Do the sums and the answer is evident. As the Dyson Heydon report outlining trade union fraud clearly indicated, Parliament should bring to a speedy end the Labor government-sanctioned involvement by corrupt unions in billions of dollars of workers’ superannuation savings. Unless the Senate’s reluctance so far to pass the coalition’s legislative attempts to fix things (by ending the Fair Work Commission’s default system) has been changed by the Heydon revelations, there is now the implied threat of an early double dissolution election if Senators, including the ALP’s, fail to recognise the need for action. But the numbers show that one of the government’s proposals, requiring one-third of industry-fund directors to be ‘independent’, is an inadequate response to a far more serious problem. It is self-deluding to believe that the wrong of a scandalous lack of a representative voice for the great bulk of superfund beneficiaries will be righted by disrupting the present comfy 50-50 union/employer superfund board split. This, inevitably, leaves the real power in union hands as employer groups are keen to avoid any stoush with unions over what to them is a non-core issue.
The union-dominated Industry Super Funds have objected to the government’s plans by pointing out, correctly, that their cosy system has brought far better financial results (and far lower administrative costs) to superannuees than most of the (generally bank-owned) retail funds with whom they have been very successfully competing – aided by Labor’s disgracefully discriminatory legislation that the coalition government has so far been unable to correct. And some Industry Funds boast of appointing ‘independent” directors – like Labor ex-politicians Steve Bracks, John Dawkins and John Brumby!
But while the Heydon report highlighted the potential for conflict of interest as evidenced in the CFMEU-Cbus fracas (between the militant law-breaking union and its allied superannuation fund), the numbers show a fundamental issue that has not been addressed. Without a trace of irony, the union-controlled funds describe their nominees on the boards and trustees of superfunds as ‘members’ representatives’ who balance ‘employer representatives’. It’s nonsense. Look at the numbers. Nationally, according to their own website, there are about six million people being looked after by union-controlled superfunds – that’s 4.4 million more than the 1.6 million trade union members in Australia. So the interests of about three quarters of Industry Superfund members are being ‘represented’ by the unions they chose not to join. And it’s costing them. Yes, there are directors’ fees – and not only for the main funds but also for all of the associate companies that do so much of the actual work – charging many millions of dollars. Look at the appalling CFMEU which received a well-earned walloping from Dyson Heydon. Its declining membership is now fewer than 100,000, yet its associated super funds, Cbus with 725,000 members and First Super, with 70,000 together have something like 88 per cent of members not being trade unionists but contributing, unwittingly, to the financial, corporate and political power of one of the most outlandish of ratbag unions.
If it is good enough for the millions of shareholders in Australian listed corporations to have the right (rarely exercised) to vote for their directors, then what on earth is preventing the government from extending that same right to the owners of what is likely to be one of the major assets in their life – their superannuation nest-egg? Let the small minority of CFMEU unionists in Cbus or First Super have their own representatives as trustees, but not at the cost of the great majority not having any rights whatsoever over who looks after their vital asset, particularly in a situation of compulsory superannuation and award-controlled allocation of their retirement bundle to a union-negotiated superfund. Employers who provide the compulsory superannuation cash should continue to have some say in its control. What is needed is not ‘independent’ directors to ensure that superfunds act in clients’ best interests, but, as in public companies, for the owners to have the right to elect directors who are answerable to them; it’s proper representation that’s needed, not so-called independents.
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