John Hewson
Morrison’s two-faced approach to religious freedom

Whenever Scott Morrison is confronted with a breaking issue, event or data, his initial response is usually to claim there is “nothing to see here”. This is usually followed by an attempt, sometimes by way of media stunt, to shift attention to another issue, as a distraction.

His almost desperate and fanatical efforts to push his Religious Discrimination Bill through parliament before the next election was one such ill-conceived distraction. While it was true that this was an election commitment, it was used essentially to distract attention from his bad polling and the mounting criticism of his response to the Omicron variant of Covid-19, as well as the abject failure to properly address the aged-care crisis. Some in the government had also hoped this could be an opportunity to wedge Anthony Albanese and the opposition.

Ironically, Morrison became his own distraction, with all the cabinet leaks, with his own members crossing the floor and with the ultimate backdown – stalling the passage of the bill through parliament.

The response from the party room and parliament suggests he had no effective strategy for passing it in the first place. A further and clear indication of incompetence is that he introduced a bill inconsistent with other legislation of his government, which had already locked in discrimination against faith-based activities. At best this is a classic case of the right hand not knowing what the left hand is doing.

It’s rather odd that this government is running on the idea that people want the government out of their lives, yet they seem intent on doing the opposite and restricting individual choices. The Religious Discrimination Bill opens up other interesting questions, for instance on superannuation.

Here there is an important example of the inconsistency between the bill and existing legislation. Faith organisations want to offer their members a clear “choice” based on their religious beliefs. Choice, of course, is the dominant issue in relation to superannuation.

The specific concern of faith groups is the recently introduced annual performance assessment in part 6a of the Superannuation Industry (Supervision) Act 1993 (SIS Act), which unnecessarily and unreasonably discriminates against faith-based investment approaches.

The part 6a test is one of a suite of initiatives introduced by the government in 2020 to encourage superannuation fund trustees to focus more intently on the net returns of the products they provide to members. Given the ripoffs and poor performance of some funds in recent years, this was a worthy objective. In essence, though, it has features that create unintended consequences in the choice sector of the superannuation system. Specifically, it restricts the capacity to make choices that the investor recognises may result in lower returns.

A substantial minority of Australians object to their money being invested in gambling, banking, alcohol, tobacco or weapons for religious reasons. But the government’s new system does not offer this choice. How inconsistent?

The test (part 6a) is unable to accommodate faith-based investment practices, and indeed it may force members of faith-based funds into an alternative fund that will not invest their money in accordance with their beliefs, or even force them into a self-managed super fund. This provision could also affect ethical investment funds – although until now they have largely performed well enough to avoid it.

The federal government’s Your Future, Your Super laws aimed to make it easier to choose a better fund and save Australians from paying excessive fees on their money. The inconsistency is with the foundational premise in the existence of a choice sector – that is, the ability of individuals to take responsibility for making decisions about the way their superannuation contributions will be invested, and to bear the consequences of those decisions. So, a faith-based choice product may have delivered “true to label” performance and yet be publicly impugned for underperformance of a benchmark that does not reflect the distinctive and differentiating approach taken by the register of superannuation institutions licensee.

The bottom line of this super legislation is that it clearly discriminates against faith-based super as religious faiths often include non-negotiable perspectives and prohibitions that intersect with investment decision-making. To judge their performance under part 6a, comparing their returns with benchmarks more applicable to funds that operate with unrestricted mandates, inevitably impoverishes the quality of choice available in the choice sector. Further, it is unreasonable to then force these individuals out of their chosen funds, denying them the opportunity to exercise choice in ways that are consistent with their deeply held religious or ethical positions.

The Labor Party has recognised this inconsistency and has pledged to “put faith back into super”. Their financial services spokesman, Stephen Jones, has made a clear commitment to do this. The Morrison government is challenged to respond but is unlikely to go back on itself. The situation is relatively easy to remedy, namely with a legislative amendment to redefine the role of the Australian Prudential Regulation Authority in relation to performance testing.

All this says to me that Morrison and his government hadn’t thought at all thoroughly before attempting to rush the Rreligious Freedom Bill through parliament. Morrison’s “endgame” was similar to the sports and other rorts – that is, paying off to mates and donors by pursuing their agendas, not necessarily in the national interest. Where were the colour-coded marginal seats?

Indeed, it seems the prime minister has taken much for granted – maybe even assumed the faith groups would support his campaign more than they did. Well, he has certainly misread some of them, and the super decisions – in some cases – really rubbed salt into their wounds.

Being objective, it would have to be said that one of Australia’s greatest, if not the greatest, post-World War II achievements has been to build a very successful and tolerant multiracial, multicultural and multireligious nation that, in many ways, is the envy of the world.

To be clear, this is a work in progress – it can’t be taken for granted or used as a political plaything. The furore generated by the mishandling of the religious freedom issue puts at risk much of this progress.

Many faith groups feel they have been left behind and are left to batten down their hatches in fear of what is next. It is significant to note that only about 600,000 people are prepared to declare they are Muslim in the yearly census, when the community would claim their number is about twice that. They are afraid. Their plight is well recorded in the Australian Human Right Commission report, “Sharing the Stories of Australian Muslims”, which concludes that 80 per cent of people who identify as Muslim in Australia “feel that they are excluded and or discriminated against”.

For the average Muslim member of their super fund, they want investments to be Sharia compliant – no gambling, alcohol, tobacco or weapons. This restricts their fund from investing in our banks or in companies such as Woolworths et cetera. Just stop to think of the sharemarket significance of these and related companies and you will begin to understand the extent of their disadvantage.

Faith-based votes could be very significant at the next election. This could certainly be the case in the outer Sydney seats of Reid, Banks and Lindsay, and in several marginal Liberal seats in greater Melbourne.

There is little doubt that faith-based groups deserve better government. The government’s two-faced approach towards faith-based organisations is either staggering hypocrisy or simply incompetence. Morrison seems happy to sing the virtues of anti-discrimination while simultaneously overtly discriminating against faith-based superannuation organisations.

More broadly, it has become something of an accepted practice, given that superannuation has been an explosive issue politically, that it is not wise electorally to fiddle with it. Yet it can be an effective vote winner as well. In this regard I have been surprised that in offering support to the small business sector during Covid-19 the government has not addressed the incapacity of small-business owners to maintain their super contributions, probably to the considerable detriment of their retirement capacity. Clearly the government could have made contributions to their funds as a means of support. As ever, they simply failed to. 

Disclosure: the author is a director of the Islamic finance and superannuation group Crescent Wealth.

This article was first published in the print edition of The Saturday Paper on February 19, 2022 as "In vestment vehicles".

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John Hewson is a professor at the ANU Crawford School of Public Policy and former Liberal opposition leader.

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