In­dus­try funds hold an un­fair edge over their re­tail cousins

The Weekend Australian - - COMMENTARY - ROBERT GOTTLIEBSEN John Durie is on leave.

Some 300,000-plus Aus­tralian re­tail em­ploy­ees are set to gain what union power has blocked for decades: a choice of su­per­an­nu­a­tion funds.

And if the re­tail flood­gates open, su­per­an­nu­a­tion choice may spread to other in­dus­tries — dra­mat­i­cally chang­ing the face of su­per­an­nu­a­tion in Aus­tralia.

The Coles draft en­ter­prise agree­ment in­cludes a clause that of­fers work­ers a choice of su­per­an­nu­a­tion funds.

Count­less hours of par­lia­men­tary de­bate have tried to achieve this goal and failed. In­stead it was achieved in the most bizarre en­ter­prise bar­gain­ing agree­ment ne­go­ti­a­tion con­ducted in Aus­tralia — one in which Coles shelf-stacker Penny Vick­ers and her fa­ther Allen Truslove ul­ti­mately con­trolled all the cards at the ne­go­ti­at­ing ta­ble. The union heav­ies — in­clud­ing rep­re­sen­ta­tives from the meat and re­tail unions — were neutered by Vick­ers’ power.

Truslove, as one of Aus­tralia’s lead­ing ac­tu­ar­ies, has been closely in­volved with su­per­an­nu­a­tion all his life and be­lieved with a deep pas­sion that just as Coles and other big re­tail work­ers were be­ing ripped off with week­end penalty rates, thanks to a re­tail union deal, so a large num­ber of Coles work­ers were also be­ing ripped off in su­per­an­nu­a­tion.

He and his daugh­ter were de­ter­mined to end the su­per­an­nu­a­tion knif­ing at Coles in the con­fi­dent ex­pec­ta­tion that it would then be stopped in all big re­tail­ers.

The union heav­ies in the Coles EBA ne­go­ti­at­ing room were joined by a stack of Coles cor­po­rate ex­ec­u­tives. Coles had no prob­lem with giv­ing their work­ers a choice of su­per­an­nu­a­tion funds be­cause there was no cost and it was a big ben­e­fit.

And they were pre­pared to ac­cept the week­end penalty rate hike be­cause they could see in the Fair Work Aus­tralia hear­ings that Vick­ers was highly likely to win the case, so it was bet­ter to ne­go­ti­ate a deal than risk huge back-pay­ments.

But both Coles and the unions knew that unless Vick­ers and Truslove agreed to an en­ter­prise bar­gain­ing agree­ment, there was no deal.

How­ever, Wool­worths now has a sub­stan­tial wage cost ad­van­tage over Coles and so may try to con­tinue to un­der­pay its week­end work­ers for as long as pos­si­ble. And the unions in the en­ter­prise bar­gain­ing for Wool­worths and other big re­tail­ers may try to per­pet­u­ate “no su­per­an­nu­a­tion choice”, even though it’s a big cost for many em­ploy­ees.

But now that clear bur­den for staff has been re­moved at Coles, Fair Work Aus­tralia will al­most cer­tainly want the ben­e­fit ex- tended to all other re­tail em­ploy­ees. The rip-off of re­tail em­ploy­ees via su­per­an­nu­a­tion has now been ex­posed.

In all pre­vi­ous re­tail ne­go­ti­a­tions (and most in­dus­try ne­go­ti­a­tions) a choice of su­per­an­nu­a­tion was never al­lowed to be put on the ta­ble be­cause su­per­an­nu­a­tion is an im­por­tant source of wealth and power for unions. Em­ployer or­gan­i­sa­tions are also big ben­e­fi­cia­ries.

In the ear­lier EBA ne­go­ti­a­tions, re­tail­ers were gain­ing big week­end shift ben­e­fits and in other in­dus­try ne­go­ti­a­tions there are usu­ally more im­por­tant is­sues for em­ploy­ers so they al­ways roll over and al­low their em­ploy­ees to suf­fer a su­per­an­nu­a­tion penalty.

Truslove un­der­stood just how the su­per­an­nu­a­tion knif­ing of em­ploy­ees takes place when re­tail em­ploy­ees are given no choice and must join the REST union/em­ployer or­gan­i­sa­tion su­per­an­nu­a­tion fund.

Many re­tail em­ploy­ees have worked else­where where it is com- pul­sory to join a dif­fer­ent fund and so they have mul­ti­ple funds and have to pay mul­ti­ple fees. Du­pli­cated fee levies is a big source of in­dus­try fund in­come. Worse still those em­ploy­ees with two or more fund in­vest­ments will nor­mally have a du­pli­cated de­fault level of death and dis­abil­ity cover and some­times even in­come pro­tec­tion.

These mul­ti­ple charges dec­i­mate their su­per­an­nu­a­tion re­turns. And in the case of, say, univer­sity stu­dents costly death cover is not usu­ally of any ben­e­fit. Un­der the Coles en­ter­prise agree­ment em­ploy­ees will be able to choose and will not be re­quired to add to their num­ber of funds. Re­tail funds can com­pete. Some Coles em­ploy­ees may even dis­cover the ben­e­fits of hav­ing a self-man­aged fund.

Why have in­dus­try su­per funds re­jected choice? Af­ter all the re­tail in­dus­try fund REST has per­formed well so it should be able to ad­vance its cause. There are at least two rea­sons why in­dus­try funds fear choice. In­dus­try funds have of­ten per­formed bet­ter than other funds be­cause they have se­cu­rity of in­come via “no choice” so they have in­vested heav­ily in in­fra­struc­ture and com­mer­cial prop­erty which in a falling in­ter­est rates en­vi­ron­ment has de­liv­ered ex­cel­lent re­turns.

The funds ar­gue that if work­ers have a choice of fund then in­dus­try su­per­an­nu­a­tion funds will not have the same in­come se­cu­rity and there­fore will not be able to in­vest at the same level in prop­erty and in­fra­struc­ture. There are lots of ways of fix­ing that prob­lem with­out knif­ing re­tail em­ploy­ees with ex­tra charges. I will save the so­lu­tions for an­other time.

Sec­ond, em­ployer as­so­ci­a­tions and unions re­ceive in­come di­rectly and in­di­rectly from their funds and as­so­ci­ated com­mis­sions. We do not know how large this money trans­fer is be­cause most in­dus­try su­per funds do not ex­plain what fees, charges and other ben­e­fits are re­ceived by the spon­sor or­gan­i­sa­tions.

Unions fight for “no choice” and em­ployer or­gan­i­sa­tions say noth­ing in­di­cates that su­per­an­nu­a­tion in­come is im­por­tant to them — so nei­ther side wants a change. Em­ploy­ees just had to suf­fer. That was un­til Penny Vick­ers and Alan Truslove ar­rived on the scene.


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