Accountability in Regulatory Reform: Australia's Superannuation Industry Paradox

Abstract

The Australian Superannuation Industry is generally seen as very strong and successful by global standards. However, three decades of legislative reform in the Australian superannuation industry have created a paradox: ongoing reforms but continuing dissatisfaction with areas of governance and outcomes. These include high levels of administrative and investment fees, and systematic problems around a culture of conflicted investment advice. In seeking to further elaborate and then resolve this paradox, this article draws upon an extensive research project conducted by the authors within the Australian superannuation industry, including three voluntary and anonymous surveys of superannuation trustees/licensees. This research has revealed that fund members are vulnerable to significant and expanding private-interest rents generated by the financial services sector. This may be explained by regulatory capture mechanisms variously described as statutory, agency, corrosive and intellectual capture. The article examines ways to better achieve public interest outcomes, and at a time when public sector integrity remains an area of particular attention, how more can be done to blunt the force of private interest rent seeking.