April 14, 2025 • 26 mins
Australia’s pension funds, known as superannuation, control a combined A$4.2 trillion, a lot of which is held in offshore assets with direct and indirect exposure to Trump’s tariff war.
This week on the podcast, host Chris Bourke and ASFA CEO Mary Delahunty unpack the major parties’ election platforms relating to retirement savings and look at what superannuation funds are doing to stay calm in a time of global market turmoil.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:01):
Will allow for first home buyers to access up to
fifty thousand dollars of this super for home deposit because
it's better to get into a home sooner.
Speaker 2 (00:10):
You haven't been able to buy a house?
Speaker 1 (00:12):
Is that right?
Speaker 2 (00:13):
No?
Speaker 3 (00:13):
But I'm wato or that some people didn't have to
use their super to buy their twenty seventh or twenty
sixth home either.
Speaker 4 (00:21):
I don't know why we should have to do that.
Speaker 2 (00:23):
What are we going to do later?
Speaker 4 (00:25):
The current pension call far exceeds Australia's annual gdfeed, it
is bigger than the total market capital market cap of
the Australian stock e Shade, so to a large degree
was completely outgrown Australia.
Speaker 3 (00:41):
It's championed around the world and as one of the
most important assets that we own. So who can Australians
trust to look out for their superannuation in this year's election,
especially when financial markets are this messy. Hello, I'm Chris
Burke and welcome to the first of our special Bloombergersustralia
podcast election episodes, where we dive into the issues that
(01:04):
Madam most to the economy, business and you ahead of
the May three vote. We'll be speaking to some special
guests for their expert insight into issues that are shaping
the future of Australia. First up, superannuation, something that's been
on the minds of many of us this month as
we've dared to look at our balances and seeing the
impact of some pretty ferocious market moves. To discuss the
(01:27):
outlook for super as we head toward the election. I
am delighted to be joined by Mary Della Hunty, who
has the Association of Superannuation Funds of Australia, which is
often referred to as the voice of the super industry. Mary,
Welcome to the podcast.
Speaker 1 (01:43):
Thank you for having me. I'm so thrilled to be
your first official exit you.
Speaker 3 (01:47):
You absolutely are our first official external guests and we
are honored to have you. Before we get onto the election, though,
let's touch on the past couple of weeks, shall we.
It's been a bit of a precarious time for millions
of Australians, with their super accounts hit by a global
market meltdown. If that wasn't enough, a coordinated cyber attack
(02:11):
I imagine, I imagine there's a lot of people worried
about these goings on. Do you see this volatility ending
or have we entered have we entered a new era
thanks to Trump? And has the unpredictability we're seeing in markets?
Speaker 1 (02:30):
Yeah, I think if I could answer that, do I
see the volatility ending? You know, I might have been
out of here and on an island already coercidatives. This
is the desit a trillion dollar question. It's certainly, it's
certainly a difficult one. And it's quite understandable that Australians
are sort of feeling that the bumps of the volatility
it's and it's prolific, isn't it The sort of the
(02:50):
market moves prolific you see in any one day, especially
in the US. The markets can open with this flurry
of hope, but by midday that's turned despair again. And
so even within days of volatility is quite rapid. So
I guess what do we do superannuation investors do about that?
And really we've got to see it in the long
(03:13):
term sense. So we've seen volatility before it as often
hasn't been driven by a trade war and sharp policy
sort of responses, retaliatory retailertory actions. But we have seen
volatility through the GFC. We've seen it in a number
of other occasions. And so if you zoom out a bit,
take the noise down, what we can still see is
(03:35):
that superannuation over twenty five years is asked for, research
will show delivers on average seven point five percent return,
so AT outpaces inflation and it puts money in people's
pockets over the long term.
Speaker 2 (03:48):
That's that's the challenge.
Speaker 1 (03:49):
Can we zoom out and see it in that in
that context?
Speaker 3 (03:54):
Yeah, I guess it largely depends on your risk profile
as well, and just how much of this you can
one can stomach. Speaking of which, at times like this,
what does give us an idea? What what does your job
look like? I mean, are you kind of fielding calls
or day? Does it? Yeah? Tell us about give us
an idea of that?
Speaker 2 (04:14):
Yeah, it's how would we put this madness?
Speaker 1 (04:18):
And I've got to say, this is just the best
job in the world because I adore this sector, and
so to be their advocate and to be the one
that brings people together is such a such an honor.
At times like this where we're coming together over a
number of different areas of life, it's certainly a busy challenge,
(04:40):
but I guess it's like stepping back from the markets too.
When you look back over the course of your day
or your week, you realize the role of the association.
You realize the good work that can be done because
you're not only helping to coordinate public messages of calm
in periods of volatility, but you're also helping to actually
do deep technical work areas, for example, of service uplift
(05:02):
on areas that matter to members. So it's quite a thrill,
but it is. It's pretty it's as volatile as the
markets during the day. Yeah, the phone goes nuts, the
emails go nuts. The team chats are always nuts, aren't
they anyway? And you know, and I've got a lot
of children, so do you think that they always managed
(05:25):
to insert themselves into the day sometimes as well.
Speaker 2 (05:28):
So there's that's what the day.
Speaker 1 (05:29):
Looks like, sort of sort of sort of a lot
of spotfiyeh, You've got.
Speaker 3 (05:32):
A lot on your plate at the moment. By the
sounds of it. Look, Trump's tariffs have pretty much overtaken
the new cycle in the first couple of weeks of
this election campaign. But you know, at the same time,
these crises really do remind us just how vulnerable our
retirement savings can be to global influences. How important it
is to keep those accounts growing where possible while minimizing
(05:56):
risk to Australian workers. So what are we hearing in
this campaign because I don't seem to have heard a
huge amount so far, But what are we hearing from
the main parties on Super policy?
Speaker 1 (06:08):
I guess you can look at we look at election campaigns,
You look at Super in kind of that two buckets
of work, don't you. There's the operations of the superfund itself,
and we haven't heard from either party that there's going
to be many changes to the way in which Super operates,
and that's something that ask for has campaigned for. Policy
stability in the way in which Super operates is really important.
(06:30):
But then the second area of work is in the portfolio,
and I think we are hearing from our leaders or
prospective leaders about what they consider good settings to be,
good investment settings, to be, good relationships to be from
a diplomatic sense, how they would manage that going forward,
which actually does have enormous impacts on the successful on
(06:54):
how successful investments can be and how successful sort of
prosperity broadly can be in Australia because our retirement savings
are exposed to that sort of international feeling, not just
in the US, not just the equity markets, but broadly
so relationships with Europe. How would they manage that? And
where can we find new markets for products etc. How
(07:15):
will they manage the fact that our near neighbors within
the Southeast Asian region are really trade exposed and heavily
trade dependent, and so what's the knock on effect of
tariffs there? So you do hear from leaders about those
kinds of areas which actually have an effect on super
As an investor, what.
Speaker 3 (07:33):
Are you hearing specifically? Have you been speak for example,
have you been speaking to anyone in the government recently
about the market mayhem that we're seeing.
Speaker 1 (07:42):
We keep a pretty close line of communication open with
both the government and where it's appropriate, with the opposition
as well. If we had a call with the Treasurer,
he is obviously in his office quite.
Speaker 2 (07:57):
They need to be able.
Speaker 1 (07:59):
To understand how superannuation funds are seeing the challenges at
the moment, seeing particularly their liquidity challenges and opportunities and
what they're sensing in the markets, and so he does
test that regularly.
Speaker 3 (08:14):
How was he feeling.
Speaker 2 (08:15):
How is he feeling?
Speaker 1 (08:16):
Yeah, that's a good quick do you know did I
stop and ask him how I was feeling? Oh, that's rude.
I definitely definitely told him how I was feeling. So there,
I better. I better go back and make sure he's okay.
But look, I think he was. He's obviously convening, still
convening in his ministerial role meetings with the Council of
Financial Regulators. He'll be keeping across the Reserve Bank. He's
(08:39):
obviously keeping across the superannuation funds and just being able
to develop a good understanding of how we're seeing the markets.
Speaker 3 (08:48):
As far as our actual kind of policies go on
the road on the campaign trail, the only one, well,
the main one we've heard so far is Peter Dutton
reiterating his policy for early access to housing. We know
that ASPHA isn't a big fan of this policy. You know,
housing is one of Australia's biggest problems. Why shouldn't young
(09:08):
ossies be able to access the superannuation early to buy
a house?
Speaker 1 (09:12):
Tell you what, I am a big fan of this election,
really considering housing deeply because it is it's such an
economic handbreak on this country isn't it is. It is
deeply unfair, but it is also it will erode the
prosperity of all of us over time, and so it
is good to see politicians, especially in an election campaign,
(09:34):
focused on that issue. My concern is that we need
a lot of focus on the supply side.
Speaker 2 (09:41):
This is a supply side problem.
Speaker 1 (09:42):
We do not have enough houses, enough of the right
places for Australians to buy into sure and so I
guess our hesitation with efforts that are just demand side
leavers is that they won't work. I mean, let's set
aside the unfairness for a second and we might just
circle back to that, but just to look at it
(10:03):
from an economy level, if you've got it in its
fairly well accepted supply side problem and your main policy
is a demand side lever, that's going to leave it
wanting full stop.
Speaker 2 (10:16):
And I don't think.
Speaker 1 (10:18):
I think Australians are smart enough to see that, and
they want and demand, and quite frankly deserve from politicians
of all stripes and colors, really good housing policy and
deep reform, and this is not that. So to sort
of circle back on why then, why wouldn't it work.
It's completely understandable that it might be popular because it's
(10:40):
sort of inn a void of actual solutions.
Speaker 2 (10:42):
So that's I get it.
Speaker 1 (10:44):
But we've done enormous research to show that actually, of
the five point three million eligible first home buyers in
the system, over five million of those would not be
able to make full use of the policy. Not to
mention that actually, if you're going to buy into the
markets that people are locked out of at the moment
(11:05):
in Melbourne and Sydney, even as a couple, draining your
entire superannuation balance the first home Bob, it doesn't get
you the deposit. So there's just so many elements to this.
But let's not you know, let's not beat around the bush.
Australians need housing policy, they need a supply.
Speaker 3 (11:24):
And as you say, at least at least there is
some talk about it in the campaign. Yeah, I mean,
as you say, it is a massive crisis, the flow
on effects from not owning your own home. That's potentially
setting up a whole lot of other problems for our
future generations.
Speaker 1 (11:39):
It is, and we've got so many policies that are
sort of all they imagine that you've got your own
home already, so you're almost you're doubly hit if you don't.
And yeah, so we can see that this needs disruption.
Speaker 3 (11:52):
What would you like to see? What would you like
to see these our leaders talking about when it comes
to super policy, kind of reforms you think are most
needed to help Australians retire more comfortably.
Speaker 1 (12:05):
Mostly we like to see good sort of policy stability,
and so we like to see policy that is well
thought out, well consulted and wouldn't be Robinson Cruse so
in that but because everyone, every sector in Australia would
be asking for that as well. For Super though, we
are long term investors and so we also take operational
(12:26):
decisions over the long term that matches that investment horizon.
Speaker 2 (12:28):
So we want to see that.
Speaker 1 (12:29):
But there's a couple of things in Super. It's an
incredibly well functioning and you know, world renowned system, but
it does have some equity and fairness sort of elements
to it that really do need to be considered. We
want to see an expansion of the low income Superannuation
tax offset the LISTO.
Speaker 2 (12:50):
We're really good at acronyms.
Speaker 1 (12:51):
That one's a really good one, I think, because well
it's sort of it's nice to say it rolls off
the tongue, but list, yeah, it does, doesn't it A list?
I can do that because I came from Colac and
I've got a really good country accent that I try
and eke out of my voice.
Speaker 2 (13:06):
That doesn't work.
Speaker 1 (13:08):
So low income earners actually can often face a tax
disincentive to set their money aside for superannuation contribution. Now,
obviously that shouldn't happen, so we want to see some
focus on that and we like to see payday Super,
the legislation of pay day Super be given fair passage
to the Parliament and a quick implementation schedule that means
that your super is paid at the same time as
(13:31):
your wages, which our research shows Australian's love and like
if I asked someone out on the street, now, do
you think they think it already was because it's your wages,
it's just part of it's deferred. So that's got to
be done.
Speaker 3 (13:42):
And that has been talked about for a long time.
Speaker 1 (13:44):
Yeah, we've seen and we've seen legislation now, so let's
get on with it.
Speaker 3 (13:48):
Yeah, okay, okay, when we come back, should our government
have more of a say and what our super funds
are investing in. Welcome back to a special pre election
edition of the Bloomberg Australia podcast. I'm Chris Burke and
today I'm talking to Mary Dalla Hunty, head of the
(14:08):
Association of Superannuation Funds of Australia. A bit of a
mouth whatever's about the big issues facing one of our
biggest assets. So look, I heard on the grapevine that
you went to the States recently.
Speaker 1 (14:25):
Yes, I was at the super Summit with many of
our members, which was really a terrific opportunity to sort
of build those relationships with the new administration.
Speaker 3 (14:35):
Just for the uninitiated who might not know what a
super summit is, that was a as I understand it,
that was a very high profile summit in both Washington
and New York where Australian the top super funds promoted
their investment power to the likes of the Trump administration
and a listers from Wall Street. Who did you get
(14:59):
to talk to?
Speaker 2 (15:01):
Oh?
Speaker 1 (15:02):
Well, not only just our members obviously, because that yeah, yeah, yeah,
but I just have to put the members first. So
we obviously had a number of superannuation funds and mcquarie
Banks sponsored and I F M as well put a
lot of work into getting this summit together. I met
with the not by myself, should say, but we met
with Scott Bessant, which was a fascinating exchange.
Speaker 2 (15:26):
We also met with men.
Speaker 3 (15:27):
It was fascinating.
Speaker 1 (15:28):
It was a fascinating exchange to hear his His take
on this is you know, this is pre tariffs, but
we sort of knew how the administration felt about trade
and the way in which US had had has trade relations,
and that was fascinating to hear him.
Speaker 2 (15:48):
Sort of put that towards this.
Speaker 1 (15:51):
Scott Persant is obviously a man who knows Wall Street
very well. He's a hedge fund manager for many years,
and so to hear him actually voice the administration's approach
to trade was genuinely interesting. His speech, if anyone wants
to have a look, is on record. And then he
met separately with the ambassador and with the Treasurer, and
(16:13):
I understand that was pretty fruitful. These relationships, like they do,
need to be built over the long term. It was
really crucial for Australians to show up, to put faces
to names and to build those relationships.
Speaker 2 (16:27):
I think it will hold.
Speaker 1 (16:28):
Our country in goods stead in the long term, once
the volatility settles and once we understand the administration's approach
to trade. But I also met with and had the chance.
It sounds like I'm way more important than I am,
but I had the chance to speak to Jamie Diamond,
to Larry Fink, to Steve Schwartzman. So these are these
(16:50):
sort of contributions to hear how investors of such caliber
are we're facing into what they knew.
Speaker 2 (16:56):
To be periods of volatility.
Speaker 1 (16:59):
Was very shaping for my understanding of what long term
investors need to do.
Speaker 2 (17:03):
So that was quite quite crucial.
Speaker 1 (17:05):
But it was an incredible four days, and I think
that the relationships built there will will be enduring.
Speaker 3 (17:13):
Those are some big names. I'm impressed.
Speaker 1 (17:17):
Yeah, I was a bit. I was trying to hold
it together. I won't lie.
Speaker 3 (17:21):
Look, why do our super funds need to woo these
big overseas investors? And how is that and the interest
of members?
Speaker 1 (17:31):
Yeah, it's it's an interesting turn of phrase to woo.
I think it is important to show up and to
build those relationships, as I was saying, because we will learn, obviously.
But the couple of the meetings that I didn't just
name drop in actually four of them, watch I thought
were probably well for me. I found them to be
really crucial. Were with the governors, with municipal governors of
(17:55):
some of the states of Tennessee, Illinois, newsy and I
think that that's really important, as your listeners will know,
you know, we pick up municipal bonds either directly or
as through index investing, and you do. It is great
to understand and from that governor's point of view what
the philosophy is towards either the raising of debt or
(18:18):
how they feel about their real assets that they hold
in their municipalities, and they have quite regardless of what's
going on at a federal level, they have quite a
lot of autonomy over those over those assets, and quite
a lot of autonomy over their ability to raise debt
through bonds, so that they were crucial meetings. So it's
that sort of thing I think, Chris, where you're really
building not only a relationship, but a deep understanding of
(18:40):
the underlying assets that is really going to be quite
a successful part of this trip as we move forward.
Speaker 3 (18:48):
I mean, as you know, a big chunk of well
actually almost half of industry funds assets are now offshore,
big chunk of those in the US. Have recent events
changed your mind at all about about Australian workers exposure
to the US. Should we feel safe that, you know,
(19:08):
so much, so much of our retirement savings are invested
over there.
Speaker 1 (19:12):
Well, I think it's probably of note to say that
the noise of volatility at the moment, and the really
sort of the heart stopping moment so largely confined to
the equities asset class. So that's that's not to take
away that there is a large exposure to US equities
at the moment. People who have, you know, a default
(19:34):
sort of superannuation fund will find that they're kind of
in a growth sort of mix and which will be
about a seventy around about a seventy percent allocation to
growth assets. That of that seventy percent allocation, a lot
of it will be Australian equities, A lot of it
will be international equities. Of the international equities exposure, a
lot of it will be the US. The recent volatility
(19:57):
and noise does not diminish the fact that is the
world's largest capital market and that it is important for
Australian's savings to be exposed to that. So again, it's
about being long term thinkers that in that capital market,
and I know that a lot of superannuation funds that
are you know, they're they've not only scenario planned for
(20:18):
what's going on at the moment, but they've been through
it a lot of volatility before. They understand that opportunities
come of this volatility as well. And many of them
are still in a buying phase right now through this.
So whilst it might be heart stopping to see that exposure,
it is really important to step back from it.
Speaker 3 (20:37):
Yeah, and it's important to know also that a big
chunk of those assets are in private. Up the list
of assets which I recently heard you describe on a
podcast as some of the dullest, greatest assets that we own.
Speaker 2 (20:54):
Everyone last Poles was right, look at that.
Speaker 1 (20:57):
We drive past them in the car and I look
at that kids you are in those and wise, what.
Speaker 3 (21:03):
A great way of looking at at super funds assets
the Australian Back to your friends at the Treasury. Actually,
they recently directed the Future Fund, our sovereign wealth fund,
or should say I think they asked quite politely to
invest more in local assets. Do you think our government
(21:24):
should be doing that with super funds as I'm telling them.
Speaker 1 (21:26):
To I say, I'm glad we've gone back to this
because I felt that whole you know, the sort of
exchange that happened over the change to the Future Fund
mandate to be quite bizarre. The mandate itself, the change
to it just brought the Future Fund in line with
other sovereign wealth funds internationally, and what it does operationally,
(21:47):
in my understanding of it, is that so investors of
all colors and stripes will look for, you know, that
balance between risk and return. Right, So what the Future
Fund have been asked to do is, let's say you've
got two equal assets.
Speaker 2 (22:03):
This will never happen, but you've got two apple.
Speaker 1 (22:05):
I know you've got another apple over here, and you're
looking at that the risk return profile for those both
of those apples. But one of those apples might be
grown from a sustainable farm. So it's not like you're
you're being asked to do something all that different. You're
being asked to consider the impact once you've also considered
the risk return profile.
Speaker 2 (22:26):
It's really I was so surprised.
Speaker 1 (22:28):
At the kind of rah that happened after that a
mandate change. It's really quite it's really quite it's internationally
comparative so to other sovereign funds. But yeah, being said
back to your question, which hopefully everyone's forgotten because I
just can't remember it, but oh, yes, should government be
doing that now? I think all superannuation funds should maintain
(22:51):
that their individual autonomy over being able to assess appropriate
risk adjusted returns. That what they can do though, and
do do now. It doesn't really need government to tell
them to. Is that we understand that, you know, broad
prosperity is also a return element. So for example, a
(23:13):
nation building projects that are you know, like the dull
ones like poles and wise, but they could be they
can be wind farms, they can be you know, sol
energy transition assets. They don't just deliver an appropriate risk
adjusted return, they can also deliver full society In that way,
it's a double dividend, it's not a haircut. And so
(23:35):
getting the government's role in this right is really quite important.
It's not about them directing super funds, it's about getting
them them getting the settings right for private capital to play.
Speaker 3 (23:49):
Okay, so the big question. Super funds made double digit
returns last year. They were pretty impressive. What do you
think we're looking at for the first half.
Speaker 1 (24:00):
I think those returns will be hard to find. They'll
be harder to find this time because of the volatility
in the market. But over the long term, and I
know I keep saying this, but it is true. Sovranuation
investors and the members within their funds are long term investors.
So we saw some incredible highs and we've seen the
equities markets come off some incredible highs, you know, record
(24:22):
highs over the last little while. Those returns that were
booked really reflected the highs in the equities market. And
it is the equities market, particularly the international equities, that
are feeling the volatility at the moment. So it's probably
not great. You know, I'm not some sort of crystal
(24:44):
ball guys that to say. I think that's going to
be harder to find. But I think over the long term,
we've come out of the GFC volatility with still with
outpacing inflation, we super funds will be putting their shoulder
the wheel to come out of this outpacing inflation as well.
Speaker 3 (25:00):
Okay, and Australia did get off relatively lately with a
ten percent tariff. I'm wondering if that was largely or
partly done to you and no doubt plastic compositions.
Speaker 2 (25:14):
Yeah, no doubt. I'm sure.
Speaker 1 (25:18):
I've got to say the Ambassador works very very hard
over there, and I'm sure that this has been you know,
it's something that people have put a lot of effort
into over a long time. I still think obviously that
effect on Australia is the knock on effect from other countries.
No one wins from a trade war, and I feel
(25:39):
for our near neighbors in particular in this region at
this particular time. But hopefully we can continue to build
those relationships and the Australian sectors can be somewhat protected
by those relationships deepening.
Speaker 3 (25:55):
Okay, let's see what the next few weeks of the
campaign brings. It's been an absolute pleasure. Thank you for
joining us on the podcast.
Speaker 2 (26:03):
Oh it's been a pleasure. Thanks for having me.
Speaker 3 (26:05):
Thank you for listening to the Bloomberg Australia Podcast. I'm
Chris Burke. This episode was recorded on the traditional lands
of the Warunduri people. It was produced by Paul Allen
and edited by Ainsley Chandler and Rebecca Jones. Don't forget
to follow and review the show wherever you get your podcasts,
and sign up to Bloomberg's free daily newsletter, Australia Briefing.
Go to bloomberg dot com to subscribe.
Will allow for first home buyers to access up to
fifty thousand dollars of this super for home deposit because
it's better to get into a home sooner.
Speaker 2 (00:10):
You haven't been able to buy a house?
Speaker 1 (00:12):
Is that right?
Speaker 2 (00:13):
No?
Speaker 3 (00:13):
But I'm wato or that some people didn't have to
use their super to buy their twenty seventh or twenty
sixth home either.
Speaker 4 (00:21):
I don't know why we should have to do that.
Speaker 2 (00:23):
What are we going to do later?
Speaker 4 (00:25):
The current pension call far exceeds Australia's annual gdfeed, it
is bigger than the total market capital market cap of
the Australian stock e Shade, so to a large degree
was completely outgrown Australia.
Speaker 3 (00:41):
It's championed around the world and as one of the
most important assets that we own. So who can Australians
trust to look out for their superannuation in this year's election,
especially when financial markets are this messy. Hello, I'm Chris
Burke and welcome to the first of our special Bloombergersustralia
podcast election episodes, where we dive into the issues that
(01:04):
Madam most to the economy, business and you ahead of
the May three vote. We'll be speaking to some special
guests for their expert insight into issues that are shaping
the future of Australia. First up, superannuation, something that's been
on the minds of many of us this month as
we've dared to look at our balances and seeing the
impact of some pretty ferocious market moves. To discuss the
(01:27):
outlook for super as we head toward the election. I
am delighted to be joined by Mary Della Hunty, who
has the Association of Superannuation Funds of Australia, which is
often referred to as the voice of the super industry. Mary,
Welcome to the podcast.
Speaker 1 (01:43):
Thank you for having me. I'm so thrilled to be
your first official exit you.
Speaker 3 (01:47):
You absolutely are our first official external guests and we
are honored to have you. Before we get onto the election, though,
let's touch on the past couple of weeks, shall we.
It's been a bit of a precarious time for millions
of Australians, with their super accounts hit by a global
market meltdown. If that wasn't enough, a coordinated cyber attack
(02:11):
I imagine, I imagine there's a lot of people worried
about these goings on. Do you see this volatility ending
or have we entered have we entered a new era
thanks to Trump? And has the unpredictability we're seeing in markets?
Speaker 1 (02:30):
Yeah, I think if I could answer that, do I
see the volatility ending? You know, I might have been
out of here and on an island already coercidatives. This
is the desit a trillion dollar question. It's certainly, it's
certainly a difficult one. And it's quite understandable that Australians
are sort of feeling that the bumps of the volatility
it's and it's prolific, isn't it The sort of the
(02:50):
market moves prolific you see in any one day, especially
in the US. The markets can open with this flurry
of hope, but by midday that's turned despair again. And
so even within days of volatility is quite rapid. So
I guess what do we do superannuation investors do about that?
And really we've got to see it in the long
(03:13):
term sense. So we've seen volatility before it as often
hasn't been driven by a trade war and sharp policy
sort of responses, retaliatory retailertory actions. But we have seen
volatility through the GFC. We've seen it in a number
of other occasions. And so if you zoom out a bit,
take the noise down, what we can still see is
(03:35):
that superannuation over twenty five years is asked for, research
will show delivers on average seven point five percent return,
so AT outpaces inflation and it puts money in people's
pockets over the long term.
Speaker 2 (03:48):
That's that's the challenge.
Speaker 1 (03:49):
Can we zoom out and see it in that in
that context?
Speaker 3 (03:54):
Yeah, I guess it largely depends on your risk profile
as well, and just how much of this you can
one can stomach. Speaking of which, at times like this,
what does give us an idea? What what does your job
look like? I mean, are you kind of fielding calls
or day? Does it? Yeah? Tell us about give us
an idea of that?
Speaker 2 (04:14):
Yeah, it's how would we put this madness?
Speaker 1 (04:18):
And I've got to say, this is just the best
job in the world because I adore this sector, and
so to be their advocate and to be the one
that brings people together is such a such an honor.
At times like this where we're coming together over a
number of different areas of life, it's certainly a busy challenge,
(04:40):
but I guess it's like stepping back from the markets too.
When you look back over the course of your day
or your week, you realize the role of the association.
You realize the good work that can be done because
you're not only helping to coordinate public messages of calm
in periods of volatility, but you're also helping to actually
do deep technical work areas, for example, of service uplift
(05:02):
on areas that matter to members. So it's quite a thrill,
but it is. It's pretty it's as volatile as the
markets during the day. Yeah, the phone goes nuts, the
emails go nuts. The team chats are always nuts, aren't
they anyway? And you know, and I've got a lot
of children, so do you think that they always managed
(05:25):
to insert themselves into the day sometimes as well.
Speaker 2 (05:28):
So there's that's what the day.
Speaker 1 (05:29):
Looks like, sort of sort of sort of a lot
of spotfiyeh, You've got.
Speaker 3 (05:32):
A lot on your plate at the moment. By the
sounds of it. Look, Trump's tariffs have pretty much overtaken
the new cycle in the first couple of weeks of
this election campaign. But you know, at the same time,
these crises really do remind us just how vulnerable our
retirement savings can be to global influences. How important it
is to keep those accounts growing where possible while minimizing
(05:56):
risk to Australian workers. So what are we hearing in
this campaign because I don't seem to have heard a
huge amount so far, But what are we hearing from
the main parties on Super policy?
Speaker 1 (06:08):
I guess you can look at we look at election campaigns,
You look at Super in kind of that two buckets
of work, don't you. There's the operations of the superfund itself,
and we haven't heard from either party that there's going
to be many changes to the way in which Super operates,
and that's something that ask for has campaigned for. Policy
stability in the way in which Super operates is really important.
(06:30):
But then the second area of work is in the portfolio,
and I think we are hearing from our leaders or
prospective leaders about what they consider good settings to be,
good investment settings, to be, good relationships to be from
a diplomatic sense, how they would manage that going forward,
which actually does have enormous impacts on the successful on
(06:54):
how successful investments can be and how successful sort of
prosperity broadly can be in Australia because our retirement savings
are exposed to that sort of international feeling, not just
in the US, not just the equity markets, but broadly
so relationships with Europe. How would they manage that? And
where can we find new markets for products etc. How
(07:15):
will they manage the fact that our near neighbors within
the Southeast Asian region are really trade exposed and heavily
trade dependent, and so what's the knock on effect of
tariffs there? So you do hear from leaders about those
kinds of areas which actually have an effect on super
As an investor, what.
Speaker 3 (07:33):
Are you hearing specifically? Have you been speak for example,
have you been speaking to anyone in the government recently
about the market mayhem that we're seeing.
Speaker 1 (07:42):
We keep a pretty close line of communication open with
both the government and where it's appropriate, with the opposition
as well. If we had a call with the Treasurer,
he is obviously in his office quite.
Speaker 2 (07:57):
They need to be able.
Speaker 1 (07:59):
To understand how superannuation funds are seeing the challenges at
the moment, seeing particularly their liquidity challenges and opportunities and
what they're sensing in the markets, and so he does
test that regularly.
Speaker 3 (08:14):
How was he feeling.
Speaker 2 (08:15):
How is he feeling?
Speaker 1 (08:16):
Yeah, that's a good quick do you know did I
stop and ask him how I was feeling? Oh, that's rude.
I definitely definitely told him how I was feeling. So there,
I better. I better go back and make sure he's okay.
But look, I think he was. He's obviously convening, still
convening in his ministerial role meetings with the Council of
Financial Regulators. He'll be keeping across the Reserve Bank. He's
(08:39):
obviously keeping across the superannuation funds and just being able
to develop a good understanding of how we're seeing the markets.
Speaker 3 (08:48):
As far as our actual kind of policies go on
the road on the campaign trail, the only one, well,
the main one we've heard so far is Peter Dutton
reiterating his policy for early access to housing. We know
that ASPHA isn't a big fan of this policy. You know,
housing is one of Australia's biggest problems. Why shouldn't young
(09:08):
ossies be able to access the superannuation early to buy
a house?
Speaker 1 (09:12):
Tell you what, I am a big fan of this election,
really considering housing deeply because it is it's such an
economic handbreak on this country isn't it is. It is
deeply unfair, but it is also it will erode the
prosperity of all of us over time, and so it
is good to see politicians, especially in an election campaign,
(09:34):
focused on that issue. My concern is that we need
a lot of focus on the supply side.
Speaker 2 (09:41):
This is a supply side problem.
Speaker 1 (09:42):
We do not have enough houses, enough of the right
places for Australians to buy into sure and so I
guess our hesitation with efforts that are just demand side
leavers is that they won't work. I mean, let's set
aside the unfairness for a second and we might just
circle back to that, but just to look at it
(10:03):
from an economy level, if you've got it in its
fairly well accepted supply side problem and your main policy
is a demand side lever, that's going to leave it
wanting full stop.
Speaker 2 (10:16):
And I don't think.
Speaker 1 (10:18):
I think Australians are smart enough to see that, and
they want and demand, and quite frankly deserve from politicians
of all stripes and colors, really good housing policy and
deep reform, and this is not that. So to sort
of circle back on why then, why wouldn't it work.
It's completely understandable that it might be popular because it's
(10:40):
sort of inn a void of actual solutions.
Speaker 2 (10:42):
So that's I get it.
Speaker 1 (10:44):
But we've done enormous research to show that actually, of
the five point three million eligible first home buyers in
the system, over five million of those would not be
able to make full use of the policy. Not to
mention that actually, if you're going to buy into the
markets that people are locked out of at the moment
(11:05):
in Melbourne and Sydney, even as a couple, draining your
entire superannuation balance the first home Bob, it doesn't get
you the deposit. So there's just so many elements to this.
But let's not you know, let's not beat around the bush.
Australians need housing policy, they need a supply.
Speaker 3 (11:24):
And as you say, at least at least there is
some talk about it in the campaign. Yeah, I mean,
as you say, it is a massive crisis, the flow
on effects from not owning your own home. That's potentially
setting up a whole lot of other problems for our
future generations.
Speaker 1 (11:39):
It is, and we've got so many policies that are
sort of all they imagine that you've got your own
home already, so you're almost you're doubly hit if you don't.
And yeah, so we can see that this needs disruption.
Speaker 3 (11:52):
What would you like to see? What would you like
to see these our leaders talking about when it comes
to super policy, kind of reforms you think are most
needed to help Australians retire more comfortably.
Speaker 1 (12:05):
Mostly we like to see good sort of policy stability,
and so we like to see policy that is well
thought out, well consulted and wouldn't be Robinson Cruse so
in that but because everyone, every sector in Australia would
be asking for that as well. For Super though, we
are long term investors and so we also take operational
(12:26):
decisions over the long term that matches that investment horizon.
Speaker 2 (12:28):
So we want to see that.
Speaker 1 (12:29):
But there's a couple of things in Super. It's an
incredibly well functioning and you know, world renowned system, but
it does have some equity and fairness sort of elements
to it that really do need to be considered. We
want to see an expansion of the low income Superannuation
tax offset the LISTO.
Speaker 2 (12:50):
We're really good at acronyms.
Speaker 1 (12:51):
That one's a really good one, I think, because well
it's sort of it's nice to say it rolls off
the tongue, but list, yeah, it does, doesn't it A list?
I can do that because I came from Colac and
I've got a really good country accent that I try
and eke out of my voice.
Speaker 2 (13:06):
That doesn't work.
Speaker 1 (13:08):
So low income earners actually can often face a tax
disincentive to set their money aside for superannuation contribution. Now,
obviously that shouldn't happen, so we want to see some
focus on that and we like to see payday Super,
the legislation of pay day Super be given fair passage
to the Parliament and a quick implementation schedule that means
that your super is paid at the same time as
(13:31):
your wages, which our research shows Australian's love and like
if I asked someone out on the street, now, do
you think they think it already was because it's your wages,
it's just part of it's deferred. So that's got to
be done.
Speaker 3 (13:42):
And that has been talked about for a long time.
Speaker 1 (13:44):
Yeah, we've seen and we've seen legislation now, so let's
get on with it.
Speaker 3 (13:48):
Yeah, okay, okay, when we come back, should our government
have more of a say and what our super funds
are investing in. Welcome back to a special pre election
edition of the Bloomberg Australia podcast. I'm Chris Burke and
today I'm talking to Mary Dalla Hunty, head of the
(14:08):
Association of Superannuation Funds of Australia. A bit of a
mouth whatever's about the big issues facing one of our
biggest assets. So look, I heard on the grapevine that
you went to the States recently.
Speaker 1 (14:25):
Yes, I was at the super Summit with many of
our members, which was really a terrific opportunity to sort
of build those relationships with the new administration.
Speaker 3 (14:35):
Just for the uninitiated who might not know what a
super summit is, that was a as I understand it,
that was a very high profile summit in both Washington
and New York where Australian the top super funds promoted
their investment power to the likes of the Trump administration
and a listers from Wall Street. Who did you get
(14:59):
to talk to?
Speaker 2 (15:01):
Oh?
Speaker 1 (15:02):
Well, not only just our members obviously, because that yeah, yeah, yeah,
but I just have to put the members first. So
we obviously had a number of superannuation funds and mcquarie
Banks sponsored and I F M as well put a
lot of work into getting this summit together. I met
with the not by myself, should say, but we met
with Scott Bessant, which was a fascinating exchange.
Speaker 2 (15:26):
We also met with men.
Speaker 3 (15:27):
It was fascinating.
Speaker 1 (15:28):
It was a fascinating exchange to hear his His take
on this is you know, this is pre tariffs, but
we sort of knew how the administration felt about trade
and the way in which US had had has trade relations,
and that was fascinating to hear him.
Speaker 2 (15:48):
Sort of put that towards this.
Speaker 1 (15:51):
Scott Persant is obviously a man who knows Wall Street
very well. He's a hedge fund manager for many years,
and so to hear him actually voice the administration's approach
to trade was genuinely interesting. His speech, if anyone wants
to have a look, is on record. And then he
met separately with the ambassador and with the Treasurer, and
(16:13):
I understand that was pretty fruitful. These relationships, like they do,
need to be built over the long term. It was
really crucial for Australians to show up, to put faces
to names and to build those relationships.
Speaker 2 (16:27):
I think it will hold.
Speaker 1 (16:28):
Our country in goods stead in the long term, once
the volatility settles and once we understand the administration's approach
to trade. But I also met with and had the chance.
It sounds like I'm way more important than I am,
but I had the chance to speak to Jamie Diamond,
to Larry Fink, to Steve Schwartzman. So these are these
(16:50):
sort of contributions to hear how investors of such caliber
are we're facing into what they knew.
Speaker 2 (16:56):
To be periods of volatility.
Speaker 1 (16:59):
Was very shaping for my understanding of what long term
investors need to do.
Speaker 2 (17:03):
So that was quite quite crucial.
Speaker 1 (17:05):
But it was an incredible four days, and I think
that the relationships built there will will be enduring.
Speaker 3 (17:13):
Those are some big names. I'm impressed.
Speaker 1 (17:17):
Yeah, I was a bit. I was trying to hold
it together. I won't lie.
Speaker 3 (17:21):
Look, why do our super funds need to woo these
big overseas investors? And how is that and the interest
of members?
Speaker 1 (17:31):
Yeah, it's it's an interesting turn of phrase to woo.
I think it is important to show up and to
build those relationships, as I was saying, because we will learn, obviously.
But the couple of the meetings that I didn't just
name drop in actually four of them, watch I thought
were probably well for me. I found them to be
really crucial. Were with the governors, with municipal governors of
(17:55):
some of the states of Tennessee, Illinois, newsy and I
think that that's really important, as your listeners will know,
you know, we pick up municipal bonds either directly or
as through index investing, and you do. It is great
to understand and from that governor's point of view what
the philosophy is towards either the raising of debt or
(18:18):
how they feel about their real assets that they hold
in their municipalities, and they have quite regardless of what's
going on at a federal level, they have quite a
lot of autonomy over those over those assets, and quite
a lot of autonomy over their ability to raise debt
through bonds, so that they were crucial meetings. So it's
that sort of thing I think, Chris, where you're really
building not only a relationship, but a deep understanding of
(18:40):
the underlying assets that is really going to be quite
a successful part of this trip as we move forward.
Speaker 3 (18:48):
I mean, as you know, a big chunk of well
actually almost half of industry funds assets are now offshore,
big chunk of those in the US. Have recent events
changed your mind at all about about Australian workers exposure
to the US. Should we feel safe that, you know,
(19:08):
so much, so much of our retirement savings are invested
over there.
Speaker 1 (19:12):
Well, I think it's probably of note to say that
the noise of volatility at the moment, and the really
sort of the heart stopping moment so largely confined to
the equities asset class. So that's that's not to take
away that there is a large exposure to US equities
at the moment. People who have, you know, a default
(19:34):
sort of superannuation fund will find that they're kind of
in a growth sort of mix and which will be
about a seventy around about a seventy percent allocation to
growth assets. That of that seventy percent allocation, a lot
of it will be Australian equities, A lot of it
will be international equities. Of the international equities exposure, a
lot of it will be the US. The recent volatility
(19:57):
and noise does not diminish the fact that is the
world's largest capital market and that it is important for
Australian's savings to be exposed to that. So again, it's
about being long term thinkers that in that capital market,
and I know that a lot of superannuation funds that
are you know, they're they've not only scenario planned for
(20:18):
what's going on at the moment, but they've been through
it a lot of volatility before. They understand that opportunities
come of this volatility as well. And many of them
are still in a buying phase right now through this.
So whilst it might be heart stopping to see that exposure,
it is really important to step back from it.
Speaker 3 (20:37):
Yeah, and it's important to know also that a big
chunk of those assets are in private. Up the list
of assets which I recently heard you describe on a
podcast as some of the dullest, greatest assets that we own.
Speaker 2 (20:54):
Everyone last Poles was right, look at that.
Speaker 1 (20:57):
We drive past them in the car and I look
at that kids you are in those and wise, what.
Speaker 3 (21:03):
A great way of looking at at super funds assets
the Australian Back to your friends at the Treasury. Actually,
they recently directed the Future Fund, our sovereign wealth fund,
or should say I think they asked quite politely to
invest more in local assets. Do you think our government
(21:24):
should be doing that with super funds as I'm telling them.
Speaker 1 (21:26):
To I say, I'm glad we've gone back to this
because I felt that whole you know, the sort of
exchange that happened over the change to the Future Fund
mandate to be quite bizarre. The mandate itself, the change
to it just brought the Future Fund in line with
other sovereign wealth funds internationally, and what it does operationally,
(21:47):
in my understanding of it, is that so investors of
all colors and stripes will look for, you know, that
balance between risk and return. Right, So what the Future
Fund have been asked to do is, let's say you've
got two equal assets.
Speaker 2 (22:03):
This will never happen, but you've got two apple.
Speaker 1 (22:05):
I know you've got another apple over here, and you're
looking at that the risk return profile for those both
of those apples. But one of those apples might be
grown from a sustainable farm. So it's not like you're
you're being asked to do something all that different. You're
being asked to consider the impact once you've also considered
the risk return profile.
Speaker 2 (22:26):
It's really I was so surprised.
Speaker 1 (22:28):
At the kind of rah that happened after that a
mandate change. It's really quite it's really quite it's internationally
comparative so to other sovereign funds. But yeah, being said
back to your question, which hopefully everyone's forgotten because I
just can't remember it, but oh, yes, should government be
doing that now? I think all superannuation funds should maintain
(22:51):
that their individual autonomy over being able to assess appropriate
risk adjusted returns. That what they can do though, and
do do now. It doesn't really need government to tell
them to. Is that we understand that, you know, broad
prosperity is also a return element. So for example, a
(23:13):
nation building projects that are you know, like the dull
ones like poles and wise, but they could be they
can be wind farms, they can be you know, sol
energy transition assets. They don't just deliver an appropriate risk
adjusted return, they can also deliver full society In that way,
it's a double dividend, it's not a haircut. And so
(23:35):
getting the government's role in this right is really quite important.
It's not about them directing super funds, it's about getting
them them getting the settings right for private capital to play.
Speaker 3 (23:49):
Okay, so the big question. Super funds made double digit
returns last year. They were pretty impressive. What do you
think we're looking at for the first half.
Speaker 1 (24:00):
I think those returns will be hard to find. They'll
be harder to find this time because of the volatility
in the market. But over the long term, and I
know I keep saying this, but it is true. Sovranuation
investors and the members within their funds are long term investors.
So we saw some incredible highs and we've seen the
equities markets come off some incredible highs, you know, record
(24:22):
highs over the last little while. Those returns that were
booked really reflected the highs in the equities market. And
it is the equities market, particularly the international equities, that
are feeling the volatility at the moment. So it's probably
not great. You know, I'm not some sort of crystal
(24:44):
ball guys that to say. I think that's going to
be harder to find. But I think over the long term,
we've come out of the GFC volatility with still with
outpacing inflation, we super funds will be putting their shoulder
the wheel to come out of this outpacing inflation as well.
Speaker 3 (25:00):
Okay, and Australia did get off relatively lately with a
ten percent tariff. I'm wondering if that was largely or
partly done to you and no doubt plastic compositions.
Speaker 2 (25:14):
Yeah, no doubt. I'm sure.
Speaker 1 (25:18):
I've got to say the Ambassador works very very hard
over there, and I'm sure that this has been you know,
it's something that people have put a lot of effort
into over a long time. I still think obviously that
effect on Australia is the knock on effect from other countries.
No one wins from a trade war, and I feel
(25:39):
for our near neighbors in particular in this region at
this particular time. But hopefully we can continue to build
those relationships and the Australian sectors can be somewhat protected
by those relationships deepening.
Speaker 3 (25:55):
Okay, let's see what the next few weeks of the
campaign brings. It's been an absolute pleasure. Thank you for
joining us on the podcast.
Speaker 2 (26:03):
Oh it's been a pleasure. Thanks for having me.
Speaker 3 (26:05):
Thank you for listening to the Bloomberg Australia Podcast. I'm
Chris Burke. This episode was recorded on the traditional lands
of the Warunduri people. It was produced by Paul Allen
and edited by Ainsley Chandler and Rebecca Jones. Don't forget
to follow and review the show wherever you get your podcasts,
and sign up to Bloomberg's free daily newsletter, Australia Briefing.
Go to bloomberg dot com to subscribe.
Popular Podcasts
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Stuff You Should Know
If you've ever wanted to know about champagne, satanism, the Stonewall Uprising, chaos theory, LSD, El Nino, true crime and Rosa Parks, then look no further. Josh and Chuck have you covered.
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com