The Association of Financial Advisers (AFA) has expressed disappointment with the final report from the Productivity Commission inquiry into default superannuation funds.

While the Gillard government has this week pushed its credentials as delivering reforms that boost Australians’ superannuation savings, both the AFA and opposition have added their voices to that of the Financial Services Council in criticising the government.

Fox and hounds

“The Productivity Commission has backed down from the strong pro-competition, pro-choice and pro-transparency position they took in their interim report and appear to have given in to pressure from the Minister for Financial Services and Superannuation Bill Shorten,” said AFA president, Brad Fox.

“The Productivity Commission set the industry up with high expectations only to let everyone, especially Australian workers, down.”

Predictably, the opposition took up the cudgel, accusing Shorten of bullying the Commission at the behest of his friends in the union movement.

“The current process for the selection of default funds under modern awards, initiated by this government and run by Fair Work Australia, is a national disgrace,” said Senator Mathias Cormann.

“It is an anti-competitive, closed-shop arrangement, which lacks transparency, is littered with inherent conflicts and inappropriately favours union-dominated industry super funds.

“Even Labor had to finally recognise that in its 2010 pre-election policy on superannuation where they promised the introduction of an open, transparent and competitive process to select default funds under modern awards.”

Lack of faith

In August, Shorten publicly supported a submission to the Productivity Commission compiled by two of his own departments – Treasury and the Department of Education, Employment and Workplace Relations – which advocated for the continued involvement of an expert panel with Fair Work Australia (FWA).

“We are very concerned about the influences on superannuation policy and we question, as we have previously, the appropriateness of FWA making decisions with respect to the selection of superannuation funds in modern awards,” said Fox .

“FWA has been running the system to this point and it has not worked.”

He added that is was difficult for the superannuation industry to have confidence in FWA because of “a widely held view that FWA lacks independence”.