ACTU misses the point on superannuation fund governance

This morning The Australian ran a story headed“Abbott blasts industry super funds‘gravy train’”, citing comments by Tony Abbott about union officials sitting on industry superannuation fund boards.  The article also reported commentsabout this issuein theCoalition Party Room,by me and my colleague Jamie Briggs, Member for Mayo.

The story provoked a media release from the ACTU claiming that Tony Abbott’s statements were “factually incorrect” and could leave working Australians tens of thousands of dollars worse off in retirement.

It is not clear which bit the ACTU says is factually incorrect.  They can’t dispute the fact that today there are hordes of union officials who sit on the boards of industry superannuation funds, from the largest (Australian Super with $43 billion of funds under management) to much smaller ones, and generally receive directors’ fees for doing so (which they either retain personally or pay to their union.)   

Nor can they dispute the fact that the governance arrangements in the sector are out of touch with modern corporate practices.  One key issue is that union officials are generally appointed to the boards of industry super funds on the direct nomination of their unions – with members of the superannuation fund not being given any say in the matter. 

This occurs regardless of how many members of the superannuation fund are actually members of the union.  (In many cases this percentage is likely to be quite low, given that in 2010 only 1.8 million Australians out of a total workforce of nearly ten million were union members in their main job.)

On other issues too – the lack of independent directors on many industry super fund boards; the poor disclosure of the fees paid to directors of industry super funds – corporate governance does not meet the standards which apply to listed public companies. 

In the light of these facts, the claim in the ACTU’s media release that industry funds ‘adhere to world class standards of governance’ is hardly credible. The whole point is that governance in this area raises serious questions – as the government’s own Cooper review into superannuation identified.

The ACTU concludes its press release with an attack on retail super funds. 

The Coalition has no preference for any particular sector of the superannuation industry.  What we care about is the interests of the many millions of Australians whose retirement savings are entrusted to superannuation funds (of all kinds).  That’s why these governance issues are important – and why we will continue to pursue them.