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What HESTA’s sweet tooth really tells us about super expenses
An unexpected outcome of spending the morning browsing APRA’s superannuation expenses data is hunger.
It’s mostly HESTA to blame; the “promotion, marketing and sponsorship” table is full of payments to the likes of “Sweet on Cupcakes” ($475), Krispy Kreme ($257) and the “Spaghetti House”($181), along with dozens and dozens of payments for restaurants and even individual coffee orders. Their transparency is admirable, though a cynic might question whether compiling the data on coffee orders ultimately resulted in a larger expense than the orders themselves. Or maybe there’s an element of malicious compliance. You want granular expenses data? Here you go! HESTA’s official comment, per a spokesperson: “We disclose various itemised expenditure to regulators, as required by law”.
But HESTA is an oddity. Many funds’ administration, and marketing and advertising payments flow to a related party where there’s little look through (in addition to a host of other payments directly to marketing agencies which do provide greater insight into how they allocate resources). So why is that HESTA has decided it should supply the regulator with details of every drop of coffee imbibed by its staff on business trips while other funds have not furnished it with any information about their McDonalds order? And if APRA can’t properly peer inside related parties, how much insight are members really getting into how funds spend their money?
And some of this data just isn’t up to scratch. AMP Super Fund shelled out $207,088 for advertising to “multiple payees” (a number of other funds did similar) – no comparison to the eagle eye view of expenses we get from knowing a HESTA staff member spent $32 at Skyros Greek Meze.
The data is, of course, limited; it’s only for 2023. More trends will become observable over time, and more action can be taken when they do. And the data largely reveals what APRA said it would: how much member money super funds are spending on marketing and promotion, payments to unions, etc. It is more granular than anything that’s come before it, and provides some insight into the millions that super funds are spending to try and retain or grow their market share.
What it doesn’t tell us is whether any of these payments are in members’ best interests.
That’s partly the point. As APRA deputy chair Margaret Cole told media on Tuesday, the important thing about the expenses is whether or not trustees can demonstrate that they’re in the best financial interests of members. Relying on “strong metrics” that link spending to member benefit is one way of doing this, and APRA acknowledges that multi-million dollar payments might do more for members than the $17 Local Government Super spent at Regal Sportswear (equally, both might be fine).
“The scale of expenditure in a particular category is not necessarily a measure of whether the expenditure is good, bad or appropriate,” Cole said. “Some very large items of expenditure may be justifiable as being in the best financial interests of members. Conversely, even relatively small items of expenditure might not be okay.”
APRA isn’t happy about some of the places money is flowing to. It “lifted up one rock and found a significant number of concerns”, and will be looking for expenses where member benefit is not “immediately evident or may not be reasonably justified”.
But for now, what APRA’s data mostly begets is more questions. Does HESTA have a sweet tooth, or better bookkeeping? Is a trip to Spaghetti House in member’s best financial interests? Is it useful for APRA (and members) to know that there was a trip to Spaghetti House, or is aggregate information about marketing expenses enough?
Maybe APRA should sit down with funds over a cup of coffee and sort it all out – APRA’s shout.
