‘I wish I didn’t have to do it’: Hostplus chief defends wining and dining at Australian Open
Hostplus chief executive David Elia has defended spending $260,000 of the fund's money hosting employers at last year's Australian Open, saying it was important to keep up with competitors.
“It’s probably our flagship corporate entertainment event that we do,” Mr Elia said at the banking royal commission on Tuesday.
“We have key employers, key stakeholders, alliance partners flying in from all over Australia to participate in that…It’s a great time of the year for us to do that.”
Mr Elia said corporate hospitality was for the sole purpose of retaining the membership of Hostplus.
“It’s a great way certainly from my perspective and the executive team's perspective to establish very early on and retain the relationships that are absolutely critical in terms of retaining the default fund status of our members and therefore retaining members,” he said.
“It’s a competitive market out there. Our competitors are doing exactly the same thing. In fact they were there.”
Counsel assisting the commission, Eloise Dias, asked Mr Elia whether he was concerned about spending so much money on hospitality.
“It does,” Mr Elia said. “And I wish I didn’t have to do it, but the reality is that it is a competitive landscape that we are dealing with. Unashamedly we utilise entertainment and corporate hospitality in order to strengthen the relationships we have with our employers.”
“In other words everyone is doing it so you have to do it too?,” Ms Dias asked.
Ms Dias asked whether this was the best use of the hospitality fund's money.
“With 161,000 accounts with less than $6000 in them… many of them are being eroded by premiums and fees down to zero,” she said. “Do you consider it’s the best use of the trust money to purchase these sorts of corporate packages?”.
Mr Elia defended Hostplus’s expenditure, saying “We are not dipping into investment reserves in order to fund the entertainment expenditure or marketing expenditure. It’s not an insignificant amount of money. You’re 100 per cent right. It’s a lot of money. But it’s done for the right purposes.
“If we ban marketing that’s perfectly fine by me but the reality is that in my world my competitors are doing just that,” he said.
The commission heard that section 68A of the Superannuation Industry Supervision (SIS) Act prohibits a trustee of a superannuation fund or any of its associates offering goods or services to a person on the condition that the person's employees will become a member of the trustees superannuation fund.
Mr Elia denied the entertainment was in breach of the act.
“It’s not an inducement in any shape or form,” he said.
The commission also heard Mr Elia’s use of Australian Open tickets for family members and use of his frequent flyer points was investigated by the Australian Prudential Regulation Authority after a tip off from a whistleblower.
More to come.