The Royal commision, page-4

You're a master of understatement!

From what I've actually watched and read in the Australian - the only news outlet giving the RC comprehensive coverage - the RC has already uncovered enough evidence of malfeasance to not only justify major legislative reform of union governance and a number of recommendations for criminal charges BUT also an extension of the terms of reference to include industry super funds.

On that topic Judith Sloan has yet another disturbing column in today's Australian detailing how a mix of unions and industry super funds so often equals employees being ripped off and having some of their super channeled to the union or ALP. It is criminal and must be addressed.

"Unions + other people's money = a bad idea, always"
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THE daughter of a friend of mine has a problem. She is a student and has a vocationally relevant job. Her superannuation contribution for this job is paid to Australian Super.
She also works some shifts at one of the large supermarkets. She requested that her superannuation contribution for this job also be directed to Australian Super.
She was told, in no uncertain terms, that this was not possible because under the enterprise agreement, all superannuation contributions must be directed to REST Industry Super.
In the meantime, the small amount of money being directed to REST Industry Super on her behalf is being gobbled up by fees and unwanted insurance premiums.
My friend asked me how this could be. After all, the Superannuation Legislation Amendment (Choice of Superannuation Funds) Act was passed in 2004, which ostensibly provides for employees to select their preferred superannuation fund.
It turns out that, under section 6 of that act, “a contribution to a fund by an employer for the benefit of an employee is also made in compliance with the choice of fund requirements if the contribution is made under, or in accordance with, an enterprise agreement under the Fair Work Act”.
The bottom line of this legislative gobbledygook is that choice of fund is consistent with no choice of fund. I’m not quite sure why the Howard government fell into this trap and I’m not sure why the Fair Work Commission continues to approve enterprise agreements that do not provide for any choice of fund for workers.
The end result is that many union enterprise agreements specify the one industry superannuation fund to which employers must make contributions on behalf of their workers. Not surprisingly, the nominated fund is the one connected with the union.
So in the case of the Coles and Woolworths agreements, for instance, the one nominated superannuation fund is REST Industry Super, which is connected with the Shop, Distributive and Allied Employees Association. And who are the employee trustees on the REST Industry Super board? They are all nominees of the SDA. It’s all very convenient.
It is sometimes implausibly suggested that it is too costly for employers to direct superannuation contributions to different superannuation funds. What — through electronic funds transfer?
But quite apart from thwarting the fulfilment of the legitimate desires of employees to choose their own fund, the monopoly status of industry funds in enterprise agreements leads to fundamental conflicts of interest and reprehensible behaviour.
Some of the perfectly predictable outcomes have been revealed in the course of the Royal Commission into Trade Union Governance and Corruption.
A while ago, we heard of the attempt by one truck driver to select a superannuation fund other than TWUSUPER.
As a result of this story we also learned about the $500,000 reimbursement of salaries and expenses of Transport Workers Union superannuation officers paid by TWUSUPER and the $100,000-plus donation given by TWUSUPER to the TWU.
On the face of it, the trustees have failed to meet the sole-purpose test of providing benefits to the members on retirement. But, not surprisingly, the Australian Prudential Regulation Authority appears to have done nothing to sanction the fund.
Just last week we also heard about the shady connection between the National Union of Workers and the Labour Union Co-operative Retirement Fund, or LUCRF Super.
NUW covers market research workers and a template enterprise agreement was struck with the Association of Market and Social Research Organisations some time ago. Under this agreement, LUCRF Super is nominated as the mandatory superannuation fund for workers up to a certain classification level.
According to the counsel assisting the royal commission, “the industrial agreement included a clause of uncertain validity to enable an employee to make an application to the Fair Work Commission to nominate an alternative superannuation fund to LUCRF Super. This clause has (probably) not been used. The effect on employees engaged for jobs with lower classifications has been the source of frustration and concern for some employees. In some cases it has operated to an employee’s financial detriment.”
But here’s the real kicker: the former general secretary of the NUW, Charles Donnelly, is now the chief executive of LUCRF, having served on the board for 10 years and as chairman for a short time.
As for his qualifications for this job, the annual report simply states that “with extensive experience in running a national membership based organisation and deep understanding of the current superannuation environment, he has led significant, successful organisation change during his career”. No mention of university qualifications or direct experience in investment.
So what is the answer to this unwarranted denial of an employee’s right to choose a superannuation fund simply because the worker is covered by an enterprise agreement that mandates one fund?
We should not be swayed by the false argument that workers have voted on an enterprise agreement and therefore agree to be bound by every clause.
This was made clear by the recent Federal Court ruling in the Toyota appeal case.
The judges held that the notion of freedom of contract does not apply to enterprise agreements because they apply to workers who have voted against them as well as new workers.
The solution is, in fact, relatively simple: all enterprise agreements can nominate one fund but must provide for choice of fund as well. The clause set out in modern awards can be used as a model.
While clumsily worded, this clause states that “unless, to comply with superannuation legislation, the employer is required to make the superannuation contributions to another superannuation fund that is chosen by the employee, the employer must make the superannuation contributions to the following superannuation fund”.
If the FWC doesn’t play ball, the Abbott government has no choice but to legislate