Rivers of Gold: Conflicts of Interest and Industry Super


"Rivers of Gold: How the Trade Union Movement is funded by Industry Super" is a 2017 report by Morgan Begg and Simon Breheny published by the Institute of Public Affairs

Those of us working in retail financial services have at least a passing familiarity with both the 'sole purpose' test and with conflicts of interest. This report suggests that the Industry Funds would benefit from some remedial training on these issues.

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In terms of total assets, industry funds represent around 23% of the superannuation industry, so they are a significant player in the financial services industry. 

Traditionally, they've differentiated themselves from retail funds on the basis that they're 'for members', that they are cheaper, perform better and lack the conflicts (commercial and otherwise) that bedevil retail funds.

Begg and Breheny analyse outflows to suggest that these claims should be more closely questioned.


The report is clear and accessible. One of the key issues to consider may be the size, and distribution, of the funds paid to third parties including the CFMEU, United Voice, ACTU, AWU and AMWU. The FSU is barely acknowledged.

These funds that may otherwise have been retained in the fund for the benefit of the members. 

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This data may be particularly alarming considering that the Industry Funds have run consistent, prolonged and aggressive campaigns against conflicted retail funds and the advisers that support them. The ISN has been mythologised even by former APRA staff:

It was ridiculous that the Government is trying to force changes on the “world’s best practice” industry super fund model which has persistently and consistently delivered significantly higher returns for members than the retail funds run for profit by banks and big financial conglomerates.
— Wilson Sy, formerly head of research at the Australian Prudential Regulator Authority (APRA)

We might not be interested in the politics but it's important to understand the choices that impact on our clients.