Cbus chief executive David Atkin has defended Cbus’ union relationships after a Liberal MP criticised potential conflicts of interest arising from union representation on boards.
In a speech last week, Liberal member for Bradfield in the Australian Parliament Paul Fletcher said the union movement has a disproportionate degree of influence over Australia’s superannuation sector.
“I have a concern about union officials sitting on boards of super funds, facing a conflict between their interest in advancing the position of the union and their duty as a director of the fund to members of the fund,” he told Investment Magazine.
Fletcher highlighted a recent industrial dispute between the Construction, Forestry, Mining and Energy Union (CFMEU) and the construction company Grocon. The CFMEU raised objections to Cbus Property’s appointment of Grocon to its 5 Martin Place development with Colonial First State due to an industrial dispute over the Myer Emporium development in Melbourne.
Atkin said there is no conflict of interest between Cbus and union stakeholders, with the superannuation fund’s model of equal representation leading to above-average performance.
“We are clear about our role and responsibility as a super fund. The unions and employers will have campaigns they advocate for and we’re comfortable with that.
“At the end of the day, let’s look at the performance of the funds. The industry funds’ record is a superior one to alternative for-profit governance models.”
Cbus and Cbus Property have two separate governance structures, with the decisions in this dispute falling to Cbus Property, not Cbus. Atkin said that in the context of the dispute, the union directors were “impeccable”.
“In no way did they use our forums to advocate their organisation’s campaign. They understood the separation of their responsibilities from representing their organisation’s views with their responsibilities of being a trustee director,” he said.
“Their contribution was focused on maximising returns, and if they did feel there was a conflict, they declared it and they absented themselves from decision making.”
Fletcher also criticised the Victorian Trades Hall Council Building Industry Group for seeking expressions of interest from other superannuation funds to become the default fund for its members subsequent to the dispute.
“This would appear to be an attempt by a union to use the economic resources of a large superannuation fund over which it has substantial influence, including the right to appoint three directors, to secure industrial or political outcomes, in this case to advance its industrial dispute with Grocon,” Fletcher said in his speech.
Atkin acknowledged criticism of the unions for the call, but said Cbus had absolutely no problem with any of its employers or unions wanting to test the market.
“It’s a competitive market place. We’re happy to put our credentials up against any others about being the best superannuation provider in the construction and building industry.”
The Victorian Trades Hall call for expressions of interest concluded last month, with Cbus selected as the preferred default fund for its members.
Fletcher also cited the case of TWUSUPER and QANTAS, in which the union was critical of a change in corporate strategy by QANTAS.
“Members of TWUSUPER have the right to expect that the only consideration that will go through the minds of the directors is which equities should we invest in to best produce financial returns for TWUSUPER. But when you’ve got four directors who are pursuing an industrial agenda against QANTAS, it raises the question what is actually uppermost in their minds.”