Amid all the corruption claims engulfing the Health Services Union, one of the most surprising revelations has been the size of the pay packets of suspended president Michael Williamson and national secretary Kathy Jackson.
It is truly obscene that Williamson has been coining $330,000 a year from the HSU on top of all his various related party transactions. Then, of course, there is an additional $150,000 for sitting on various government and superannuation boards.
While Jackson seems genuinely distant from the NSW corruption claims, her salary of $270,000 is also way over the odds.
Given the fact that Australia’s trade unions have more than $1 billion a year in revenues, it is quite incredible that so few of their leaders actually disclose their salaries. Paul Howes tweeted last week that he gets $140,000. Presumably his fees from AustralianSuper are returned to the ACTU, which nominated him onto the board of the nation’s biggest super fund.
While public company executives and directors are clearly overpaid, at least we do get comprehensive disclosure.
Even the public sector struggles with executive pay transparency, so much so that this morning I submitted the following motion for debate at next Tuesday’s Manningham City Council meeting:
In light of the relatively poor disclosure regime as demonstrated in Exhibit A (pages 195 and 196 of Manningham City Council 2010-11 annual report) and the comprehensive disclosure regime demonstrated in Exhibit B (pages 109 to 118 of the Westfield Holdings 2010 annual report), council resolves that:
“Commencing with the 2011-12 annual report, council will move closer to ASX-style remuneration disclosure for its 5 most senior and highly remunerated officers. Information to be disclosed from 2011-12 onwards will include the name and position of each officer, the terms and duration of any service contract, salary and benefit entitlements and a description of superannuation arrangements, including details of any post-retirement obligations for local government employers.”
The last line is included to try and get a sense of the liabilities associated with defined benefit pension schemes, which the Kennett government closed for new entrants in 1993.
Victorian councils were forced to stump up an unexpected $71 million last year to cover a blow out in pension liabilities, which the 2008 actuarial review estimated were $1.5 billion. However, the actuaries were back after a three-year break for an analysis of the situation as at December 31, 2011 and are tipped to reveal another even larger black hole in the next month.
Rob Spence, the long-serving CEO of the Municipal Association of Victoria, is in a tricky situation because he became chairman of Vision Super last July. Vision Super represents council workers and has just consummated a merger with the privatised electricity sector fund, Equipsuper, to create a $10 billion industry fund. Spence will chair the combined body and his first challenge will be to keep Vision Super fully funded, but to do that he must drain additional cash out of the very councils he represents through the MAV.
Interestingly, Equipsuper was one of many industry funds which initially failed to disclose its board and senior executive pay in 2010-11. However, they did make this supplementary online disclosure, which suggests the nine blokes on the board did quite well, each pocketing between $50,000 and $100,000.
It looks like the chairman gets between $100,000 and $150,000 but these anonymous numbers against salary bands — something which ASX companies were forced to abandon more than 15 years ago — make it hard to decipher.
In a municipal election year, it will be a brave council that jacks rates up by more than 10% to help cover a $200 million-plus unfunded pension liability. The soft option would be to slip into unfunded liability territory like the federal government and all states, except Queensland.
However, that would involve temporarily abandoning the full funding discipline imposed by the Kennett government. It would also ease the pressure on many long-serving council officers with generous pension entitlements who should arguably receive lower pay rises than their colleagues who are forced to take equity market risk through accumulation schemes that have gone backwards since the GFC.
Anyone who has read Michael Lewis’ hilarious book, Boomerang, will know how generous pension schemes for municipal workers crippled many cities in California.
Despite Arnold Schwarzenegger trying his best for seven years, the State of California is burdened with a massive $US1.5 trillion unfunded pension liabilities for retired workers. The response of many stricken American states has been to push the burden onto individual cities and councils.
Lewis focused on the City of Vallejo, near San Francisco, which has 112,000 people but at one point envisaged being down to one municipal worker, such was the crushing liability of pension claims, especially for retired police and fire fighters.
While Australia is obviously nowhere near such a situation, the public should know more about the circa $100 billion, which is owed to serving and retired Defence personnel.
Similarly, we also need far better disclosure of board and executive salaries at key institutions such as unions, councils or super funds. We’ll see if Manningham councillors are brave enough to blaze the trail next Tuesday night.
Finally, we were rather impressed with the way HESTA disclosed board fees in its 2010-11 annual report, including whether the trustee pockets the cash or on-passes to its nominating body.
Kathy Jackson’s $26,475 is listed as “self”, contrasting rather starkly with the likes of Yvonne Chaperon who returned her $19,947.50 to the ANF.
Union officials have pocketed millions from not for profit industry funds over the years and it is time someone constructed a comprehensive list detailing how this largesse has flowed.
*Stephen Mayne is Manningham City Council’s delegate on the MAV and was also the Kennett press secretary who dealt with the closure of the defined benefit schemes in 1993. He was not paid for this item.