Put super fund members first

Wayne Swan has apologised twice in two days for the CFMEU-linked Cbus superannuation fund’s indifference to the beneficiaries of members who needed their money. The Australian Securities & Investments Commission is suing the construction industry fund, which Mr Swan chairs, alleging it “failed to act efficiently, honestly and fairly in the handling of claims”.

Appearing before a Senate committee on Friday, Mr Swan announced he was “sick in the guts” over the delays. He said the same when ASIC first acted in mid-November, but back then he also stated the problem was caused by a subcontractor.

It was an excuse, not an explanation, and it made Mr Swan look out of touch with a problem on his watch in a way familiar to observers of the 2017-19 Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. He still does.

At the committee hearing, Mr Swan took cover behind a consultant’s report that three recently appointed directors nominated by the CFMEU were fit and proper to be on the Cbus board. This may be nowhere near enough to reassure fund members, given Attorney-General Mark Dreyfus has ordered the construction and general division of the union be placed in administration for four years.

People whose families’ futures depend on Cbus deserve more evidence than the fund’s statement last week that the three “share a determination to generate the strongest sustainable financial returns for members and deliver the best possible service”.

None of this will matter to fund members who believe their best interests and those of Cbus’s union and employer-group partners are always the same. The danger for investors is that board members may think so as well.

We saw an example last week from Jim Chalmers, a sometime protege of Mr Swan. The Treasurer announced changes to Australia’s sovereign wealth Future Fund so it will consider “national priorities in its investment decisions”. The Treasurer listed these as housing, energy transition and infrastructure – major political objectives of the government.

But the Future Fund’s job is to maximise returns for all Australians, regardless of what the government wants; the task of Cbus is to create wealth for its members regardless of what board members think on any other issue.

As James Kirby wrote this week, ratings group Morningstar has concerns about “the appropriateness of union affiliates sitting on Cbus ­investment committees”. The same issue applies to all industry-based super funds – their only job is to maximise returns for fund members.