) and how big are the assets it manages?

Industry Funds Management (IFM) is the asset manager fronting the campaign. According to the article, IFM is owned by the nation’s 16 industry superannuation funds and manages almost $30 billion in retirement savings on behalf of five million members.

Why is the timing of the clean energy ads controversial for investors?

The controversy stems from the ads being planned to coincide with the Gillard government’s own advertising campaign on the carbon tax. Opposition figures say that timing could make the campaign appear politically motivated, raising concerns for members who did not approve such activity.

What concern did Andrew Robb raise about superannuation members and their flexibility?

Robb noted that unlike individual shareholders who can sell listed company shares they disagree with, members of industry superannuation funds held in trust do not have the same flexibility. He argued that this lack of choice makes politically motivated spending by funds more problematic for members.

Did APRA respond to the request for an investigation into the advertising campaign?

According to the article, a spokesman for APRA declined to comment on the letter from Andrew Robb.

As an everyday investor, what should I watch for regarding this industry super funds advertising issue?

Based on the article, everyday investors may want to watch for any official response from APRA, disclosures from IFM or the industry funds about the purpose and funding of the campaign, and whether members’ approval or governance processes are referenced. The controversy centers on transparency, political motivation and potential impacts on member confidence.