05 Mar Stop playing politics with industry super
AustralianSuper chairman Heather Ridout has told the government to stop politicising how the $145 billion investor manages its holdings, saying trustees, whether from industry or unions, “leave their hats” at the boardroom door.
Ms Ridout, who is an Employer Director appointed by the AiGroup, said the fund had every right to talk to BHP about its work practices and has had many discussions with the mining giant, including about its dam failure in Brazil, and its tax practices.
“We have talked to BHP about their work practices because in the asset management principles we have, treating employees well is obviously part of that. We have become very comfortable with BHP. Andrew Mackenzie has come to our board. That is the best approach to take, and it has worked for AustralianSuper.”
“Shockingly partisan comments like this show exactly why Australian Super and their lobbyists are wrong to oppose independent directors on super funds,” he said. “Australians’ retirement incomes should not be used as a political play thing by a dying union movement. Ms Ridout would do better to remember her fiduciary duties rather than running the latest talking points of militant unions.”
Ms Ridout was speaking the day after federal treasurer Josh Frydenberg wrote to the prudential regulator to express alarm that industry super funds were using their leverage as investors to pressure BHP to save seafarer jobs.
Australian Industry Group chief executive Innes Willox, also an AustralianSuper director, and Transport Workers Union national secretary Michael Kaine also rebuked the Treasurer.
Mr Kaine accused the Coalition of abetting the “greed agenda” by failing to act on “rip-offs by the banks” and “wage theft” by companies, such as aviation services company Swissport (formerly Aerocare).
The TWU previously lobbied industry funds to exit Swissport over the use of split shifts.
“On the one hand the federal government doesn’t want to see superannuation divesting from companies with poor labour practices, but is happy to see banks rip their customers off for years and for companies to rip workers off,” Mr Kaine said.
“The truth is that higher wages and decent employment security are the best friend of a healthy superannuation system.”
Mr Willox said: “We are not in the business of delivering on activist agendas that are separate from our clear obligations to deliver strong returns to our members. This would not only place us in breach of our formal obligations – it would be the wrong thing to do.”
Ms Ridout said the federal government needed to come to terms with the fact that industry super funds, which have benefited from a $11 billion inflow after retail super scandals exposed at the banking royal commission, have a governance model that can result in strong results for members.
“Having member representatives on the board – people whose skin is very much in the game representing hundreds of workers who have their money in our fund – is a very grounding proposition,” she said.
“Whilst it has its own issues and challenges, I think it has served the industry super network very well.
“Superannuation should have a bipartisan approach, because it is a long-term investment by Australians and long-term issue for Australia. We shouldn’t be dragged into political debates,” Ms Ridout told 1500 directors gathered at an Australian Institute of Company Directors conference in Sydney on Monday.
“They are cats and dogs, employers and unions. The government doesn’t like the trade union movement. They have probably said it’s antithetical to everything they believe in…But you have to trust the governance model, you have to trust the ethics and integrity, you have to trust regulators.”
Working people did not want their retirement savings subsidised by “stealing from workers in the companies in which they are invested”, Mr Kaine said, citing a parliamentary report that found employees were underpaid $5.6 billion in super contributions in 2013-14.
“That is not financial activism. It is common sense.”
Ms Ridout called for the government to stop playing politics and said the union backgrounds of industry fund board members did not compromise the role they play as trustees of the fund, including meeting the legal duty to put members’ interests first.
Ahead of a federal election campaign where the governance of superannuation funds will remain a key battleground, Ms Ridout acknowledged industry super funds must hire experts with investment and technology skills to back up board members with union backgrounds but defended their ability to work for members.
“We will not be dragged into industrial relations. Representatives of unions and employers, when they walk into the board room of AustralianSuper, take off their hat and become a trustee of Australian Super. They have fiduciary duties to members of that fund and as chair of that fund, I have seen hats taken off.”
Ms Ridout and ANZ Bank chairman David Gonski also backed a call by Greg Combet, chairman of Industry Super Australia, for investors to more focus on environmental, social and governance matters in the interests of long-term value creation.
Mr Gonski said it was the failure to think enough about the long term that tripped the banks up at the royal commission.
“There is absolutely no doubt – and we weren’t alone in this – in thinking from time to time short term and finding things to fix quickly.. but we didn’t think through in the longer term.”
He also defended the approach of AustralianSuper as an investor, saying “every singe shareholder is entitled to have their view and put it to us”.
“I find AustralianSuper an excellent shareholder,” he said. “You have first rate people who do their homework before they come in. But the ultimate decision is ours as the board of directors.”
This article was originally published in the Australian Financial Review.