Paul Fletcher (Bradfield, Liberal Party) Share this | Link to this | Hansard source

I have spoken before in this place about the role of the union movement in the governance of superannuation funds, as a consequence of the so-called 'equal representation model' introduced by the Hawke-Keating government, under which the boards of industry superannuation funds have a certain number of people appointed by unions. That is also the case in respect of public sector funds, such as, for example, the Energy Industries Superannuation Scheme and Local Government Super in New South Wales.

These arrangements are very extensive. I recently looked at the arrangements across 64 public sector and industry funds, with a total of more than $300 billion under management. On my calculations there are more than 150 directors appointed by the unions, and there are a significant number of funds where the unions appoint at least half of the directors. It is also interesting to look at the number of unions that appoint the directors of multiple funds. The CFMEU appoints directors to the Auscoal Superannuation Fund, to Equipsuper and to First Super. The AWU appoints directors to AUST(Q), the Allied Unions Superannuation Trust of Queensland, to the AustSafe Superannuation Fund, to Club Super in Queensland, to Health Super Fund and to Local Super. The Australian Services Union appoints directors to CareSuper, to Equipsuper, to the Health Employees Superannuation Trust Australia—that is, HESTA—to legalsuper and to Vision Super, as well as to Sunsuper Superannuation Fund and the WA Local Government Superannuation Plan.

In other words, the arrangements which were introduced by the Hawke-Keating government have led to the union movement having very extensive influence and control over the conduct of the superannuation sector. This is so, even though the percentage of employees across the workforce who are members of unions is now as low as 18 per cent, and in the private sector it is materially lower than that, around 12 per cent, I believe. When you do a basic calculation, if you assume an average fee per director of around $40,000, which is a reasonable number when you look at those funds which do disclose directors remuneration, you are getting the best part of $10 million a year going to directors who are union officials, in some cases to be kept by those directors personally and in other cases to be paid into the unions' coffers.

There are a number of reasons to be very concerned about these arrangements. The first is that many of these officials are in a position where they face a conflict between their role as industrial advocates and their role as custodians of the retirement savings of the members of the fund.

I have previously cited in speeches in this place and elsewhere TWUSUPER, which has some $2.6 billion under management, was very aggressive in its criticism of actions taken by Qantas management last year—actions which Qantas management said were necessary to improve the financial performance of the company. Members of that fund might reasonably ask how directors think about equity investments in Australian companies in the transport sector.

I have also previously spoken about the Australian Workers Union and its involvement in effectively scuttling the proposed merger between Vision Super and Equipsuper in Victoria. There is a very long tale of small funds, which is another consequence, because the arrangements we have today effectively reflect the architecture of the union movement. It suits particular union officials to have an affiliated fund. This presumably explains why, for example, we have on the one hand the Australian Meat Industry Superannuation Trust and on the other hand the Meat Industry Employees' Superannuation Fund. We have the Health Industry Plan with net assets of some $612 million, which is different to HESTER. We have what I previously mentioned Aust(Q), the Allied Union Superannuation Trust, with net assets of only $193 million—in other words, a long tale of small funds. You also have the Transport Industry Superannuation Fund with net assets of $84 million and that is different to TWUSUPER. So we have a set of arrangements where there are multiple small funds. A real question arises as to whether the architecture of the arrangement of the funds suit the interests of union officials and the interests of members of the funds come a distant second. There are other issues about the basis on which transactions occur between funds and organisations where there are directors on both the selling organisation of the fund, and I will be pleased to speak about those on another occasion.