Industry super fees a bonanza for unions

Industry super fund payments to unions have almost doubled in the past five years, with $10m handed over last financial year.

Financial Services Jane Hume says ‘it’s so important that we renew super trustees’ focus on their responsibility to act in not just what they believe is best for their members, but in the best financial interest’. Picture: Gary Ramage

Industry superannuation fund payments to trade unions have almost doubled in five years, with the retirement savings sector handing over nearly $10m in the last financial year.

Twenty-three of the nation’s leading industry funds spent $9.8m of members’ money in 2019-20 on directors’ fees, sponsorships and major advertising deals with the unions, according to data from the Australian Electoral Commission. Five years earlier, in 2014-15, the same funds paid unions $5.03m.

First Super, a smaller fund that largely covers workers in the timber industry, gave the single largest amount, with a $2.04m payment to the CFMEU. The fund said it paid the union to handle issues raised by its members in hard-to-reach rural areas.

Cbus, originally established for construction workers and now one of the largest industry funds, was the next-largest payee with $1.09m split between the CFMEU, the Communications, Electrical and Plumbing Union and the Australian Manufacturing Union in 2019-20.

The Morrison government has long sought to slow payments between industry funds and the unions, which it considers a form of political donation, a claim denied by the Australian Council of Trade Unions.

“There are no donations from industry super funds to unions,” an ACTU spokesman said.

“Funds pay unions for products and services, and all these transactions are declared to the AEC. Any expenditure by any industry fund has to be vetted and be determined to be in the best interest of members.”

“This stands in stark contrast to the $10bn which was skimmed last year by retail super funds and taken as profit by parent companies like CBA, Westpac, ING, AMP and NAB.”

The majority of superannuation sector payments to unions consist of fees paid to union members who sit on the boards of industry funds and returns on investments made by the unions.

Many funds also make “sponsoring payments” to unions in order to encourage workers to join industry funds.

According to evidence before the banking royal commission, these payments totalled between $30m and $40m from 2014-2019

Evidence before the commission and parliamentary committees has also shown that $429m was spent by the industry super sector on advertising and marketing in the five years to 2019.

The government has argued the use of members’ funds for union activities and marketing was outside the scope of super funds and is aiming to block this practice through a “best financial interest duty test” as part of a raft of superannuation reforms.

Financial Services Minister Jane Hume declined to comment on the payments but said those changes would force industry funds to explain to members why sponsorship and advertising deals with groups like trade unions were in their financial interest.

“It’s so important that we renew super trustees’ focus on their responsibility to act in not just what they believe is best for their members, but in the best financial interest,” she said.

“We have reversed the onus from regulators back to the fund so that for every decision that a super fund makes with your retirement savings … the trustees will have to demonstrate to regulators that they had the best financial interest front of mind.”

The CFMEU was the major beneficiary of super payments in 2019-20, and it collected up to $4.7m, according to the AEC’s transparency register.

Liberal senator Andrew Bragg, a critic of industry super, said the data was proof the sector was a “union piggy bank”. “This data shows super is working hard for unions, when it is supposed to work hard for workers,” he said.

Industry Super Australia chief executive Bernie Dean said Senator Bragg “had a beef with industry funds ever since he became a bank lobbyist”. Senator Bragg previously held senior roles with the Financial Services Council.

“As opposed to Senator Bragg’s previous employers, the banking royal commission gave industry super funds a clean bill of health after having an extensive look,” Mr Dean said. “He wants these laws so the government can ban things like advertising that would let people know if they’re stuck getting ripped off in a dud retail super fund.”