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Monday, 18 March 2013
Page: 2298

Mr FLETCHER (Bradfield) (11:39): I am very pleased to rise to speak on this motion moved by the member for Greenway, which commends the historic achievement of the previous Labor government in establishing universal superannuation. Once again, we see the spectacle of members of this present Rudd-Gillard government harking back to the glory days of what was—it must be acknowledged—a much more substantial government in terms of its policy achievements. The present government, sadly, is nothing of the scale or capability of the Hawke-Keating government.

This motion, however, is conspicuous for what it does not say about features of the superannuation system that need significant improvement and what it does not say about areas of reform, including those recommended by the Cooper review, which have been ignored by this present government—largely because they are changes that are unappealing to the union officials who call the tune in the Rudd-Gillard government. The equal representation system is part of the superannuation arrangements established by the Hawke-Keating government. This had the effect of entrenching the friends of that government in the union movement at the centre of the governance system of industry and public sector superannuation funds. Those entrenchment arrangements are very much still in place some 20 years later.

Last year I looked at the arrangements across 64 public sector and industry funds, with a total of more than $300 billion under management. I counted over 150 directors appointed by the unions, with a significant number of funds where the unions appoint at least half the directors. It is easy to see how these arrangements serve the interest of the unions. It means a large number of well-paid directorships are allocated amongst union mates and in, some cases, the fees paid to the directors of industry super funds are pocketed by the individual. In other cases, the fees are paid to the union. Regardless, it is an arrangement which very much suits union officials.

The problem though, as the Cooper review acknowledged, is that the interest of a union is not the same as the interest of a member of a superannuation fund, and that creates a very significant conflict of interest. There is a very good example right now. The Victorian branch of the CFMEU is attempting to put pressure on building industry superannuation fund Cbus in relation to property developments pursued by Cbus following a major industrial dispute, last year, between the CFMEU and construction company Grocon.

According to media reports recently, CFMEU's Victorian secretary, John Setka, said his members were angry that Cbus had awarded Grocon a $430-million project in Sydney. He said, 'I reckon it's a slap in the face for the union, what Cbus has done. As a consequence, CFMEU has been seeking expressions of interest from other super funds to become the default fund for CFMEU members and presumably it intends to use the award system to have Cbus removed as a default fund and a new one put in.

Let us be clear. This is nothing less than an attempt by a union to use the economic resources of a large superannuation fund over which it has substantial influence—including appointing three directors—to secure industrial or political outcomes, in this case to advance the industrial dispute of the CFMEU with Grocon. The interests of the 655,000 members of Cbus, the superannuation fund, are being put second to the industrial agenda of the CFMEU. That reflects a structural problem in the superannuation system, a problem that reflects the design of that system, as set up by the Hawke-Keating government, to entrench the position of union officials.

We could look at plenty of other examples. There was a $30-million investment in building company Austcorp by the Meat Industry Employees' Superannuation Fund, almost all of which was lost following Austcorp's collapse in 2009. The Australian has reported that Mr Wally Curran, a long-time secretary of the Meatworkers Union and a long serving director on the board of the fund, was paid significant consultancy fees by Austcorp. There appears here to have been a clear conflict of interest in duty—yet another consequence of the systematic problem in the governance of industry and public sector superannuation funds. Let us understand the full picture. Yes, the superannuation system is something to celebrate, but the governance arrangements and the equal representation system are seriously flawed—this government has done nothing about that.

The DEPUTY SPEAKER ( Ms Vamvakinou ): The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.