Earlier today, ASIC released Accounting for Your Super: Super Fund Financial Reporting and Audit 2025-26 (Report 841), in relation to the performance of some of Australia’s largest audit firms in providing audit services for registrable superannuation entities. Some of the findings in this report are deeply disturbing.
I commend an article written by Lucas Baird and published in the Australian Financial Review entitled ‘EY, PwC ticked off $80b in private assets without enough proof’. Australians have $4.8 trillion invested in superannuation. That’s an extraordinary amount of money. A significant proportion of those funds are invested in unlisted assets, where there is limited transparency because those assets are not listed on public markets such as the ASX. That makes it absolutely crucial that the audit processes used to assess valuations are rigorous and provide transparency regarding the value of Australians’ retirement savings.
This ASIC report is deeply concerning. Let me highlight some of the audit surveillance findings contained within it. On page 13, ASIC states:
Auditors’ procedures often did not sufficiently address the valuation risks associated with unlisted investments and were not adequate to obtain sufficient appropriate audit evidence.
This is extraordinary. We’re talking about PwC and EY, two of Australia’s largest audit firms, failing to discharge their obligations and failing to conduct audits in accordance with basic auditing standards.
Table 3 sets out a number of troubling findings. It states:
For externally managed investments, three auditors did not adequately test the reliability of prices provided by external fund managers, or test the methods, assumptions and data used for the valuations.
Again, this is extraordinary. The report continues:
For internally managed investments, two auditors did not obtain sufficient appropriate audit evidence for the valuations.
This is basic auditing practice. It also states:
One auditor had insufficient audit documentation of the explanations and supporting evidence for valuation differences.
The findings continue. On page 14, ASIC notes that, of the six registrable superannuation entity audit surveillances it conducted:
we had findings relating to the audit of unlisted investment valuations for three (two from EY and one from PwC).
It goes on to state:
The findings relate to $80 billion of unlisted investments, which is 29% of the $275 billion of investments covered by our six RSE audit surveillances.
ASIC examined valuations covering $275 billion in investments and identified issues relating to $80 billion of those investments.
What else is out there? There is $4.8 trillion under management in Australia’s superannuation system. Based on this analysis, ASIC found deficiencies in relation to 29 per cent of the investments it reviewed. Twenty-nine per cent. That is not good enough.
I believe EY and PwC should explain themselves to the Australian people regarding what has occurred here. As a member of the Parliamentary Joint Committee on Corporations and Financial Services, under the outstanding leadership of Senator Deborah O’Neill, this is certainly a matter that I expect we will consider further. We need to shine a light on this issue and ensure accountability for these serious failures in the auditing of unlisted assets held within Australian superannuation funds.
Turning now to another issue, in the United States the Volstead Act was introduced in 1920. It was the legislation that implemented Prohibition, banning the sale of alcohol and leading to an explosion in organised crime. Figures such as Al Capone made millions of dollars from it. It was not until 1933 that Prohibition was repealed through the repeal of the Volstead Act. It took 13 years, and during that time organised crime flourished.
We have a similar phenomenon occurring in Australia today with respect to the illegal tobacco industry.
In one of the greatest public policy failures any government could achieve, billions of dollars that should be flowing to the public purse through tobacco excise have instead been diverted into the hands of organised crime. Everywhere you go in Australia, there is a proliferation of illegal tobacconists selling illicit tobacco. It has been reported that organised crime is generating somewhere between $4.1 billion and $6.9 billion in profits from this trade. That is money that should be benefiting Australian taxpayers. Instead, it is enriching organised crime.
This is also having a damaging effect on small businesses in my home state of Queensland.
I refer to an article by Andreas Nicola entitled ‘Businesses neighbouring tobacco stores face fivefold insurance hikes after firebombing wave’. This issue is not only hurting government revenues through lost excise receipts; it is also hurting small businesses located near illegal tobacconists.
I want to quote one of those business owners. Estie Derksen, who runs a South African grocery business in Browns Plains, has been impacted three separate times because the tobacconist next door was firebombed.
This is a small-business owner simply trying to make a living. Yet because the illegal tobacconist next door was targeted, her business suffered significant consequences. The first time, she lost 30 to 40 per cent of her business for months because it took three months to obtain a custom replacement door, and many customers assumed the store was closed. The second time, the business was forced to close for several months.
She said:
Emotionally, my husband and I went through a period of stress and financial hardship that had a massive impact on us. We had to take money out of our home mortgage just to fund ourselves and keep going.
She also said they attempted to relocate, but 13 of the 15 premises they inspected were still next to an illegal tobacconist or a tobacconist.
Insurance premiums are skyrocketing, assuming insurance can be obtained at all. All of this is the result of the government’s failure to properly address the illegal tobacco trade and implement a realistic excise policy.
I commend Angus Taylor and the Coalition leadership for the Coalition’s plan to reduce tobacco excise by 80 per cent. The objective is to redirect consumers away from illegal tobacco products, which are funnelling billions of dollars in profits to organised crime, and back towards legal, regulated products. In doing so, we can reduce the devastating impacts on small businesses and undermine the criminal networks profiting from this trade.
We should not wait 13 years, as the United States did before repealing Prohibition in the 1930s.
Finally, in 2032 the Olympic and Paralympic Games will come to Queensland. I won’t be presenting medals there; I’m quite certain of that. However, I did have the opportunity to present medals at Ipswich Little Athletics last Saturday, and it was an absolute pleasure.
I want to congratulate the organisers, including Centre Manager Joshua Roney, for their outstanding work. I also want to give a special shout-out to one particularly inspiring participant.
Jett Troder is 12 years old. He has cerebral palsy and competes as a para-athlete in the F37 classification. He recently competed in the national championships in discus and shot put. He aspires to represent Australia at the Paralympic Games.
To Jett, I say: well done. You are an inspiration. It was wonderful to meet you, and if you do go on to represent Australia, as I sincerely hope you will, I’ll be there cheering you on.
