Fuelling the fire for Governance changes

There exist influential elements of the Coalition who are continuing to press for changes to superannuation fund governance and recent testimony to the Royal Commission into Trade Union Governance and Corruption has added impetus to their arguments. 

It will not have escaped the attention of those sitting on the boards of organisations such as Industry Super Australia or the Australian Institute of Superannuation Trustees that evidence given during the Royal Commission into Trade Union Governance and Corruption has served to fuel the debate around superannuation fund governance. 

It also seems entirely probable that those same board members are familiar with the views of influential sections of the Liberal Party on superannuation fund governance and, particularly, the governance of industry superannuation funds. 

Thus, the amount of time devoted during the Royal Commission to the events which gave rise to confidential superannuation fund member data being provided to the Construction, Forestry, Mining and Energy Union (CFMEU) will have given them pause to consider how the ultimate findings of Royal Commissioner, John Dyson QC, might be utilised by the Abbott Government. 

Because what has become clear from the Royal Commission transcripts is that some of the lines of governance demarcation between the CFMEU and the major construction industry fund, Cbus, became very blurred. 

Almost anyone who has worked in the superannuation industry for any length of time well understands that one of the most frequently-encountered problems is employers who fall into serious arrears in meeting their superannuation guarantee obligations. Further, super fund executives will know that this is more of problem in industries such as mining or building and construction. 

It is a simple fact that when employers fall into arrears with their superannuation guarantee obligations they are denying their affected employees a statutory right and that, if those employees are members of a trade union, the trade union has a right to pursue the recalcitrant employer. 

The problem for Cbus and the CFMEU is that, on the available evidence, lines were crossed by officials of both the fund and the union in seeking to pursue the interests of members impacted by an employer who fell into arrears. 

It is not disputed that the personal details of members of Cbus employed by this particular employer were inappropriately provided to the union. What is disputed, however, is whether this represented an inadvertent oversight or a something which characterised inherent flaws in the governance of a superannuation fund built on the foundations of award-based superannuation. 

It can be argued that the CFMEU has every right to pursue superannuation guarantee arrears when is members are impacted and, equally, that Cbus has every reason to ensure that employers live up to their obligations. The problem arises because the super fund’s trust deed together with relevant Commonwealth legislation dictate that there are limits to the information which can be shared between the two parties. 

A problem also arises because the Royal Commission transcripts suggest that the relationships which existed between executives of the superannuation fund and officials of the union were such that they could easily give rise to the perception of lines having been crossed - frequent phone calls and e-mails between the fund CEO and senior union officials. 

The case for Cbus is also not helped by the reality that it is a significant investor in Australian building and construction projects and therefore has a substantial exposure to the industrial relations environment largely influenced by the CFMEU. 

Not every industry fund is as closely associated to particular unions as Cbus, but it seems a fair bet that if the Government will not be differentiating if and when  it chooses to use the findings of the Royal Commission to alter the legislation around fund governance.