During his recent meeting with US President Donald Trump at the White House, Prime Minister Malcolm Turnbull proposed that Australian superannuation funds invest in Trump's plan to renew the US's ailing national infrastructure. He was repeating a view being pushed by Australian ambassador and former Treasurer Joe Hockey for the US to adopt Australia's controversial "asset recycling" scheme by state and local governments, aided by federal subsidies.
The Sydney Morning Herald reported: "In face-to-face talks at the White House [last] week, Turnbull [proposed] using a chunk of Australia's $2.53 trillion superannuation pool to help unlock funding for Trump's infrastructure push.
"Trump's US$1.5 trillion (A$1.9 trillion) public-works plan has hit potholes amid a lack of bipartisan support in Congress and questions over who would pay for the initiative, despite his pledge of US$200 billion in federal funding over 10 years.
"Australian politicians have pointed to their own success in selling or leasing public assets to finance new construction without incurring new debt — a concept known as asset recycling."
This claim of "success" is extremely debateable. Community opposition to privatisation of public assets and "asset recycling" has grown in Australia, and internationally, in recent years.
David Whiteley is chief executive of Industry Super Australia, the representative body for not-for-profit funds that invest the super funds of five million workers. It has more than $224 billion under management. "The key blockage in the US,” he said, “which is also common across the world, is the political risk due to community concern over private ownership of what people perceive should be public assets."
Assets in Australia's superannuation funds have increased nearly 10 times in the past two decades. Superannuation assets are expected to peak in 20 years, by which time the system will be worth between $3.5 trillion and $5.1 trillion.
Many US states and municipalities remain wary of private ownership, even if assets are bought by not-for-profit retirement funds. Ten years ago, Chicago's move to lease its parking meters for 75 years cost the city US$974 million in lost revenue and angered residents who were left paying higher fees.
University of Queensland economist Professor John Quiggin, writing in the Guardian last year described asset recycling as the "last gasp of a failed model".
“The government’s asset recycling fund, established in 2014, was shut down in 2016, with barely half of its budget allocation spent.
"This end of asset recycling has been part of a broader reaction against privatisation and PPPs [Public Private Partnerships], which has swept a number of state governments from office," Quiggin wrote.
We could include among those state governments: the fall of the Coalition government in Victoria in 2014, the demolition of the Campbell Newman Liberal National Party regime in 2015 and the collapse of the Barnett Coalition government in WA in 2017. The [Gladys] Berejiklian Coalition state government in NSW could well be next in line.
However, there is also the controversial question of whether superannuation funds, especially union-influenced industry super funds, should invest in "asset recycling", whether in Australia or overseas.
The involvement of industry funds in shareholdings in privatised public facilities, such as toll roads, is totally unethical and should be opposed by unions and all workers who are obliged to pay super contributions into these funds.
A case in point is the fact that Unisuper — the superannuation fund for university staff — is the largest single shareholder in Transurban, the company that already owns 13 tollways in Australia, and is expected to buy Sydney's monstrous $17 billion WestConnex tollway network when the NSW government puts it up for sale later this year. Unisuper currently owns 12.6% of Transurban.
In all the recent mainstream media coverage of Turnbull's trip to Washington, and the accompanying push for increasing Australian big business trade and investment with the US, the underlying issues of Australian superannuation funds' involvement in potentially stealing American workers' public assets is largely hidden.
Green Left Weekly, on the other hand, has strenuously and continually exposed the corrupt privatisation rorts of Australian governments. And we have campaigned to oppose the sale of public assets, whether to multinational corporations or superannuation funds.
The truth about the disaster arising from the experience of asset recycling, with the privatisation of community assets for the benefit of big business, and the associated cuts to the public sector in the areas of housing, education, health and the environment, must be revealed and opposed.
Green Left Weekly has campaigned ceaselessly against the sale of public assets, wherever they are and whoever they are sold to, and will continue to do so. But we need your help keep up this effort.
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