Unions’ super windfall on the chopping block

The Morrison government is considering new laws to stop industry super funds giving up to $40m to unions and spending more than $400m on advertising and marketing.

Chair of Industry Super Australia Greg Combet has rejected a proposal by the Morrison government to govern how members’ money is spent. Picture: Nick Cubbin

The Morrison government is considering new laws to stop industry super funds giving up to $40m to unions and spending more than $400m on advertising and marketing, which the Coalition considers a “misuse” of members’ money.

Cabinet discussed plans to limit industry superannuation funds’ payments to unions and employer groups as “sponsored organisations” before the coronavirus outbreak in January but has renewed momentum after securing huge changes to the super system during the pandemic.

The Coalition wants to drastically shake up the super system on the back of its emergency COVID-19 changes, which have included providing early access to retirement savings and increasing choice for workers on their investments.

The move would spark a fierce political contest over the rules governing the $3 trillion sector, with Greg Combet — the chair of Industry Super Australia and a former Rudd and Gillard government minister — rejecting the proposal.

Mr Combet said any suggestions super funds were making improper payments to unions was a fabrication. “The royal commission into banking looked at all of these issues and found nothing whatever improper,” he said.

Mr Combet also argued that providing early access to super for workers for any purpose before retirement “would be a disaster”.

But NSW senator Andrew Bragg — a former accountant and NSW Liberal Party executive ­director — has claimed that Australian Electoral Commission ­donation records show industry super funds will send $13m this year to unions, totalling $31m by 2030.

“The super funds hide these payments from workers and we only know about them from AEC returns filed by unions,” Senator Bragg said. “The funds should be required to disclose payments to political organisations in annual reports and websites.”

The comments drew a sharp rebuke from Mr Combet, who ­accused the senator of engaging in “ridiculous conspiracy theories”.

All industry funds made “sponsoring payments” for the “mutual advantage” of funds and unions aimed at encouraging workers to join industry funds. Based on royal commission evidence, these payments totalled between $30m and $40m over the five years from 2014-2019.

The Morrison government also argues the use of members’ funds for union activities and marketing is outside the scope of super funds and is aiming to block this practice through legislation.

Evidence before the royal commission and parliamentary committees showed $429m was spent by the industry super sector on advertising and marketing in the five years to 2019 and $96.9m last year alone.

The royal commission was also informed that one super fund spent $260,000 for guests to ­attend the 2018 Australian Open tennis tournament and that its total marketing and entertainment spend was $21m in 2017.

The commission also ­received a KPMG audit report of one industry superannuation fund’s payments to “sponsored organisations” — including the ACTU, CFMEU, CEPU and AMWU as well as the Master Builders Association — of almost $9m over five years.

Renewed consideration of curbing industry super payments to unions comes amid new figures showing the emergency access to fund members’ super during the pandemic reached $34bn for 2.8 million people. For the first time since compulsory superannuation started in 1992, national contributions were also less than withdrawals.

The Prime Minister told parliament this week that “people’s superannuation investments belong to them, not to industry fund managers”, and said Labor bristled at any suggestion that people should access their savings, ­“including during a pandemic”.