Crisis Management: APRA To Be Given Power To “Direct” Your Super

17 Jul
Australian Treasury,  Strengthening APRA's Crisis Management Powers, September 2012, page 34 (click to enlarge)

Australian Treasury, Strengthening APRA’s Crisis Management Powers, September 2012, page 34 (click to enlarge)

It’s been a big week for your humble blogger, vis-a-vis finding incriminating evidence on government websites.

Here’s another example of something I have warned of (repeatedly) since the inception of this blog, now coming to fruition.

That like so many other countries in the Western world since 2008, our government too would, someday, use the pretext of “crisis management” to steal your super to prop up an insolvent financial system.

Today, we learn that the Orwellian euphemism that has been chosen to describe this process in Australia, is “direction powers”.

From the Australian Treasury’s Consultation Paper, Strengthening APRA’s Crisis Management Powers, September 2012 (my bold emphasis added):

2.3.1 Potential new direction triggers

…it is being considered whether APRA should have new direction powers in relation to superannuation.

The purpose of the direction powers would be for the rectification of significant problems, in the nature of an enforcement power.

Possible triggers for the issue of a direction might include:

  • a breach of the RSE licensee law or licence condition;
  • an anticipated breach of the RSE licensee law or licence condition;
  • promoting instability in the Australian financial system;
  • conducting affairs in an improper or financially unsound way; and
  • where the failure to issue the direction would materially prejudice the interests or reasonable expectations of beneficiaries of the superannuation entity.

Note carefully what is being described here.

Earlier in the same document, the Treasury department bemoaned that:

APRA has comprehensive direction powers in relation to ADIs, general insurers and life insurers but not in relation to RSE licensees, even though the superannuation sector holds approximately $1.4 trillion in savings and a number of superannuation entities hold tens of billions of dollars in assets.

Oh dear! All that money, just sitting there making private sector fund managers rich on fees, and they (the government) don’t have the power to direct what happens to it. Sacre bleu!

Treasury went on to say that APRA needs an “early intervention tool” that is “preemptive”, and so allows it to “address a superannuation entity’s deterioration or non-compliance with prudential requirements”:

Australian Treasury, Strengthening APRA's Crisis Management Powers, September 2012, page 34 (click to enlarge)

Australian Treasury, Strengthening APRA’s Crisis Management Powers, September 2012, page 34 (click to enlarge)

Now here is where the cunning comes in.

How do you ensure that you give yourself the ability to “trigger” your new “enforcement power”, in order to give “direction” to a superannuation fund to … oh let’s say … direct a percentage of its (ie, yours, dear reader) money into government bonds to support the national government’s solvency? Or to the shares of a collapsing bank? Or to the shares in a new “bridging institution”, as directed by the FSB under its new, G20-wide bank resolution “bail-in” regime?

Easy.

You establish a set of “triggers” for your new “direction power”. Just like those they have listed above. Including, most notably, the trigger that — in their judgment — “the failure to issue the direction would materially prejudice the interests or reasonable expectations of beneficiaries of the superannuation entity.”

In other words, if APRA (or the IMF, or FSB, who now tell APRA what to do) were to decide that it “would materially prejudice” your interests if they did NOT “direct” your super fund to do whatever the government wants, then that is all the “trigger” they need to enforce a “direction” on your super savings.

Don’t believe me?

Think I’m twisting what they said?

Read it again.

Very carefully.

With special note of this:

Enhancing direction powers in superannuation would allow APRA to detail specifically how an entity must address an identified concern. Direction powers would enable APRA to direct the entity as to what should be done to remedy the situation…

What if the “identified concern” is that failure to issue the direction would materially prejudice the interests or reasonable expectations of beneficiaries of the superannuation entity”?

Or what if the “identified concern” is simply that the super funds are not parking your money in the “investments” that the government wants them to, and that this is or could be “promoting instability in the Australian financial system” — another one of the “triggers” listed?

By this action, the government is effectively abrogating to itself what is essentially an unlimited power to “direct” your super fund to do “specifically” whatever the government says with your money, under the dangerously broad, and subjective, Big-Brother-Knows-Best pretext that “failure to issue the direction would materially prejudice” your interests.

See also:

Your Super Screwed By The Laboral Party

Stealing Our Super – I DARE You To Ignore This Now

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8 Responses to “Crisis Management: APRA To Be Given Power To “Direct” Your Super”

  1. mick July 17, 2013 at 5:03 pm #

    “where the failure to issue the direction would materially prejudice the interests or reasonable expectations of beneficiaries of the superannuation entity”.

    I can’t read anything more into this than the interests of the fund owners (superannuants) needs to be guaranteed. Whether this results in dodgy behaviour or not remains to be seen.

    Legal documents always have an escape clause. I discovered this years ago and had it confirmed by a fairly high profile lawyer I knew. If the government forces fund managers to invest in a failing bank it will come back to haunt them and the public outcry will be significant. It appears to me anyway that the more likely intention of the script is that superannuation companies should act in the interests of their clients.

    Either way I have cut ties with managed superannuation as I have not trusted the industry for several decades.

    • The Blissful Ignoramus July 17, 2013 at 5:51 pm #

      You have to read the entire thing, and keep it all in context. Starting with the title of Treasury’s document.

      Sadly Mick, it appears from many of your comments (including this one) that you are keen (desperate?) to downplay as only a possibility, what is clear, irrefutable, soundly evidenced, and beyond any reasonable or logical doubt.

      This reaction is understandable, of course. It’s very unpleasant to confront the reality of it.

      • mick July 17, 2013 at 8:36 pm #

        Balance is important otherwise one leaves oneself open to attack for running a witch hunt. Some of the documents you have put up tell a compelling tale and whilst I have not checked your sources I take you at your word and the prognosis is not good.

        Whilst I have significant suspicion of governments I also need to read what is on the page. If a document talks about safeguarding superannuation funds then unless I smell a very big rat I have to believe (with a grain of salt) that this is the intention.

        Please do not take this is an attack on your views as I am not making a call. Rather I am treading carefully and waiting until the bastards hang themselves. They will…and probably already have. It will be interesting if/what comes back from government ministers regarding your revelations. Cheers.

  2. nothislittleblackduck July 17, 2013 at 5:11 pm #

    make sure you wear your balaclava and gun before you rob me politicians

  3. Oliver Manuel July 17, 2013 at 11:48 pm #

    Two seemingly minor lies, promoted as scientific facts in 1945 to save the world from possible nuclear annihilation, instead destroyed the integrity of science, education, research journals, the news media and world leaders and faith in our Creator-endowed inalienable rights to self-governance:

    1. Neutrons attract neutrons.

    2. H-fusion powers the cosmos.

    My research mentor, the late P. K. Kuroda, directed me to start research to reveal this deception in 1960.

    I regret that it took so long to complete that 1960 assignment.

    Later today I hope to post the manuscript here with links to the irrefutable data and observations.

    Oliver K. Manuel Former NASA PI For Apollo Samples

    Sent from my iPhone

  4. Kevin Moore July 19, 2013 at 8:59 am #

    There is nothing new under the Sun.
    .
    http://www.onenationwa.asn.au/Old_Age_Pension.pdf
    .

    1942 – 1943
    As a Wartime measure, the Federal Government gained sole control over Australian IncomeTax. Labor Prime minister (Ben Chifley) introduced three bills to establish the National Welfare Fund, to be financed by a Compulsory Contribution (levy) of one and sixpence in the Pound (20/-) on all personal income. Opposition Leader (Robert Menzies) stated that the Compulsory Contribution (levy) should be kept completely separate from other government income streams, that it should be shown separately on the Taxation Assessment and paid straight into a “TRUST” account, and not mixed with the General Revenue.Menzies said “The stigma of charity should be removed from the Age Pension.” and that “It should be an entitlement earned by the person’s personal contribution to the fund.”
    .
    1946

    Prime Minister Chifley agreed and established The National Welfare fund as at 1/1/1946.
    A “Trust” Fund with the Parliament as “Trustee.” The Compulsory Contributions (levy) commenced as at 1st January 1946. It was shown separately on the personal Tax
    Assessments for 1946, 1947, 1948, 1949 and 1950 and the compulsory levy was properly paid straight into the Special “Trust” fund and Welfare claims were paid out of the fund. The balance in the fund in 1950 was almost 100 million pounds.
    .
    1949
    Robert Menzies became Prime Minister and he introduced Bills to amend the acts governing the National Welfare Funds. The Compulsory Contributions (levy) was then grouped with the Taxation Assessment and appeared as one amount on the Taxation assessments and was paid as one amount straight into the Consolidated Revenue Account. The sabotage of the National Welfare Fund had commenced. The Opposition Labor Party had collaborated in this sabotage by remaining silent instead of opposing Menzies’ action.
    .
    1951 – 1985
    The compulsory levy of 7.5% now included in the tax continued to be collected and placed in the Consolidated Revenue Account treated as General Revenue and spent,
    until 1985.
    .
    1974 – 1975
    Labor Prime Minister (Gough Whitlam) abolished income test for all persons 70 years of age and over and paid pensions to all people over that age.
    .
    1975
    Liberal Prime Minister (Malcolm Fraser) cancelled the Whitlam legislation.
    .
    1977
    Liberal Prime Minister (Malcolm Fraser with Treasurer Philip Lynch) transferred the balance in the Welfare Fund Account (approximately $470,000,000) to Consolidated
    Revenue Account.

  5. Land owner via SMSF July 26, 2013 at 12:17 pm #

    How is this going to work with an SMSF? SMSF’s are often run in country Australia to increase a farmers available arable land under management. APRA will now try to sell the farm?

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