Who controls the $1.4 trillion invested in industry superannuation funds? Does the system have the best possible settings? This is not about union-bashing; fund directors also come from industry associations. It’s about transparency, efficient collection of super and better returns for everyday Australians. Things the Conservative Party fully supports.
Chief executive of the Council of Small Business of Australia Peter Strong writes in The Australian:
“These are important issues because industry funds – given a boost after last year’s savaging of retail funds by the Hayne royal commission – are on track to dominate our retirement savings system.
It’s worth going back to 1992, when Paul Keating brought in compulsory super. This was a great thing – except for the collection process. Its inefficiency has been a bugbear for small business. It would be much better if employers simply included the super money of employees with the tax payments sent to the Australian Taxation Office, which would pass on the super to the employee’s choice of fund.
Small firms shouldn’t be burdened with shepherding compulsory super money; they need time to run their businesses. And super funds would save a substantial sum if the role of employers were streamlined – money that could go to members.
Now we have a dedicated assistant minister for superannuation, financial services and financial technology, the well-respected senator Jane Hume. Can she preside over a change for the better? Industry funds are likely to oppose it.
The Council of Small Business of Australia reviewed eight of the largest funds, with a total of 88 directors, not counting alternate directors. Our analysis revealed 43 per cent of these directors were from unions, 40 per cent were from industry associations and 17 per cent were independent directors. This reinforces the argument for the boards of industry funds to bring in more directors from the finance sector and general community.
When the Keating system began, unions and the biggest industry associations divided the spoils of the superannuation landscape. This was buttressed by workplace laws that sacrificed employee choice to bulk up new industry super funds.
Small business, already tied up in red tape, was conscripted with big employers to collect compulsory super for the funds.
The issue becomes more fraught if industry fund trustees are going to run investment decisions through a political filter. This is what ACTU president Michele O’Neil wanted in February when she tried to enlist industry funds in a campaign to force BHP to retain local seafarers who were going to lose out to cheaper foreign crews.
Put simply, the duty of trustees is to safeguard the retirement savings of fund members. The good returns posted by industry funds may be in jeopardy if decisions become distorted by political or industrial factors.