Our retirement savings locked up in superannuation are now worth over $3.6 trillion. That’s more than the combined value of all the stocks on the ASX which represents $2.5 trillion. 

For a relatively small economy, we have the fourth largest private pension system in the world. But of course, the system isn’t really private in a strict sense as workers don’t have as much control over their retirement savings as they should. Your superannuation savings are your money but not everyone sees it that way. 

Our seven biggest super funds are all union-controlled industry super funds.

This should ring alarm bells, considering the money those funds are syphoning back to the unions who in turn donate heavily to the governing Labor party who in turn put in place laws to protect the system!

If your retirement savings are in one of these funds then you have to accept that a proportion of your money is being syphoned to our big unions. Last year, these funds gave their union masters $16million – an increase of $9 million from the previous year. Over the same period, unions donated $17 million to state and federal ALP.

This is all funded through exorbitant fees. In 2020, $30 billion was paid in super fees, that’s more than the $27 billion Australians spent on power bills. 

Labor and the unions pull the strings of our biggest super funds as is evidenced by their control of the board structure of our biggest funds with chairs including former ALP heavyweights Wayne Swan and Nicola Roxon.

Given super funds now control more assets than the entire ASX, we shouldn’t be surprised if they start to flex their muscle and make their own director nominations to the companies they invest in.

Reports this week suggest union funds are considering using their sizable stake in Origin Energy and Woodside to appoint their own representatives to their respective boards with the alleged objective of “pushing companies to improve their energy transition plans, workplace conditions and gender equity”.

As James Mathias and Freya Leach from the Menzies Research Centre (MRC) told a Senate Inquiry this week, industry super is an industry of vested interests.

Thankfully, one of our regulators, APRA, is looking into this very matter as it investigates the $9 million in payments to unions between 2021-22.

The unions now have their eyes set on another potential trillion-dollar industry. Namely, Worker Entitlement Funds. The powerful ETU and CFMEU set up such funds over 20 years ago using structures that gave their respective unions control over the organisation and funds. 

These funds are topped up every year by employers and provide additional leave entitlements to fund potential redundancies. Combined, these funds already have well over $1 trillion in assets.

We know little of their governance arrangements given they are exempt from the rigorous reporting you would expect for such behemoths. But we do know that these funds provide substantial grants back to the respective unions, namely John Setka’s CFMEU (pictured above) and the ETU.

In addition, they provide substantial payments to the union bosses who sit on their corporate boards. As you would expect, these funds provide plenty of ‘jobs for the boys’.

Former Victoria ALP boss, Erik Locke runs the CFMEU controlled worker entitlement fund “Incolink” which has around $900 million in assets. He wants the Labor government to mandate such funds like his across the country.

“Over time, the scheme would result in funds like ours growing to a scale similar to super funds and that, my friends, is a very good thing,” he said. 

Multi-employer bargaining, introduced by the Albanese government in 2022, is the new mechanism which will be used to force employers to contribute money to these funds.

These new laws enable so-called ‘agreements’ to be made by one union and one big business and imposed on an entire industry or supply chain.

The head of the powerful ETU has said: “ideally, the new multiemployer bargaining laws could spread portable entitlements throughout the economy, and heighten the benefit of union membership.”

Union membership has experienced a significant decline, plummeting to just 8% in the private sector. Despite this downward trend, union funding has increased through the successful monetising of the IR system by various unions.

Kickbacks from funds linked to the union movement have increased the wealth, influence and power of union bosses. 

Their increase in wealth and power has coincided with a decrease in scrutiny and regulation. At the request of the unions, the Labor government completely abolished the union watchdog known as the Registered Organisations Commission.

A few months after the 2022 Federal election, Labor also attempted to remove the requirement for super funds to disclose payments from unions before the parliament blocked the changes. It was such an outrageous attempt to limit transparency that even the Greens blocked the move in federal parliament. 

In a previous MRC report, Unions Inc, it was shown that the asset wealth of nine of Australia’s 15 largest trade unions has outpaced the growth of the ASX since 2003, some by a significant margin.

The Menzies Research Centre will be building on this work and advocating for:

  • A reintroduction of the union watchdog.
  • New laws to improve transparency of money transferred from superannuation funds to unions and political parties.
  • New laws to encourage more independent directors of big super funds to smash the vested interests.
  • Laws to give workers more control over their super, including changes to give first home owners access to their superannuation to overcome the deposit hurdle.
  • A thorough examination of the ‘default fund’ arrangement which has pushed millions of young workers into union funds and restricted choice.

Labor was once the party of the worker but is now squarely in the pocket of Australia’s largest and wealthiest industry.

Superannuation is not the government’s or the unions’ – it belongs to workers!  

We need to take back control of this industry and stop the Albanese government and their union backers from taking it from us!

This article first appeared in the Menzies Research Centre’s newsletter Watercooler News and was written by their Executive Director David Hughes. It has been slightly edited. MRC’s website address is https://www.menziesrc.org. Thanks also to Johannes Leak for his cartoon.