Tuesday, 4 June 2013
Union Appointments: Superannuation Funds
I am very pleased to rise to speak on the issue of the economic power exercised by the major unions in this country through their capacity to appoint directors to industry and public sector superannuation funds, which have funds under management totalling hundreds of billions of dollars.
This power exercised by the unions through this mechanism reflects the playing out of a strategy adopted by the Hawke-Keating government in the early nineties under which the so-called equal representation model was established whereby directors of industry and public sector superannuation funds are appointed in large number by unions.
It is quite instructive to look at the superannuation statistics produced by the industry regulator, the Australian Prudential Regulatory Authority and look at the funds which APRA classifies as public sector or as industry funds. The most recent statistics issued by APRA in January show that there are 71 funds which APRA classifies as public sector or industry funds. If you look at the annual reports of these 71 funds you discover that the total funds under management exceeds $380 billion—so, by any measure, a very large amount. Across these 71 public industry and public sector funds, analysis of their annual reports reveals a total of 551 directors and, of these directors, 171 were appointed by unions and the majority of those directors appointed by unions were union officials.
It is particularly instructive to look at which unions appoint large numbers of directors across some of the major funds. There is a very clear pattern in which large unions and large union peak bodies extend their influence across a large number of major superannuation funds. Unions NSW, for example, appoints a total of nine directors across several superannuation funds. The CFMEU appoints 14 directors across four funds, including large funds such as Cbus, Auscoal and the Building Unions Superannuation Scheme of Queensland. The Australian Workers Union appoints nine directors across seven superannuation funds. The ACTU appoints 20 directors across multiple funds, and the total funds under management of the superannuation funds to which the ACTU appoints directors exceeds $100 billion. United Voice appoints 13 directors across six funds. The Australian Services Union appoints some 10 directors across multiple funds. And the Electrical Trades Union appoints 13 directors, again across multiple funds. So what we see is a very clear pattern in which the major unions appoint substantial numbers of directors across some very large industry and public sector superannuation funds which have large amounts of money under management. Of course, that allows the unions to exercise substantial economic power through the very large amounts of money that these large funds manage.
The other thing that is occurring is that, thanks to the arrangements that the Rudd-Gillard government put in place to give the industry and public sector funds preferred access to the stream of contributions through the so-called modern award system, we are seeing that the share of contributions going into industry and public sector funds exceeds their current share of funds under management. So they are growing their market share.
Of contributions for the year ended March 2013 according to APRA statistics, which totalled almost $93 billion, industry and public sector funds picked up almost 66 per cent, and that compares to their share of funds under management in total across the superannuation sector of 53 per cent as at the end of 2012. So their share of contributions exceeds their share of funds under management.
What we have is the effectiveness of a measure introduced by the Hawke and Keating governments to increase the economic power of the union movement, and that is continuing to play out today in a very significant way.