ISA points to bill double standard

Industry Super Australia (ISA) has called out a regulatory double standard with the Investment Funds Legislation Amendment Bill 2021 that looks to exempt the Future Fund from Freedom of Information (FOI) holdings disclosure.

ISA said in its submission to the inquiry that while the rationale was that releasing commercially sensitive investment information might adversely impact the execution of the investment strategy, it would be a double standard given industry funds might soon be required to publicly disclose the same sort of information.

It said the legislation would undermine the sole purpose of industry funds if it were implemented alongside the government’s proposed portfolio holdings disclosure regime.

“Policy settings that apply inconsistent disclosure regimes in the market would in effect give some participants an unfair advantage over, and to the detriment of, others. This should be avoided in the best financial interests of superannuation fund members,” ISA said.

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“In pursuing changes that exempt the Future Fund from certain FOI disclosures, the government would be fully aware of the impact of the disclosure of commercially sensitive information on Future Fund investments otherwise it wouldn’t be seeking them.

“…As the Future Fund grows in scale it is entirely reasonable that it would seek to protect taxpayers from any adversity arising from disclosure of commercially sensitive information that could risk lowering returns for taxpayers. This is especially acute as the Future Fund seeks to increase taxpayers’ exposure to unlisted property and infrastructure.”

ISA noted it did not necessarily reject what the bill looked to achieve but that the committee needed to seek information from Government about the disparity and recommended that regulatory disclosure should be “reasonably aligned”.

“In this regard the proposed portfolio holdings regime for superannuation funds should allow reasonable flexibility around the disclosure of unlisted asset valuations,” it said.

“Aligning disclosure regimes to avoid an unfair competitive advantage by ensuring the portfolio holdings disclosure does not disadvantage super fund members would be consistent with comments from the Minister for Finance who speaking on this bill said ‘it will simply align the treatment of the Future Fund under the FOI Act with that of other entities that deal regularly with commercial information’.”