This is Business Now with Ross Greenwood.

This is Business Now with Ross Greenwood.

Hi, there are welcome to Business Now on this Wednesday. Thanks for your company. I'm Ross Greenwood. Coming up on the program today, an economic quagmire. Australia is growing at the slowest pace since the early nineteen nineties and the only thing stopping is from being in recession is record government spending. We break down the latest economic numbers and the political implications.

Hi, there are welcome to Business Now on this Wednesday. Thanks for your company. I'm Ross Greenwood. Coming up on the program today, an economic quagmire. Australia is growing at the slowest pace since the early nineteen nineties and the only thing stopping is from being in recession is record government spending. We break down the latest economic numbers and the political implications.

With economist Warren Hogan.

With economist Warren Hogan.

There's a call today that former Treasurer Wayne Swahan, now chair of Giant Industry Super Fund SEEBUS, should be dragged back before the Senate as his evidence to a committee last Friday seems to be in conflict with an independent report into that fund by Deloitte. The man leading that charges Senator Andrew Bragg, who will be with us today. And South Korean shares suffer whipplash after its president Yung sup yol, declared martial law but then several hours later reversed it. So all that and plenty more coming up on today's program.

There's a call today that former Treasurer Wayne Swahan, now chair of Giant Industry Super Fund SEEBUS, should be dragged back before the Senate as his evidence to a committee last Friday seems to be in conflict with an independent report into that fund by Deloitte. The man leading that charges Senator Andrew Bragg, who will be with us today. And South Korean shares suffer whipplash after its president Yung sup yol, declared martial law but then several hours later reversed it. So all that and plenty more coming up on today's program.

What we're going to do is get stuck straight into the market today.

What we're going to do is get stuck straight into the market today.

With Edward Boyd and those soft economic numbers, they were pretty bad that.

With Edward Boyd and those soft economic numbers, they were pretty bad that.

They worked for a difference on the market today.

They worked for a difference on the market today.

Well, the immediate impact was hard to see. There wasn't much movement in the share market right after the numbers dropped at eleven thirty, but then it began to recover in the afternoon thanks to money markets bringing forward their rate cut expectations from May to April. So the ASX two hundred started the day down about half a percent. It finished the day down abouto point four percent. Top stocks included the rare Earth's mind A Liners plus the Canadian focused Iron or minor Champion Iron. Medical imaging software provider Promedicus was the top health stock today. It's two co founders sold one million shares each, netting them about two hundred and fifty seven million dollars apiece, but both founders still own about twenty four million shares each, worked about six point two billion dollars on paper as of today per person buying our pay later companies it it bounced back after its co found allow Diamond's share sale yesterday, and the coffee machine maker Brevel's been rising thanks to rising coffee prices, which markets believe will force more people to drink coffee at home and buy breathle appliances. Medicine maker Mesa Blast was sold off. The New Zealand building company Fltsheer was down two, mining company Middle Resources, pipeline operator and owner APA Group, and the commercial industrial property manager Goodman. They all finished the day in the red. And here's a look at the South Korean markets and it's and some of its biggest companies, and it's still trading as we speak. The cost B two hundred index started the day down two percent as investors try to understand the impact of last night's declaration of martial law on its economy, its government and trade. Electronics and computer ship maker Samsung slumped, its main competitor LG Groups down two. Global car manufacturer Hyundai has been sold off even more sharply. It's off three points almost three point three percent. The country's largest steel manufacturer, Costco will it's down about one point six percent as we speak right now.

Well, the immediate impact was hard to see. There wasn't much movement in the share market right after the numbers dropped at eleven thirty, but then it began to recover in the afternoon thanks to money markets bringing forward their rate cut expectations from May to April. So the ASX two hundred started the day down about half a percent. It finished the day down abouto point four percent. Top stocks included the rare Earth's mind A Liners plus the Canadian focused Iron or minor Champion Iron. Medical imaging software provider Promedicus was the top health stock today. It's two co founders sold one million shares each, netting them about two hundred and fifty seven million dollars apiece, but both founders still own about twenty four million shares each, worked about six point two billion dollars on paper as of today per person buying our pay later companies it it bounced back after its co found allow Diamond's share sale yesterday, and the coffee machine maker Brevel's been rising thanks to rising coffee prices, which markets believe will force more people to drink coffee at home and buy breathle appliances. Medicine maker Mesa Blast was sold off. The New Zealand building company Fltsheer was down two, mining company Middle Resources, pipeline operator and owner APA Group, and the commercial industrial property manager Goodman. They all finished the day in the red. And here's a look at the South Korean markets and it's and some of its biggest companies, and it's still trading as we speak. The cost B two hundred index started the day down two percent as investors try to understand the impact of last night's declaration of martial law on its economy, its government and trade. Electronics and computer ship maker Samsung slumped, its main competitor LG Groups down two. Global car manufacturer Hyundai has been sold off even more sharply. It's off three points almost three point three percent. The country's largest steel manufacturer, Costco will it's down about one point six percent as we speak right now.

And Ross's that's markets.

And Ross's that's markets.

Thanks so much, ed well in a shop move. President yunisuok Yol was imposed martial law at one am in Korea overnight. Only do I overturn that decision several hours later after opposition parties, which have a majority in the Korean Parliament storm passed security and voted Now North Korea was signed as one reason for the president's unusual move. A doctor's strike was another, but it sent the country into shock to see a strong ally and certainly a customer so destabilized. Professor Tim hark Ord of uts joins me. Now he's the host of the Airport Economist and a regular visitor to South Korea. Tim just first up South Korea as a proud democracy. Why did President Yune imposed martial law only then to lift.

Thanks so much, ed well in a shop move. President yunisuok Yol was imposed martial law at one am in Korea overnight. Only do I overturn that decision several hours later after opposition parties, which have a majority in the Korean Parliament storm passed security and voted Now North Korea was signed as one reason for the president's unusual move. A doctor's strike was another, but it sent the country into shock to see a strong ally and certainly a customer so destabilized. Professor Tim hark Ord of uts joins me. Now he's the host of the Airport Economist and a regular visitor to South Korea. Tim just first up South Korea as a proud democracy. Why did President Yune imposed martial law only then to lift.

It a complete shot ross, I mean, they've been a rogue bus democracy since nineteen eighty eight when Sole hosted the Olympics, very proud of their robust debate and freedom of speech. And so someone in posts martial law in South Korea, I mean't that hasn't happened since the eighties and seventies. So a real surprise, I think for Koreans, and a real surprise for observers and frequent travelers to career like myself.

It a complete shot ross, I mean, they've been a rogue bus democracy since nineteen eighty eight when Sole hosted the Olympics, very proud of their robust debate and freedom of speech. And so someone in posts martial law in South Korea, I mean't that hasn't happened since the eighties and seventies. So a real surprise, I think for Koreans, and a real surprise for observers and frequent travelers to career like myself.

Well, there's a real call now for the Democratic Party, which has the majority but doesn't have the presidency, really to try and overturn much of the cabinet, and indeed to try and overturn the presidency as well well.

Well, there's a real call now for the Democratic Party, which has the majority but doesn't have the presidency, really to try and overturn much of the cabinet, and indeed to try and overturn the presidency as well well.

Not only the opposition, but his own party voted against martial law, so he's effectively lost confidence of his own party, even though of course they have a presidential lot of Westminster system. I think that was the big, the big sign that he's clearly overstepped in such a radical, unexpected move.

Not only the opposition, but his own party voted against martial law, so he's effectively lost confidence of his own party, even though of course they have a presidential lot of Westminster system. I think that was the big, the big sign that he's clearly overstepped in such a radical, unexpected move.

Just one thing about Korea and that is its important to the global trade I mentioned that in the introduction, but also stability to the region. So I'm thinking even there, cars like Yondai, Kia, computers, TVs, mobile phones, computer chips, Household Good's pharmaceutical Strategically, it's absolutely vital, exactly.

Just one thing about Korea and that is its important to the global trade I mentioned that in the introduction, but also stability to the region. So I'm thinking even there, cars like Yondai, Kia, computers, TVs, mobile phones, computer chips, Household Good's pharmaceutical Strategically, it's absolutely vital, exactly.

Right, advanced manufacturing and healthcare and technology and also ross. You know, South Korea has been a very important leader in the nation. It was South Korea, along with Bob Hawk that established APEK, the G twenty finance ministers. They're very important part of the Asia Pacific infrastructure, economically and also in terms of geopolitics. That's why you want a stable, democratic South Korea, and also as a contrast of course to the authoritarian North Korea right alongside it always the contrasts of democracy with economic progress.

Right, advanced manufacturing and healthcare and technology and also ross. You know, South Korea has been a very important leader in the nation. It was South Korea, along with Bob Hawk that established APEK, the G twenty finance ministers. They're very important part of the Asia Pacific infrastructure, economically and also in terms of geopolitics. That's why you want a stable, democratic South Korea, and also as a contrast of course to the authoritarian North Korea right alongside it always the contrasts of democracy with economic progress.

And also Australia an important trading partner for US. Be course, we have a free trade agreement with them, and on top of that, there is significant supplies of beef, of gas, of coal which goes into South Korea.

And also Australia an important trading partner for US. Be course, we have a free trade agreement with them, and on top of that, there is significant supplies of beef, of gas, of coal which goes into South Korea.

Already five percent of South Korean imports comes from Australia. They're very successful manufacturing nation, as you say, but their energy dependent and food dependent on exporters like Australia. So certainly, you know stability in South Korea is important for Australian exporters and investors, and important for the South Korean chapels that invest around the world significantly in Australia, as you say, Ross, So certainly the economic ties between South Korea and Australia very important. You couldn't say where soul mates ros.

Already five percent of South Korean imports comes from Australia. They're very successful manufacturing nation, as you say, but their energy dependent and food dependent on exporters like Australia. So certainly, you know stability in South Korea is important for Australian exporters and investors, and important for the South Korean chapels that invest around the world significantly in Australia, as you say, Ross, So certainly the economic ties between South Korea and Australia very important. You couldn't say where soul mates ros.

And you could.

And you could.

Very good pardon, thank you so much for your time as always, Tim Hardcourt, thanks for being on the program.

Very good pardon, thank you so much for your time as always, Tim Hardcourt, thanks for being on the program.

Thanks very much for us could to be with you. Let's bring it back home now.

Thanks very much for us could to be with you. Let's bring it back home now.

In Australia's economy, it's pretty obvious to anybody, isn't a funk right now? It'll be close to or in recession if it weren't for government spending.

In Australia's economy, it's pretty obvious to anybody, isn't a funk right now? It'll be close to or in recession if it weren't for government spending.

The problem is a public investment.

The problem is a public investment.

Now is it a record rate According to the Bureau of Statistics. Today, it's holding inflation higher for longer, which is forcing the Reserve Bank to also keep interest rates higher for longer. But after the GDP came in for the September quarter at just zero point three percent, the annual rate of point eight percent also much weaker than forecasts. Money markets, as the said, have brought forward their expectations of the first RBA rate cuts from May to April next year.

Now is it a record rate According to the Bureau of Statistics. Today, it's holding inflation higher for longer, which is forcing the Reserve Bank to also keep interest rates higher for longer. But after the GDP came in for the September quarter at just zero point three percent, the annual rate of point eight percent also much weaker than forecasts. Money markets, as the said, have brought forward their expectations of the first RBA rate cuts from May to April next year.

Now, the heart of the economic problem is households.

Now, the heart of the economic problem is households.

They continue to go backwards GDP per capita in other words, your man of economic output per person. It's fallen for seven straight quarters. Now households are in recession. That's almost two years. And that's despite tax cuts, energy bills support from governments, and.

They continue to go backwards GDP per capita in other words, your man of economic output per person. It's fallen for seven straight quarters. Now households are in recession. That's almost two years. And that's despite tax cuts, energy bills support from governments, and.

Wage increases as well. What happened is that families.

Wage increases as well. What happened is that families.

Used much of that money to pay down their mortgages a.

Used much of that money to pay down their mortgages a.

Bit more quickly.

Bit more quickly.

You can see that in a tick up to the household satan's ratio and where people did have spare cash, well, they traveled overseas. That was up nine point nine percent for the quarter alone. Well, someone who's explained all of this economic funk to you for some time. Now is Warren huakan economic advisor at the small business lenders Judo Bank, who joins me nowt Warren. These numbers are a surprise surely to the government.

You can see that in a tick up to the household satan's ratio and where people did have spare cash, well, they traveled overseas. That was up nine point nine percent for the quarter alone. Well, someone who's explained all of this economic funk to you for some time. Now is Warren huakan economic advisor at the small business lenders Judo Bank, who joins me nowt Warren. These numbers are a surprise surely to the government.

They're about to go to an election.

They're about to go to an election.

The economy is in the fact, but it's the households that are feeling it. And you don't have to really tell anybody that households going backward their unhappy households when it comes to politics.

The economy is in the fact, but it's the households that are feeling it. And you don't have to really tell anybody that households going backward their unhappy households when it comes to politics.

Well they are.

Well they are.

And it was surprising how weak consumption was in the quarter. That was a big part of the miss. It's not great for the government in terms of trying to portray how the economy's going.

And it was surprising how weak consumption was in the quarter. That was a big part of the miss. It's not great for the government in terms of trying to portray how the economy's going.

Government says, no, wages are going up.

Government says, no, wages are going up.

Basically, we've got equality and wages come out hurt the treasure It staff noon talking about this. They're trying to spin this somehow into being good news.

Basically, we've got equality and wages come out hurt the treasure It staff noon talking about this. They're trying to spin this somehow into being good news.

It's not. It's bad news for Australia.

It's not. It's bad news for Australia.

It doesn't paint a good picture of this economy and there's a lot of complexity to it. The number one problem is where a capacity constraint economy. The governments of Australia are spending and that's crowding out the private sector. The household sector is being held back by inflation to squeeze on their disposable income. But the good news is there is signs of that improving.

It doesn't paint a good picture of this economy and there's a lot of complexity to it. The number one problem is where a capacity constraint economy. The governments of Australia are spending and that's crowding out the private sector. The household sector is being held back by inflation to squeeze on their disposable income. But the good news is there is signs of that improving.

In the quarter, Treasury says inflation's coming down. All it's good. We're working hard to bring down the inflation rate. Is that the government. I thought the government was actually the cause.

In the quarter, Treasury says inflation's coming down. All it's good. We're working hard to bring down the inflation rate. Is that the government. I thought the government was actually the cause.

Of the inflation rate because of record government spending. According to the Bureau Stats today.

Of the inflation rate because of record government spending. According to the Bureau Stats today.

We have record government spending. We've now surpassed on the measures I use the pandemic level highs, and we've seen government spending as a share of the economy shift up in the last decade by twenty five percent from about twenty two percent to twenty eight percent. This is a radical shift in the structure of our economy, which, of course in a world that's capacity constrained, puts pressure on inflation. But it also it's the government competing with the private sector for staff, for tradees, for everything.

We have record government spending. We've now surpassed on the measures I use the pandemic level highs, and we've seen government spending as a share of the economy shift up in the last decade by twenty five percent from about twenty two percent to twenty eight percent. This is a radical shift in the structure of our economy, which, of course in a world that's capacity constrained, puts pressure on inflation. But it also it's the government competing with the private sector for staff, for tradees, for everything.

And that's because so many.

And that's because so many.

People now are reliant on government for their job.

People now are reliant on government for their job.

There's a lot of that before, and there's a lot of construction activity that's rely on infrastructure projects and other government activities. So, look, this is a very complex economy and a lot of it comes down to this big surgeon government spending. It's not sustainable and that is an issue that has to be addressed in investment site. I'm never going to argue with because we need infrastructure, it's the recurrent spending that needs to do well.

There's a lot of that before, and there's a lot of construction activity that's rely on infrastructure projects and other government activities. So, look, this is a very complex economy and a lot of it comes down to this big surgeon government spending. It's not sustainable and that is an issue that has to be addressed in investment site. I'm never going to argue with because we need infrastructure, it's the recurrent spending that needs to do well.

We've said, is it all sorts of reports of Deloitte report, that Chris Richardson report in the past week have all come out signing it. Basically, government spending, state and federal is pretty much out of control. It's got to be brought back in which politician know is brave enough politically to actually bring that spending back in the check. You saw what happened to Tony Abbott and Joe Hockey when they tried to put a budget of restraint in many years ago.

We've said, is it all sorts of reports of Deloitte report, that Chris Richardson report in the past week have all come out signing it. Basically, government spending, state and federal is pretty much out of control. It's got to be brought back in which politician know is brave enough politically to actually bring that spending back in the check. You saw what happened to Tony Abbott and Joe Hockey when they tried to put a budget of restraint in many years ago.

It just didn't work.

It just didn't work.

So if it goes like this, so the economy falls off a Clifford substage.

So if it goes like this, so the economy falls off a Clifford substage.

Well, there's a couple of things that are worrying. One is the tax burden is getting unbelievably high, and that's going to effectively be a disincentive to work to invest the whole lot. At the moment, we've had a tax cut that we all know about, and it took the tax take for income tax down by three point eight percent to eighty seven billion dollars in the quarter.

Well, there's a couple of things that are worrying. One is the tax burden is getting unbelievably high, and that's going to effectively be a disincentive to work to invest the whole lot. At the moment, we've had a tax cut that we all know about, and it took the tax take for income tax down by three point eight percent to eighty seven billion dollars in the quarter.

Okay, so just get this right.

Okay, so just get this right.

So the Stage three tax cuts costs in that quarter eighty seven billion dollars.

So the Stage three tax cuts costs in that quarter eighty seven billion dollars.

No, no, No, the total tax take with eighty seven the tax cuts only reduced it from just over ninety billion.

No, no, No, the total tax take with eighty seven the tax cuts only reduced it from just over ninety billion.

Right.

Right.

But back in the March quarter, not six months ago, the tax take was only eighty six point seven billion. I despite the tax cuts, the government's income tax takes take from the households of Australia is higher than it was.

But back in the March quarter, not six months ago, the tax take was only eighty six point seven billion. I despite the tax cuts, the government's income tax takes take from the households of Australia is higher than it was.

So that's inflation and bracket creep.

So that's inflation and bracket creep.

So that again sees that not only is government spending preventing interest rates from being cut because they're causing inflation. But then the second thing is that the government's taking even more out of households. So part of the squeeze on households that they're feeling the pressure right now is not just energy bills, not just supermarkets, not just all those places that government wants you look, it's the government itself.

So that again sees that not only is government spending preventing interest rates from being cut because they're causing inflation. But then the second thing is that the government's taking even more out of households. So part of the squeeze on households that they're feeling the pressure right now is not just energy bills, not just supermarkets, not just all those places that government wants you look, it's the government itself.

Oh, the real tax burden is rising, definitely, it's having just a bigger effect on households as higher interest rates in my view, And of course, the other point here is that consumption was weak, but the evidence is starting to show that consumers did not respond to the tax cuts immediately. In July and August we saw better retail sales. For October, we've seen some good anecdotes around Black Friday. I suspect the consumer is now starting to loosen the purse strings a bit heading into Christmas. We don't know for sure, but this soft consumer story, I think we should be careful to overstate it. I think we're seeing a recovery and household incomes, and we should see a recovery and consumption. But of course that is into an economy that has got inflation and is operating at its capacity. This gives the RBA no room to cut right.

Oh, the real tax burden is rising, definitely, it's having just a bigger effect on households as higher interest rates in my view, And of course, the other point here is that consumption was weak, but the evidence is starting to show that consumers did not respond to the tax cuts immediately. In July and August we saw better retail sales. For October, we've seen some good anecdotes around Black Friday. I suspect the consumer is now starting to loosen the purse strings a bit heading into Christmas. We don't know for sure, but this soft consumer story, I think we should be careful to overstate it. I think we're seeing a recovery and household incomes, and we should see a recovery and consumption. But of course that is into an economy that has got inflation and is operating at its capacity. This gives the RBA no room to cut right.

I was going to say, where's the room rates as the markets are saying today.

I was going to say, where's the room rates as the markets are saying today.

There was a very big reaction in the bond market, the money markets, and I think it's the wrong reaction. The market is looking at two things. One the weak headline jeddp that is not the right way to look at these numbers. And of course the other dynamic here is the RBA legislation, the government can appoint board members in one March for one March for that April meeting. And there's a view, rightly or wrongly, that they're going to appoint people who will want it cut rates before the election.

There was a very big reaction in the bond market, the money markets, and I think it's the wrong reaction. The market is looking at two things. One the weak headline jeddp that is not the right way to look at these numbers. And of course the other dynamic here is the RBA legislation, the government can appoint board members in one March for one March for that April meeting. And there's a view, rightly or wrongly, that they're going to appoint people who will want it cut rates before the election.

Okay, so they cut rates before the election, the government gets what it wants, that all takes place, But then what does that do to the economy, because that could actually create inflation and then the Reserve Bank simply has to turn around and start raising rates in the future.

Okay, so they cut rates before the election, the government gets what it wants, that all takes place, But then what does that do to the economy, because that could actually create inflation and then the Reserve Bank simply has to turn around and start raising rates in the future.

Well, it could, and that's why I don't think the RBA is going to do that no matter who's on the board. And of course I think we're going to start to see some better consumer spending numbers over the summer and the case for a rate cut just won't be there. But the fact of the matter is we have a big issue in our society about the size of government, and of course this inflation problem is a long way from being.

Well, it could, and that's why I don't think the RBA is going to do that no matter who's on the board. And of course I think we're going to start to see some better consumer spending numbers over the summer and the case for a rate cut just won't be there. But the fact of the matter is we have a big issue in our society about the size of government, and of course this inflation problem is a long way from being.

Okay, if you're the prime minister right now, given the economy, given everything you can see right now, would you prefer to go to the polls sooner or later? A thing is going to be worse in four months time, well, three months time or are they going to be as bad as they are now.

Okay, if you're the prime minister right now, given the economy, given everything you can see right now, would you prefer to go to the polls sooner or later? A thing is going to be worse in four months time, well, three months time or are they going to be as bad as they are now.

I don't think you're going to get a rate cut, but the economic data might be better.

I don't think you're going to get a rate cut, but the economic data might be better.

SODI what Warren Hagan. Good to have you in the program today.

SODI what Warren Hagan. Good to have you in the program today.

Thanks for us well.

Thanks for us well.

Coming up after the break for go and foot up on seabusses pulled out for payments to the CFMAU and to the Master Builders Association by an independent report that was ordered by the regulator Paperal.

Coming up after the break for go and foot up on seabusses pulled out for payments to the CFMAU and to the Master Builders Association by an independent report that was ordered by the regulator Paperal.

Senator Andrew Bragg is on the program next. Thanks for being with us here on Business Now.

Senator Andrew Bragg is on the program next. Thanks for being with us here on Business Now.

Well.

Well.

Yesterday, an independent report into one of Australia's biggest superannuation funds SEEBUS, which has about ninety four billion dollars in it, issued a damning criticism about its relationships and payments to affiliated unions and employer representatives.

Yesterday, an independent report into one of Australia's biggest superannuation funds SEEBUS, which has about ninety four billion dollars in it, issued a damning criticism about its relationships and payments to affiliated unions and employer representatives.

The report by Deloitte.

The report by Deloitte.

Was ordered by the superannuation regulator OPRA after concerns about the fund's relationship with the building industry union the CFMEU, though the directors were all judged by Deloitte to be fit and proper people. The funds also facing a separate legal action from ASSE that it was slow in paying out twenty million dollars in benefits to around ten thousand members who made life insurance claims. The chair of SEEBUS is the former Treasurer Wayne Swann, who appeared before a Senate committee last Friday, and he was questioned by the Liberal Senator Andrew Bragg, mostly importantly about those payments to the CFMU and to others.

Was ordered by the superannuation regulator OPRA after concerns about the fund's relationship with the building industry union the CFMEU, though the directors were all judged by Deloitte to be fit and proper people. The funds also facing a separate legal action from ASSE that it was slow in paying out twenty million dollars in benefits to around ten thousand members who made life insurance claims. The chair of SEEBUS is the former Treasurer Wayne Swann, who appeared before a Senate committee last Friday, and he was questioned by the Liberal Senator Andrew Bragg, mostly importantly about those payments to the CFMU and to others.

Well, we have partnership agreements with the CFMU. I don't have to figure the total figure in front of the Senator, but they are partnership agreements which are subject to the BFID test because they are highly commercial arrangements which deliver great benefit to the fund in the same way that we have partnership arrangements with the Master Builders, with the CFMU, with the AWU and other organizations.

Well, we have partnership agreements with the CFMU. I don't have to figure the total figure in front of the Senator, but they are partnership agreements which are subject to the BFID test because they are highly commercial arrangements which deliver great benefit to the fund in the same way that we have partnership arrangements with the Master Builders, with the CFMU, with the AWU and other organizations.

Now, just one thing about that you should know that BFID that Wayne Swan referred to is the best financial Interest duty, which compels the superannuation trustee to always act in the best interests of their members. Because of that, and in light of the Deloitte report findings and findings, Senator Andrew Bragg now wants Wayne Swan to reappear before the Senate and he joins me out from Canberra.

Now, just one thing about that you should know that BFID that Wayne Swan referred to is the best financial Interest duty, which compels the superannuation trustee to always act in the best interests of their members. Because of that, and in light of the Deloitte report findings and findings, Senator Andrew Bragg now wants Wayne Swan to reappear before the Senate and he joins me out from Canberra.

Andrew goot the chat to you. Why do you want Wayne Swan back in the Senate?

Andrew goot the chat to you. Why do you want Wayne Swan back in the Senate?

Good afternoon, Rice.

Good afternoon, Rice.

I think it's very important that we get to the bottom of what's happened here because missus Swan has appeared as a witness at the Senate committee and it is a contempt to give folks almost leading evidence to the Senate. And I have to say that his testimony just doesn't match up with the Deloitte report which US canvas there. So Deloitte says one thing and Missus Swan says something completely different. So it's very strange.

I think it's very important that we get to the bottom of what's happened here because missus Swan has appeared as a witness at the Senate committee and it is a contempt to give folks almost leading evidence to the Senate. And I have to say that his testimony just doesn't match up with the Deloitte report which US canvas there. So Deloitte says one thing and Missus Swan says something completely different. So it's very strange.

So let's go to what Deloitte actually did say. We've got the statement here, one of the key passages that is inside this Deloitte report. If we have a look, the review found that although individuals are focused on ensuring expenditure achieves the relevant strategic objectives and member outcomes. It then goes on and says the relative documentation did not always clearly articulate how the two concepts specific expenditure and member outcomes were aligned, and this may result in the trustee not being able to appropriately and adequately meet the BFID requirements.

So let's go to what Deloitte actually did say. We've got the statement here, one of the key passages that is inside this Deloitte report. If we have a look, the review found that although individuals are focused on ensuring expenditure achieves the relevant strategic objectives and member outcomes. It then goes on and says the relative documentation did not always clearly articulate how the two concepts specific expenditure and member outcomes were aligned, and this may result in the trustee not being able to appropriately and adequately meet the BFID requirements.

That's the key to it isn't it.

That's the key to it isn't it.

Missus Onan was very clear that their partnership agreements were measurable and we're delivering strong measurable benefit to members. Deloitte was clear that that was not the case, that there were no benefits to members in some cases, and that there was no measurement, no framework. So Missuswan, I think easy at great risk of having mislead the Senate. So we do need to at some stage clarify why exactly this evidence was given to the Senate, particularly given that missus Swan read the Deloitte report because he mentioned the report any evidence.

Missus Onan was very clear that their partnership agreements were measurable and we're delivering strong measurable benefit to members. Deloitte was clear that that was not the case, that there were no benefits to members in some cases, and that there was no measurement, no framework. So Missuswan, I think easy at great risk of having mislead the Senate. So we do need to at some stage clarify why exactly this evidence was given to the Senate, particularly given that missus Swan read the Deloitte report because he mentioned the report any evidence.

So then you asked him straight out right how much money that the CEABUS Fund had given to the CFMU in exchange whatever services they claimed. How much money did he actually come up with, because it's in the Deloitte report though he didn't have the number at hand.

So then you asked him straight out right how much money that the CEABUS Fund had given to the CFMU in exchange whatever services they claimed. How much money did he actually come up with, because it's in the Deloitte report though he didn't have the number at hand.

Well, we know that in the last year the unions received more than two million dollars from the Sea Bus Fund, and that the CVMU in particular received over a million dollars. So I find it very hard to understand that missus Swan did not know about those figures.

Well, we know that in the last year the unions received more than two million dollars from the Sea Bus Fund, and that the CVMU in particular received over a million dollars. So I find it very hard to understand that missus Swan did not know about those figures.

These are figures.

These are figures.

Which were already reported in the member statement so I think the people who are running this fund need to be honest with the Australian people, who are honest with their members about why they are making these payments. I believe it is very clear that some of these payments are uncommercial. There is no basis for them other than they want to give away money to their mates the CFMU.

Which were already reported in the member statement so I think the people who are running this fund need to be honest with the Australian people, who are honest with their members about why they are making these payments. I believe it is very clear that some of these payments are uncommercial. There is no basis for them other than they want to give away money to their mates the CFMU.

Okay, But the fund also gives money on the other side to the Master Builders Association, the Industry Fund, so you know, the Building Industry Association. So it goes both sides to employers and to the union themselves. Do you think there should be some rule that industry superfunds cannot simply make these payments under any circumstances.

Okay, But the fund also gives money on the other side to the Master Builders Association, the Industry Fund, so you know, the Building Industry Association. So it goes both sides to employers and to the union themselves. Do you think there should be some rule that industry superfunds cannot simply make these payments under any circumstances.

Well, I don't think the employee groups are any better than the unions. I mean, they're all part of the ir club. They're all sucking millions of dollars out of these super funds. And when the superfunds incur big fines, as may happen in seabus's case for the non payment of insurance claims, the employer groups in the unions don't have to pay any money, so they're happy to take dividends from the fund. But they run for the hills when something goes wrong. So I think it is a very sick system where the shareholders get away with blue murder here, and that it's used a supersystem as a cash cow.

Well, I don't think the employee groups are any better than the unions. I mean, they're all part of the ir club. They're all sucking millions of dollars out of these super funds. And when the superfunds incur big fines, as may happen in seabus's case for the non payment of insurance claims, the employer groups in the unions don't have to pay any money, so they're happy to take dividends from the fund. But they run for the hills when something goes wrong. So I think it is a very sick system where the shareholders get away with blue murder here, and that it's used a supersystem as a cash cow.

So do you think that these funds are now getting too big that something needs to be done to me?

So do you think that these funds are now getting too big that something needs to be done to me?

In some ways, they're mutuals.

In some ways, they're mutuals.

Just like the old AMP National Mutual Colonial Mutual MLC were in the old days. They were not for profit mutual funds. They got too big. It seems to me that these industry superannuation funds now exert extreme control not only over companies and company behavior, but indeed in the way in which capital is deployd.

Just like the old AMP National Mutual Colonial Mutual MLC were in the old days. They were not for profit mutual funds. They got too big. It seems to me that these industry superannuation funds now exert extreme control not only over companies and company behavior, but indeed in the way in which capital is deployd.

Well, the governance is a shambles, clearly, and the Sea Bus is just one case study where mister Swan came to the Senate and gave evidence which clearly was inconsistent with the expert review that he was sitting on. But more broadly, the fact that these organizations are not supported by their shareholder organizations, they don't capitalize these funds, and they have virtually no independent directors means that they are running a nineteen fifties governance model in the twenty first century. And I think it is very unreasonable for doctor Chalmers, the Treasurer, to dodge questions on this. He's very quick to batch up the Comwealth Bank, very quick to call for the heads of the people at Westpac when they had their issues in twenty nineteen, but he seems silent on Cebus for reasons that may be obvious to you.

Well, the governance is a shambles, clearly, and the Sea Bus is just one case study where mister Swan came to the Senate and gave evidence which clearly was inconsistent with the expert review that he was sitting on. But more broadly, the fact that these organizations are not supported by their shareholder organizations, they don't capitalize these funds, and they have virtually no independent directors means that they are running a nineteen fifties governance model in the twenty first century. And I think it is very unreasonable for doctor Chalmers, the Treasurer, to dodge questions on this. He's very quick to batch up the Comwealth Bank, very quick to call for the heads of the people at Westpac when they had their issues in twenty nineteen, but he seems silent on Cebus for reasons that may be obvious to you.

Okay, And there's of course one other big issue that's sleeping inside is and that is their non liquid investments in a range of issues including infrastructure and private equity investments.

Okay, And there's of course one other big issue that's sleeping inside is and that is their non liquid investments in a range of issues including infrastructure and private equity investments.

Yeah, and that's a matter for APPRAH. I mean, APRAH has to step up here and do its job. They need to make sure that they are marking to market and value in their assets. Probably, but OPRAH I think right now has its hands full on trying to make sure that it can get some straight answers from Cebus. From the Senate testimony from OPRAH, I think they were also displeased. So it is a real mess at the moment, and we need to get to the bottom of why there appears to have been misleading edidence given to this.

Yeah, and that's a matter for APPRAH. I mean, APRAH has to step up here and do its job. They need to make sure that they are marking to market and value in their assets. Probably, but OPRAH I think right now has its hands full on trying to make sure that it can get some straight answers from Cebus. From the Senate testimony from OPRAH, I think they were also displeased. So it is a real mess at the moment, and we need to get to the bottom of why there appears to have been misleading edidence given to this.

Yeah, brilliant Andrew Bragg, great have you on the program. Many thanks for your time. Thanks ros and That is it for today's program. By the way, you haven't earned the end of that story, not by a long shot. Thanks for your company, we'll see you shortly

Yeah, brilliant Andrew Bragg, great have you on the program. Many thanks for your time. Thanks ros and That is it for today's program. By the way, you haven't earned the end of that story, not by a long shot. Thanks for your company, we'll see you shortly