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Issue #1917      June 1, 2020


The fact that a lot of workers have had to access their superannuation funds in order to survive through the impact of this latest pandemic concentrated my mind with the fascinating article I read by Richard Dennis in April edition of The Monthly on the subject.

Compulsory superannuation was beginning in the early eighties when I was planning to return to Australia from the UK, and I never became involved. The principle of having any monies compulsorily taken from my wages and put into a fund managed by Trustees was something I never quite got my head around. That was until I read Dennis’s article “Super Heroes or Super Villains,” which explains what he sees as anomalies in the system.

He makes a comparison with the textbook version of capitalism as being “based on the idea that individuals are best placed to decide how to spend or invest their own money”, with the socialist argument that it’s best to have a pooled resource investment where decisions are made by an elected committee. He questions the role of “trustees” with superannuation funds worth billions of dollars, who invest the capital accrued from the 9.5 per cent deducted from people’s wages. Dennis, quite rightly, points out that a system has been introduced “with all the inequality of capitalism but none of the discipline of the market” adding that the old categories of “market” and “state” no longer work.

He then gives a fascinating insight into the difference between the Commonwealth Bank when publicly owned and after privatisation. In the hands of the public, only our political representatives could decide on the Board members but privatised the shareholders are deemed better at choosing the board than is the federal cabinet. Now private owners of the Commonwealth Bank have no influence in the appointment of bank directors and trustees of super funds (believed to own more than 1/5th of the Commonwealth Bank), not only make decisions without consultation but do so without informing the funders of how they voted. He asks: “Why do we think super trustees are better at appointing the board of a bank than the cabinet of an elected government?”

Dennis goes on to state that the Australian “superannuation system is so big that it has broken the categories of public and private ownership,” describing it as a massive “experiment in a new form of capitalism without capitalists.” Super trustees are unelected, and unaccountable to members so how do members know their money is being used in their interests. I would certainly want to know that my money was not being invested in companies whose value systems did not concur with my own. On this very subject, Dennis reveals that the bureaucrats running AustralianSuper, representing 2 million members, “voted against 11 shareholder resolutions designed to improve the climate performance of the companies they hold shares in.” They voted “against a proposal to mandate Rio Tinto’s disclosure of its transition plan from coal, and another proposal to stop BHP funding lobbying campaigns that were inconsistent with the goals of the Paris Agreement.” He also pointed out that UniSuper had also voted against all climate motions put forward in Australia! And none of them have to give account of their actions!

A very brave 24-year-old, Mark McVeigh is suing his $57 million super fund for failure to mitigate the risks to his investments that are presented by climate change. Another course of action would be to divest from any funds, companies or institutions investing in activities with which you do not agree. I would certainly not be happy about not being given information on how my money is invested. I would want decisions made in my best interests and, if they ignore me at every turn, they do not represent me or my interests.

Another way to view the use of superannuation funds has been argued by David Elia, the chief executive of Hostplus, who says that owning many shares in fossil fuel companies give the fund the means to influence. But do we know what that influence might be? Dennis makes a valid observation about the actions of Hostplus, who say nothing about influencing or pressurising these companies, but make a lot of public criticism about climate activists.

Another valid and rather pertinent point made by Dennis is about the recent announcement by the federal government wanting “one-third of the directors of the large not-for-profit industry funds to be ‘independent,’ ” (meaning not appointed by unions and employer groups). He queries “independent” and suggests members should be free to choose directors, going on to say that the unions and the Labor Party would surely “prefer democratic representation over random selection from an elite club of ‘experienced trustees!’ ” That would certainly not be popular.

The implication of this article is obvious. Currently, decisions are being made by superannuation trustees about million dollar investments that are probably not in line with the values of their own members regarding action on climate change. It’s a rallying cry to make workers realise their funds own big business, and those funds should be working for the workers. It’s a case of “finding a way to put our voice where our money is.” Thanks Richard.


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