Are our nest eggs really that golden?
I usually know where my money goes, right down to every last dollar.
That's both the joy and penalty for being a wage slave – there is no pot into which I can sink my paws to rescue me if I'm short.
In fact, our family has a ritual. On the day our wages are deposited into our account, we put some aside for saving, we direct pay our bills (and occasionally push one out to the next cycle) and the rest buys fruit and vegetables, meat and fish, bread, wine, fun.
But every week – before that money even lands in my account – some of the money disappears.
Tax. I don’t usually mind. It pays for Medicare and schools and universities. It repairs roads, supports people on welfare and provides the infrastructure to make this world of ours work. Last week, in fact, the government decided to spend $24 billion on planes. Loathsome choice, particularly as they are thinking about slashing pensions, but at least I have some inkling about where my money goes.
Yet every week, 9 per cent of my income disappears. Well, I know it goes to my superannuation fund but what they do with it – exactly what they do with it – I don't know. And that's causing me some concern.
When I first signed up, I joined the ethical choice. That means – I sincerely hope – that the fund won't invest my money in weapons or fossil fuels. It also means – I hope – that it won't ever invest in companies that, in any way, contribute to the upkeep or operation of Australian detention centres as they are today. I have a long list and, after yesterday, the list became even longer.
Oxfam Australia released a report that said the big four Australian banks were engaging in practices that included child labour, land seizure and forced evictions.
And there would hardly be a superannuation fund in this country that doesn't invest in one of the big four banks.
The way it usually works is this – your super fund will tell you in a general way where your money is going, how much is invested in which particular sectors, how much is invested locally or internationally. But if you want actual company names and numbers, that gets a lot harder.
It's usually described as commercial-in-confidence – but that's really an excuse to protect your super fund from customer inquiries.
Andy Gracey, Australian equities portfolio manager at Australian Ethical, has heard those arguments. And ignores them. Every single investment is transparent. Every single one. They aren't listed in real time to avoid the possibility that somehow investments will be manipulated – but not long afterwards you will know exactly where your money is going.
Australian Ethical has never held three of the top four banks because the institutions could not reach the ethical standards required. Only Westpac has survived because it has a high proportion of what the fund manager describes as positive lending – money for residential mortgages.
If the Oxfam report stacks up – and there's no reason to believe it wouldn't – Australian Ethical will revisit its Westpac investment.
A few weeks ago, I interviewed the Australian Shareholders' Association’s Stephen Mayne about Transfield, which provides services to detention centres. Transfield hasn't caved despite a national revulsion to what's happening in detention centres but there is still time.
He said then: "Listed Australian corporates don't have an appetite for ethical controversy."
And: "We've never had a child labour scandal with a listed company."
But perceptions may change with the Oxfam report. Helen Szoke, chief executive of Oxfam Australia, is asking Australians to be tough on their banks, to ask these questions: "Why aren’t you more upfront about where you are investing your money? What is your view on the issue of land grabs? And what pressure can you put on these companies?"
Szoke knows that banks are sensitive on shareholder return but she says Australians want a healthy return and an ethical investment.
"Australians care about both," she said.
We all need to start engaging with these companies that get our money by government decree and start asking them what they are doing with it.
At the moment, the only measure they use is if they are providing a decent return by financial standards – but not whether they are providing a decent return by humanitarian standards. Research from the Australia Institute shows a significant proportion of Australians with superannuation want ethical and environmental considerations to be taken into account by the trustees of their superannuation funds. Actually, more of us want our super to be invested ethically and not just to maximise our financial return.
Richard Dennis, executive director of the Australia Institute, says super funds are always talking about getting members more involved. One way would be to ask members what it is that they want and expect from their funds.
"Superannuation funds should systematically ask their members what they want ... having asked their members these ethical questions, funds should then invest – and vote at AGMs – according to these expressed member wishes," he said.
And if what you want is your money to be invested ethically, then avoid these banks until they have cleared their practices. And pressure your super funds to do the same.