Given the Future Fund is to fund the
liabilities of the old CSS and PSS superannuation schemes, which will
be significantly changed on July 1 this year, it would make sense that
the financial contributions go into those funds, where there’s already
an “independent” board and organisation.

Problem is, it’s a
little too independent, with the Board half controlled by the ACTU and
already in internal debate about the level of active corporate
governance its executive should conduct.

The CEO of the
CSS/PSS is Steve Gibbs, a good operator who came out of the Australian
Services Union. No wonder the government doesn’t want to give him tens
of billions to play with.

When the Kennett Government
established the Victorian Funds Management Company in 1993 it banned
the directors from ever voting any shares at AGMs. California’s
Republican governor Arnold Schwarzenegger has been accused of trying to
neuter CALPERS, the world’s biggest and most effective campaigner for
good corporate governance.

If the Future Fund is going to become
Australia’s biggest investor in the stockmarket over the next few
years, will the Howard Government let it take on the corporates who
donate so much to the Liberal Party and rely on lax regulation to make
huge profits. What position would the Future Fund have taken on James
Hardie? Would they have been allowed to take a position?

Peter
Costello and Jon Faine had an interesting exchange today when the ABC
Melbourne morning host declared he would rather see the money invested
in infrastructure than handed over to “merchant bankers” mandated by
the Future Fund.

Costello “profoundly disagreed”, and we’re with
the Treasurer on this one because only a reckless employer doesn’t put
money aside for the super of their employees. We’re talking about a
projected liability of $120 billion by 2020, but the present cash cost
to the budget is only $2.4 billion a year.

ABC employees are
members of the CSS/PSS fund so they are totally unfunded. Given that
United Airlines is currently trying to default on its pension scheme in
the US, unions and employee groups should always push for full funding
of super so this sort of thing can’t happen.

The latest ABC annual report
details the super position on page 127 with the following lines: “The
liability for their superannuation benefits is recognised in the
financial statements of the Commonwealth and is settled by the
Commonwealth in due course. The Corporation makes employer
contributions to the Commonwealth at rates determined by the actuary to
be sufficient to meet the cost to the Commonwealth of the
suerpannuation entitlements of the Corporation’s employees.”

In
other words, the $933 million ABC budget is not actually the full whack
for the ABC because the government only requires the ABC to contribute
to the $2.4 billion it pays out each year. Super liabilities are
projected to blow out by $4.5 billion to $95 billion in 2005-06 because
the government is not requiring the ABC to put money aside.