Greg Combet & Diana Olsberg
Reaffirming the role of unions
Introduction Bill Kelty's passion for superannuation, and the efforts he and others made towards achieving the system we have today, cannot be overstated, and I am sure that he will continue to contribute through his membership of the board of ARF. The ACTU is as committed to superannuation today as it has ever been. Unions directly represent nearly 2 million union members, all of whom have an interest in the adequacy and safety of their retirement incomes. With this in mind, the ACTU and unions have an interest in ensuring that superannuation funds fulfil their prudential responsibilities, including by seeking strong returns balanced by appropriate risk, and by ensuring that administration and investment costs are as low as possible consistent with professional levels of service.
Adequacy Taking this basis as our starting point, the ACTU is concerned to address a number of key issues. The first is the question of adequacy - it is well-established, that 9 per cent, which will be reached through the Superannuation Guarantee in July this year, is not sufficient to ensure reasonable living standards in retirement. Irrespective of which government is in Canberra, options need to be developed about increasing contributions - whether through the taxation system, direct employer contributions, member co-contributions or a combination.
Attacks on trustees The second issue is the attack being waged on the trustee system, and industry funds in particular, by the federal government. Crude attempts to link the failure of some small funds, none of which had union representation, or effective employee representation for that matter, to industry funds and union-nominated trustees, demonstrates clearly what the government is on about. The government's objective is to shift superannuation from the non-profit, jointly run superannuation system to the retail funds and master trusts operated by its mates in the banking and insurance industries. The policies with which the government went to the election, with a couple of exceptions, like requiring quarterly payment of contributions, are largely directed to helping those best off, and encouraging money into retail funds.
Super and IR: the connection? First of all, let me make it absolutely clear to anyone who hasn't been listening for the last 15 years, the ACTU has not, does not and will never support union-appointed trustees, or any other trustees, jeopardising members' retirement incomes by making investment decisions based on considerations other than the interest of those members.
Unions do not instruct trustees how to invest members' funds, as those in the industry well know. The evidence that this does not occur can be seen in two key features of our system. The first is that a two-thirds majority is required for trustee boards to make a decision, and in most cases, decisions are made by consensus. The second is that industry superannuation funds do not generally make decisions about investing in particular stocks: almost universally, this is delegated to funds managers. In practice, it is simply unmanageable for fund boards to make these kinds of decisions.