The Liberals announced before the March election that a Marshall Government would “support the growth of SA’s local funds management industry”, which would “create more jobs in our state”.
“For too long, this sector has been neglected, resulting in many of our talented people and investment dollars heading interstate or overseas,” now-Treasurer Rob Lucas said at the time.
“The state Liberals will implement measures to ensure there is greater management of our public sector funds locally.”
The centrepiece was a move to make the government-owned superannuation trust Funds SA require “most” of its contracted fund managers “to maintain a substantive local presence”.
A policy document stated fund managers “will need to meet the same standards regarding expected investment returns and prudential requirements, but will be required to employ some people locally”.
“It is reasonable to expect Funds SA, in its engagement of fund managers, to have ready access to the people making investment decisions on behalf of South Australians,” it said.
Funds SA invests over $30 billion worth of assets on behalf of the government and its employees, through around 50 different fund managers worldwide.
Documents recently released to the Labor Opposition reveal that only three of those managers – AMP, LendLease and Macquarie – have any kind of local presence.
A minute from Funds SA CEO Jo Townsend to Lucas further states that “whilst AMP and Macquarie have offices in Adelaide, these are retail focussed offices and no institutional funds management activities are undertaken”.
Lucas told InDaily that Funds SA had warned against implementing the Liberals’ election policy, which was now “in the too-hard basket”.
“Funds SA has expressed concern in relation to heading down that particular path,” he said.
“The board expressed concern about potential impact of that -which I accept… I’m not in the position to direct Funds SA in relation to these things.”
Advice from Funds SA released via Freedom of Information notes that while contracts with some fund managers can be quickly terminated, others which invest “into illiquid assets which are not easily bought or sold” require “a commitment to invest for a period of 10 years or more”.
Lucas was also prompted to write to various public sector unions before the election to assure them members’ superannuation investment returns would not be adversely affected.
“I gave a commitment [that] we wouldn’t be taking any action which led to any impact on their members’ returns,” he said.
Lucas said the Government was now “contemplating some other options which might be able to encourage development of a local funds management industry” but “in terms of the commitment I made, we won’t be mandating a particular number”.
He conceded that while there was a small local presence among the 50 fund managers currently contracted, “in the context of what we’re talking about, they don’t manage funds out of those particular offices”.
Lucas conceded under questioning in a recent estimates hearing that “I think the honest answer is that [meeting the election commitment] is going to be very difficult”.
“That is certainly the advice from Funds SA and the board chairs both past and present, most certainly the present one,” he told Labor shadow Treasurer Stephen Mullighan at the time.
It comes after Premier Steven Marshall just last month told parliament the Liberal Government was meeting “each and every single one” of its election commitments.
“The people of South Australia voted for a government that made commitments, and we were delighted when we brought down our very first budget… to implement each and every single one of those commitments,” he said.
“This is a government which is implementing each and every one of its commitments.”
Mullighan described the climb-down as a “broken promise”.
“There is now no plan to attract and create jobs in the financial services industry in SA, leaving young South Australians with little option but to head interstate or overseas to find work in this industry,” he said in a statement.
“Steven Marshall may talk big when it comes to growing jobs in SA, but this is another example of where the budget gives little hope for jobs growth in the state’s economy.”
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