Room for unions to work with super funds, says Combet

Greg Combet has backed the right of unions to raise ­industrial relations issues with super funds.

Greg Combet: ‘It is a strong protection against partisan issues … inside the boardroom’. Picture: Nick Cubbin

Superannuation fund chief Greg Combet has backed funds being able to examine industrial relations issues raised by unions providing it is done “within a proper investment and member interest lens”.

Mr Combet, a former Labor minister and ex-ACTU secretary, said union officials could legitimately raise industrial relations issues with superannuation funds, but super trustees were obliged to consider such issues only in the context of their duty to act in the best interest of fund members.

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Mr Combet has become one of the most significant figures in the $2.8 trillion superannuation system after ­becoming chairman of Industry Super Australia, which manages projects on behalf of 15 industry super funds, and chair of its jointly owned funds management company, the $113 billion IFM Investors.

Industry funds have been in regular conflict with the federal government, including over moves to weaken union representation on boards.

Josh Frydenberg recently wrote to the Australian Prudential Regulation Authority, asking whether it had the power to ­ensure that union-appointed super trustees did not pursue ­political objectives at the expense of members’ interests.

The intervention by the Treasurer came after the ACTU had backed a maritime union ­campaign for industry funds to pressure BHP and BlueScope Steel into reversing a decision not to renew a contract for two ­Australian-crewed vessels, and after AustralianSuper, where ACTU president Michele O’Neil is an alternate board director, had pressured global commodity group Glencore to cap its coal production.

Last month, APRA said super fund board trustees must undertake duties “free from the influence of sponsoring organ­is­ations”. “The ACTU and the unions are entitled to express their view; I don’t think APRA is questioning that,’’ Mr Combet said.

“That’s their day job. They are representing people. They contribute to public policy debate about super and many other ­issues.

“But once you go into a superannuation boardroom, you’re in the realm of trust law, you’re a trustee for people’s money. So in there you’ve got the sole purpose and you must look at everything through a member benefit lens, and that is the benefit to the superannuation fund members.

“This has been a very successful collaboration between business and unions, the industry super sector.”

He said he had no doubt Ms O’Neil, when she went into the boardroom as an alternate director, understood her trustee duties.

“Just because someone makes a speech or writes a letter doesn’t mean that all of a sudden these multi-billion-dollar institutions run around doing someone’s bidding,’’ he said. “It just doesn’t work like that.”

Mr Combet said labour relations and industrial relations practices could be legitimately scrutinised “within a proper investment and member interest lens … There is legitimate territory, of course, for examining environmental, social and governance issues, including ­labour relations from an investor standpoint, in the interests of the members of the fund.’’