Stoljar does super – for the banks

6a00e554fa70848834017c317189df970bJeremy Stoljar looks like a spear chucker for big banks campaigning to get their hands on billions of dollars of workers’ retirement savings.

The senior counsel assisting Tony Abbott’s royal commission against trade unions has effectively turned finance industry talking points into a soap opera, generating priceless publicity for the drive against not-for-profit super.

He has used a privacy leak investigation to question the legitimacy of industry super and, particularly, its relationship with trade unions.

Case studies have reflected from the perspective of banks angling for regulatory changes that will give them access to billions of dollars tied up in not-for-profit accounts. The finance industry wants:

-   changes to rules governing default funds where contributions go when individuals do not nominate their own super funds. Current requirements are based on the industry fund model which has a 30-year history of generating superior returns for members.

-   an end to the representative trustee model where employer and employee organisations appoint equal numbers of directors. This would effectively eliminate worker representation

To be fair, there was a genuine issue at the core of Stoljar’s examination of the relationship between construction super fund Cbus and the NSW branch of the CFMEU.

Way back on June 23 the commission travelled to Perth so it could get Paul Bracegirdle to speak to a statement he had prepared.

Bracegirdle joined Toll Holdings in 2009 and was unhappy to learn his super contributions would be going to TWU Super under terms of a collective agreement endorsed by Toll employees.

Bracegirdle came across as a person who strongly opposed collectivism as, indeed, is his right.

He certainly objected to industry super. He said he complained repeatedly about it to workmates, union delegates and officials. He wrote to his MP and ended up in correspondence with the Minister of Superannuation.

Bracegirdle declared himself a bargaining agent and sought to represent himself in EBA negotiations.

He claimed, in sworn testimony, union delegates at his yard were “embarrassed and ashamed” about union actions, and that union directors on the TWU Super Board “had no reasonable education in economics at all”.

No evidence was presented to support any of these claims and Stoljar chose not to test them in any way.

The same applied to Bracegirdle’s assertion that “commercial alternatives, the banks and things”, might have offered him lower fees and better returns.

Bracegirdle said when a new collective agreement was signed, employees had three months to leave TWU Super, if they wanted to, and he took his account elsewhere. He characterised this as a “small, hollow win”.

Counsel’s submission on Bracegirdle’s evidence is revealing.

He describes the anti-industry super activist as an “utterly compelling witness,” whose story “exemplified the vice of a clause in an enterprise agreement which denies employees’ choice of superannuation fund.”

Counsel does not explain that this clause is negotiated and voted on by the people affected. Nor does he mention that everyone gets three months, under this EBA, when they can move from the nominated fund.

Without any consideration, Stoljar’s submission dismisses the view that a choice, expressed collectively, is still a choice. In fact, it calls for a law change that would make such a choice unlawful.

This royal commission has not taken evidence from any of the five million members of industry super funds but Bracegirdle was one of two short-term, former members it elected to lead testimony from.

 

Why industry super?

 

Industry Super was driven by unions, mainly in the 1980s, to extend superannuation beyond managers, professionals and the public service.

Australia’s 15 industry super schemes now have five million members and hundreds of billions of dollars under management.

There are two important facts underlying the current argument over industry super.

The first is that, on any objective measure, including rating agencies surveys and analysis by ASIC and regulator APRA, its funds outperform for-profit rivals over any sustained period. Analysis shows that, over a working life, this can make a six-figure difference on retirement.

The second is that the banks and finance companies are deeply pissed about the success of industry super and want to get some of the billions of dollars in its funds across to their higher-fee, for-profit accounts.

To this end they have furiously lobbied the Coalition political parties. Australian Electoral Commission figures reveal the finance sector poured nearly $2 million into political donations in the year before the last federal election.

In the wake of that lobbying, the Coalition has already moved to drastically water down protections in FOFA (Future of Financial Advice) legislation, designed to protect consumers of financial services.

It has refused Senate committee demands for a formal inquiry into the Commonwealth Bank’s financial planning scandal, and allegations over ANZ and Macquarie Bank involvement in finance industry failures that have cost families their homes and individuals their life savings.

Instead, it has set up a much different inquiry into superannuation, headed by David Murray who was the boss at the Commonwealth Bank when its planners, it is now conceded, were skinning Mum and Dad investors.

Union sources says the finance sector must have a “squirrel hold” on the Abbott Government for it to act so brazenly while the “stench of bank-backed failures is still in everyone’s nose”.

Cbus, meanwhile, has appointed Graeme Samuel, former Australian Competition and Consumer Commission (ACCC) chairman to conduct a wide-ranging review of its procedures and standards.

The figures below, courtesy of SuperRatings, set out the average returns to members of median industry super funds and median bank-owned funds over a range of rolling time-frames, to October 2014:

One year:  Industry Super 8.85 percent, bank-owned funds 7.19 percent;

Three years:  Industry Super 11.06, bank funds 9.93.

Five years: Industry Super 8.35, bank funds 6.86.

Ten years: Industry Super 6.97, bank funds 5.10

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