The heads of some of the largest superannuation funds in the country have been pressed over large sums of money paid to the Australian Council of Trade Unions.
During last week’s parliamentary committee hearings into Australian super funds, committee chair Tim Wilson quizzed top executives from Industry Super Australia (ISA), REST, Hostplus and IFM Investors about thousands of dollars handed over to the ACTU.
ISA chief executive Bernie Dean was asked if he was ware of the ACTU’s superannuation partnerships program or “ACTU Member Connect”.
Mr Dean said he was aware of the "ACTU Member Connect portal" and that ISA has a commercial sponsorship arrangement with the ACTU valued at $60,000 a year.
“It has all the normal aspects that you would expect from an organisation like ours using this sort of sponsorship to reach audiences so that it adds to our broader efforts to help funds retain members and grow. That’s very squarely the focus of the sponsorship. We have access through the sponsorship to advertising, using the advertising that you would normally see on the television and online, on the well-patronised websites that the ACTU [has],” the chief executive explained.
“We also get access to email newsletters that the ACTU put out to the membership. Really, the focus of this sponsorship is not that different to any other effort that we make to go out and promote awareness of the industry super funds not only as good funds to remain with – so retaining members – but also to join.
“It’s also an opportunity to engage with members on issues and policies that can have a real impact on their level of savings – for example, the super guarantee.”
IFM Investors CEO Brett Himbury confirmed that the investment manager has paid $315,000 to the ACTU over a five-year period.
“We’ve consistently asked about this ACTU superannuation partnership program, which was brought to our attention in your answers to questions on notice,” Mr Wilson said.
“Everybody has said that it’s basically increased their exposure to potential clients or their base. You give $105,000 to them, although you don’t have individual clients. Why, then, are you giving $105,000 to that program which is designed for that purpose?”
“It’s a broad partnership program with the ACTU that we have that’s amounted to that $315,000 over the last five years. We do it because we believe it fundamentally improves the ultimate returns to our investors,” Mr Himbury said.
He explained that the $315,000 payment gives IFM Investors “access to the ACTU”.
“We get access to around 230 trustees of many of the superannuation funds. That access and engagement [help] improve the understanding, which improves the relationship, which has ultimately been one of the many factors that’s gone into our business going from $50 billion to $150 billion and the scale benefits therefore helping support those improved returns to investors. So, from my perspective, it’s a very efficient and effective commercial application of a limited expense budget to build relationships, build scale, reduce fees and enhance returns. Frankly, if I was offered the opportunity as any other fund manager, I would jump at it, because that’s a very effective way to go to the trustee groups of major superannuation funds,” he said.
REST CEO Vicki Doyle told the committee that the super fund pays $44,000 a year to be part of the ACTU Member Connect portal.
“The ACTU is obviously a peak body, and it has a program called Member Connect. That program is what we pay to be part of. As I understand it, any union member, across any of the unions, can access an online portal, and it enables them to have information about all the different industry funds,” Ms Doyle said.
“REST is one of those, but there are lots of other funds that are on that. So a member can log onto that or go and access Member Connect. A union member, when they start a job, gets a whole lot of information. They sign up, as I understand, to be part of the union, they can go onto Member Connect, and they can find out factually about all of the super funds. So if they’ve started with an employer and their default fund was REST or it was Australian Super or it was CBUS, they can go on to that and find out information. So we participate in that.”
Mr Wilson was eager to know what information on the portal is not already publicly available. “That’s a lot of money – $44,000 a year. You’re paying $44,000 a year to get information from a portal about information about yourself?”
“You pay $44,000 a year to the ACTU Member Connect program for people to basically access information about super. You’re arguing it is justified. Have you ever done any analysis about the value or benefit of that program to REST and its members?”
Ms Doyle said the spend would be part of an annual review.
“It’s an ad. It’s a very expensive educative ad,” Mr Wilson said. “And when you get other organisations – because, if that’s the purpose, there is another fund that spends $105,000 doing it, and they don’t even accept individual members. So it seems very specious or questionable conduct.”