Wayne Swan, Australia’s former treasurer and deputy prime minister, said the Cbus pension fund was looking for acquisitions to expand its assets under management to A$150 billion (US$108 billion).
Swan took over as head of the construction industry’s A$67 billion pension fund this month. It already plans to absorb Media Super, which will add A$5.9 billion, and EISS Super, a A$6.4 billion energy industry fund, this year.
Australia’s A$3.3 billion pensions sector is consolidating rapidly after the Australian Prudential Regulation Authority pressured smaller or poorly performing funds to merge with larger rivals. This prompted 15 mergers in the year ending in October and raised expectations that the market will boil down to a handful of “mega funds”.
Swan, who as treasurer guided the country’s economy through the 2008 financial crisis, said the construction workers’ fund was in talks to strike further deals. “Many funds are looking for a partner. We talk to them like everyone else,” he said.
He added that Cbus, which was one of the first industrial funds in the country, should not lose its “blue and pink collar” identity as it expands. “We don’t just want to grow for growth’s sake. We don’t see ourselves as a generalist fund,” he said.
Swan argued that the fund’s primary strength should be organic growth, as opposed to expanding its scale through mergers. The Cbus growth fund has generated returns of almost 20% in the year to June 2021.
Swan’s nomination, revealed in July, has proved controversial among some of the unions whose workers represent the fund. The Construction, Forestry, Maritime, Mining and Energy Union NSW called their choice a “insult” to its workersfor laws introduced while Swan was in government had cost unions millions of dollars to protect the rights of their members.
His dual role as chairman of Cbus and chairman of the Australian Labor Party has also been criticized.
Swan said his job as chairman of the Cbus board would involve bringing people together, but dismissed the suggestion that his role in the ALP should rule him out of the job.
“There are too many partisan debates, especially on the supers. I would like to see more consensus on things,” he said.
Part of Cbus’ strategy will be to capture the value of transitioning from a fossil fuel-based economy to renewable energy. He argued that funds from industry, unions and government needed to work together to boost investment in the post-coronavirus pandemic economy.
“A healthy super sector plays a role in recapitalizing the economy as it did during the GFC [global financial crisis],” he said. “We should be talking about strengthening and refreshing the Australian economy for the next 20 years.”