Hostplus Chief Executive defends $300,000 annual hospitality spending

David Elia, Chief Executive of the Hostplus superannuation fund, has defended spending $300,000 on tickets to sporting events for clients and staff, saying it was the price of doing business.

Giving evidence to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission), Elia explained why Hostplus spent $260,000 on tickets for the Australian Tennis Open, entertaining 120 employers.

Another $40,000 was spent on AFL Medallion Club tickets which were distributed among employer representatives, as well as staff for reward and recognition of their efforts.

Established in 1987, as an industry superannuation fund for the hospitality, recreation,  sport and tourism industries in Australia, Hostplus has almost one million members and over $20 billion in funds. 

Taking to the witness stand on the issues of substantiating corporate expenses and multiple member accounts, Elia was questioned as to whether whether high levels of spending on client entertainment was in the best interest of super fund members.

Elia (pictured) said he would have preferred not to spend so much on marketing, but said it was necessary for the fund to maintain its position as the biggest default fund for employers in the sectors in which it is active.

Elia advised that the spending was necessary so it could retain employers' choice of Hostplus as the default status fund, given it's a "competitive market" and competitors are also "doing exactly the same thing."

He advised, “it's a very, very important integral part of our retention strategy.”

Under questioning he added “I wish I didn't have to do it, but the reality is that it is a competitive landscape that we're dealing with."

The Royal Commission revealed that the Australian Prudential Regulation Authority had also expressed concern to Hostplus about its expenditure, following advice from an anonymous whistle-blower.

It was found Elia took his family to the tennis.

Commenting on this, Elia advised “so my wife does come as we invite other partners. So it's not just myself, but the executive team or any other staff member from Hostplus. She is a Hostplus member, and so are my two children.”

In relation to members having multiple accounts and low balances, Elia added these are "certainly a key feature" of the superannuation industry.

Elia said a large cohort of members have small account balances. As at June last year, Hostplus had 469,659 member accounts which had balances that were $6000 or less - 296,898 were inactive.

Given that Hostplus is one of the best-performing funds, Elia advised that members leave their money with Hostplus "to take advantage of the investment performance of the fund or the insurance features of the fund."

Elia went on to say that 90% of the staff's AFL tickets went to call centre workers to retain their services.