Andrew Bragg (NSW, Liberal Party, Shadow Assistant Minister for Home Ownership) Share this | Hansard source

I indicate that we will be supporting this reference to the economics committee. We are supporting this motion because we are very concerned that there is a longstanding nexus between the superannuation funds, the unions and a major political party in this country, which is not in the interests of Australian workers.

The big question is: why has the government been so quiet—almost silent—on these questions since the CFMEU scandal broke only a few weeks ago? Of course, the whole idea that the CFMEU scandal was news to Labor is actually hilarious. These are the same people who campaigned for this Labor government, who, the government members knew, were involved in corrupt activities and systemic wrongdoing.

The silence on the superannuation issues is very troubling, because the government comes into this chamber and says that they are standing for strong action in relation to the CFMEU and are in fact supporting putting that organisation into administration. But what about the people that have their money invested in the Cbus fund, where they have three CFMEU trustees sitting on the board and apparently holding themselves out to be great fiduciaries? That is extraordinary hypocrisy—that you can be concerned, on one hand, about the administration of the union, but have no interest in the activities of these people who are sitting on the boards of compulsory savings schemes as enacted by this parliament back in the early nineties. So it is ridiculous that the Minister for Financial Services and the Treasurer, Mr Chalmers, have had nothing to say about these issues in this past month.

The reason that they are silent is that they are beyond conflicted, because there are two key design features in the superannuation model which support the political apparatus of the labour movement: firstly, the directors on the boards; secondly, the rivers of gold which flow from the super funds into the union movement and the labour movement more broadly. It is very troubling, and it has always troubled me, that sometimes it's unclear whether a Labor senator is supporting the agenda of a trade union or is there to represent their state? The same can be said for the superannuation movement. I believe these conflicts are going to rot the core of the labour movement, which once stood for workers. It is now clear that there are huge organised elements of the labour movement which now stand for institutional power inside unions and the great wall of money that is superannuation.

The first design feature is the directors of the board. In this case, I think the Australian people will be shocked that their government is prepared to put the CFMEU into administration but couldn't give a rat's about the three board members on the CBUS fund who are CFMEU officials and do not have anything to say about this—nothing, crickets. This has been left to the prudential regulator, APRA, which released a statement last week saying it is seeking a report and a review into these boards. I assume one of the questions that the APRA board will be asking is: how can it be that CFMEU officials can conduct themselves as directors on the boards of these super funds while the organisation is in administration, or soon to be in administration, and is subject to multiple law enforcement activities, including engagement in mass corruption, which is inflating the cost of construction in this country by up to 30 per cent? When young Australians say, 'I can't afford to buy a house,' one of the reasons for that is because when people go and build an apartment block in Sydney or Melbourne or Brisbane or elsewhere, they're paying a 30 per cent premium to these criminals who are inflating the costs so they can make off with people's money. So the director's issue is very serious.

There are CFMEU directors, in some cases, who have been on the CBUS fund's board for more than 10 years: Dave Noonan, 16 years—extraordinary; Rita Mallia, 13 years. APRA's own guidelines say no more than 10 years is appropriate on a board, so I don't see how it can be the case that APRA can allow anyone, let alone anyone with the status of a CFMEU official, to be on the board for 10, 15, or 16 years in this case. Of course, the chair of this fund is Mr Wayne Swan. He's also the President of the Labor Party. And, again, I wonder whether or not these howling conflicts of interest are ever going to be matters of interest for the minister? Because the Minister for Financial Services and Superannuation, Mr Jones, who would have to be one of the worst ministers in the government—and that is really saying something—has said nothing about these issues, so it's been left to the prudential regulator.

One of the reasons we're supporting this motion is because we think there should be the most pressure on the prudential regulator to enforce its own guidelines. How can it be the case that the prudential regulator can say, 'Our guideline is 10 years on the board,' and sit there while people sit on the board for 16 years? I think it's just extraordinary, so we look forward to there being more pressure on the enforcement of these guidelines. But this is not a new issue.

There have a been multiple reviews going back more than 14 years now into the question of the governance of the super fund boards and whether or not the idea of having all these people who work at the union on the board is an appropriate model. I would say, just as the employer groups make up half the board in these funds, they are part of the problem. They are part of the IR club who work together to rort workers. The employer groups and the unions, they love superannuation because they get lots of money from it. The rivers of gold, I'm about to canvas, is the reason that the employer groups and the unions want to keep their people on these boards. The reason that they maintain the status quo or want to maintain the status quo is because that is how the money goes from the super fund into the union or the employer group. They are paid in directors' fees. Often these are inflated fees, and these fees go through to the employer group or to the union. They are paid in directors' fees—often these are inflated fees—and these fees go through to the employer group or to the union.

Of course, the other way that the money flows is through inflated, bogus and rubbish commercial agreements. In fact, in the case of the Cbus fund and the First Super fund, they have massive sponsorship and advertising agreements with the CFMEU, whereby the super fund pays enormous funds, $700,000 contracts, to sponsor the CFMEU. The amount of money going from the funds into the unions reached, in the last year, $40 million. So $40 million of Australian super fund members' money is being siphoned off to the unions and all their associated lobby groups. Why is this happening? Because the law in relation to best financial interest duty, which was passed in the last parliament, has not been enforced as strongly as it could have been. I welcome that APRA has finally had something to say on this matter, in its statement on Cbus.

But it shouldn't have taken for the crisis that we've seen in relation to the CFMEU for this to happen. I believe that over the last two years, as we have canvassed these issues endlessly at Senate estimates, APRA could have acted early to put a stop to these huge amounts of retirement savings being siphoned off to the unions. In the case of the Cbus fund, they have given over a million bucks in the last year to the CFMEU, and the First Super fund has given more to the CFMEU, even though it's a tiny fraction of the size of Cbus. It is true that this is the first time APRA has flagged it would invoke the best financial interest duty, but I don't think it would be wise for this parliament to vote against this motion, because this motion will ensure that there will be a separate inquiry by this parliament to look at the issues that are being canvassed, including why on earth they allowing people to be on the board for 13 years and how, in fact, they propose to enforce this best financial interest duty. I do not see how it can be in the interests of the workers for the Cbus fund or the First Super fund to be making $700,000 or $800,000 sponsorship payments to the CFMEU, particularly now that it's going to be in administration. We have to get to the bottom of this system.

If I were running the Labor Party and one of my favourite achievements were superannuation, I would be taking these issues very seriously. These issues of probity, if not managed correctly, will undermine confidence in the scheme. It is a very paternalistic scheme. When Paul Keating was quizzed on it in the early nineties, he said he would be open minded to looking at the question of letting people use their own money in super for a house. These days the modern Labor Party will do anything to keep the money hermetically sealed inside super, presumably so it can be plundered by their mates at the unions. That may be a cynical view, but I think super is now at risk of unravelling, because, if people feel that CFMEU trustees like Dave Noonan and Rita Mallia are allowed to go and sit on the Cbus board for 15 or 20 years or whatever and send as much money as they want down the road to the CFMEU, then I believe that will erode confidence in this scheme, as it rightly should.

What it will also potentially do is show that the parliament, if it votes against the motion, doesn't give a rat's about these people, doesn't care and is going to do the same thing that the executive government is doing, which is to say nothing. The executive government want to hide behind APRA. APRA are doing the right thing by flagging that they're going to do something, after waiting for years to do anything in relation to best financial interest. But it's not good enough, because the Australian people know that the Cbus fund is linked to the CFMEU, and, as we have read about in the Nine newspapers, there appear to be all sorts of agreements underneath the table, where the CFMEU will do a special deal for property which has been developed by Cbus. You pay 30 per cent tax if you're developing an apartment building and if you're a regular property developer, but you get exempted from that tax if you're the Cbus fund and you are developing property on behalf of Cbus and the CFMEU. So this is a very important motion, which we'll be supporting. For a long time our view has been that the model of equal representation where unions and employer groups come together to steal money from workers and sit on the board for decades like it's a holiday has had its day. This law, the equal representation law, should have been removed a long time ago. There should, at least, be a handful of independent trustees on these boards. Ultimately, the conflict of interest here, where you have Mr Wayne Swan and all his mates from the CFMEU and the employer groups sitting around the board table and working out how they can steal money from workers, is a very crooked scheme. There should be independent directors on these boards. That should be happening at a minimum.

The second thing that should happen is there should be no more of these payments from the super funds to the unions for any reason. This money is supposed to be held in trust for workers' retirements; it is not there for political purposes. It is not there for the unions to use in their campaigns to help re-elect a Labor government. This is the money that belongs to the workers. It should be there for their retirement, and Labor should reflect carefully. This could be an opportunity to get some incremental reform which allows them to maintain their favourite issue, which is that they created this compulsory super scheme. They could use this as an opportunity to maintain the integrity and probity of the scheme, which I would say is now at the greatest risk since it was created 30 years ago. So we'll be supporting this motion because we believe that probity and good governance is very important in relation to a scheme which is compulsory, in that you can't get out of it.