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Issue #1670      January 28, 2015


The unions and superannuation

The Abbott government has opened up another front in its war on workers and their trade unions. Union representation on the boards of not-for-profit industry superannuation funds and the default selection of those funds in relevant enterprise agreements are under attack. “Choice”, “competition” and “independence” are the war cries of the marauders of finance capital. The business pages of the corporate press are rallying around federal Assistant Treasurer Josh Frydenberg, supporting the view that “unions simply have no business in the superannuation industry”, as an Australian Financial Review editorial put it recently.

The flurry of comment comes in the wake of the release of the recommendations of the financial system inquiry conducted by David Murray, a former chief executive of the Commonwealth Bank. The inquiry’s recommendations would bring the make-up of the boards of trustees of industry funds into line with those of the retail funds run by the big four banks and AMP. These board members would be “independent” of the interests of the unions and employers and, so the story goes, simply do their best to boost the retirement incomes of the fund’s contributors.

The would-be “reformers” of the system will have their work cut out selling the changes. Workers know that industry funds outperform retail ones year in and year out despite the alleged lack of expertise from union representatives. Indeed, their lack of “independence” from the interests of their members is a problem for speculators and profiteers who want greater access to the $1.9 trillion held in Australian workers’ superannuation funds. This stack of money, a sizeable chunk of it workers’ compulsorily deferred wages and investment income generated from them, is set to grow to $6 billion by 2030 if current projections hold.

The scandal surrounding the Commonwealth Bank’s financial advice and the compensation scheme subsequently put in place won’t help Abbott and Co’s agenda, either. Neither will the hash they are currently making of attempts to remove the requirement that financial advisers act in the best interests of their clients under the slogan of slashing “red tape”. Workers would be well advised to defend their industry funds and the involvement of their unions. And we need to remind ourselves of the history of the current superannuation industry in this country.

Superannuation has existed in Australia for many decades, particularly in public sector employment but the notion of a national, compulsory scheme was first floated at the time of the Hawke Labor government’s Prices and Incomes Accord in the early 1980s. The idea that the state could step away from some or all of its responsibility to look after citizens in their old age by forcing them into “self-provisioning” came straight from the pages of the works of right wing economist Milton Friedman. It was first established under the dictatorship of General Augusto Pinochet in Chile. Chief among the local “Chicago Boys” (as Friedman’s followers were called) was Chile’s minister for Labour and Social Security, José Piñera. A few decades later, whether by military dictatorship or tripartite union, employer and government collaboration, most OECD countries had Piñera-style retirement funds.

The Keating government introduced the “Superannuation Guarantee” in 1992. Unions agreed to forgo a national 3 percent pay-rise in exchange for the establishment of the scheme. This should have tipped workers off that the employer “contributions” to the scheme were actually foregone wages and conditions. Unfortunately, many union leaderships had got themselves caught up in the plans of globalised capitalism to wind up the welfare state established after World War II. Given the consolidation of the right-wing agenda in the country, these same planners no longer feel the need for trade union support to implement it. So now the knives are out in the superannuation industry.

Workers must struggle to safeguard the retirement savings locked up in super funds but they should be under no illusion that their best interests are served by amassing fortunes for corporations to speculate with. The Communist Party of Australia supports the establishment of a people’s bank and a national, publicly owned and run superannuation scheme that invests in socially useful and sustainable projects. Given the stink surrounding the corruption-riddled finance sector, it is an idea whose time has come.

Next article – Greek elections – No historic or radical change

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