On superannuation and independence
Andrew Whiley writes: Re. “Mayne: time for a citizen jury to sort out industry fund governance” (July 3). Regrettably Stephen Mayne has decided to throw red herrings left and right rather than respond to the thrust of my comments. Just to net some of those lively fish and tag them with some facts: In his first piece Mayne states, “we got hundreds of sub-scale funds and created a gravy train of board fees pocketed by every last union powerbroker.” The latest figures from Australian Prudential Regulatory Authority as of February 2015 record at total of 42 Industry Funds. Not quite the “gravy train” as portrayed.
Mayne also raises what he sees as deficiencies in a fund constitution in regard to the skill levels of the Board. I note that the Boards of all Responsible Superannuation Entities must meet the rigorous “fit and proper” standards determined by APRA. It’s here, it’s detailed and the Regulator has an active stance on it. Mayne makes lots of mentions of “independent directors” but fails to acknowledge that directors on industry fund boards already meet the same Corporate Governance ASX definitions of “independence” that he cites in the in his first article. The very same standard that applies to “independent” directors on listed companies.
Mayne advocates in his second article “asking the members” what they think of fund governance, yet in his first article he floats, then discounts giving fund members a vote on Board representatives on the basis that the “professional directors” won’t be able to win. So member opinion can be trusted on governance … but only a little, in case those same union officials and employers who have outperformed the “professionals” on investment returns for twenty years repeat the dose on member trust in overseeing their retirement savings.
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Mayne plays the man and mischaracterises my comments as being on behalf of my UK employer. He demands to be told who is or isn’t a client in Australia. He repeatedly imputes my comments are being influenced by financial or other considerations. The biggest red herring of all. For the record, the governance changes proposed by Josh Frydenberg are not relevant to any Australian clients. Secondly, my views to Crikey are personal, born of more than twenty years involvement in superannuation including board and management roles, all of which is on the public record.
And lastly, Stephen, as most who know me will attest, I take no bidding as to any views I express and require no imprimatur except my own. Your inferences have been met with much laughter amongst friends and ex-colleagues in Australia who read Crikey. Loud enough to be heard in London.
Stephen Mayne replies: Full marks to the former CBUS man in London for his vigorous engagement on this issue. He makes lots of good points, knows the industry well and his straight-talking and passion is to be admired. A few quick points: There may only be 42 industry funds left but that is after dozens of mergers. This is still too many and lacks scale. A “fit and proper” test goes to issues of criminality, bankruptcy and regulatory sanction, not qualifications or skills. For instance, Vision Super has had a home care worker from the City of Greater Dandenong on its board as one of the 4 ASU nominees since 1998. There are no tenure limits and no skills requirements and this is the board that mugged Victoria’s council’s with a circa $500 million defined benefit cash call three years ago. Where’s the accountability?
Vision Super signed a merger deal with Equip Super a couple of years back, but this then fell apart, partly due to issues involving the structurally conflicted ASU. Equip Super does have a skill-based requirement in its constitution, as you can see with these director profiles. What’s wrong with making this a requirement for all super fund directors in Australia? Equip also has some member elected directors which has delivered a stronger board than what we see at Vision Super which is an ASU-ALP stronghold.
Member votes are not ideal with something as sensitive and conservative as superannuation, but a bit more of it would be an improvement on the current board duopoly between unions and certain employer association. A better option would be genuinely independent directors whose tenure is not reliant on the whims of union secretaries and employer group as sponsors.
Time to intervene?
Nick Young writes: Re. “Little children are sacred — except in offshore detention” (yesterday). “Disgrace doesn’t even begin to cover it”. Truer words were never written. This whole business with covering up child sexual abuse is, let’s call a spade a spade here, evil. I don’t use that word often or lightly, but in the case of covering up the theft of the innocence of children for political advantage, I don’t really think it’s a stretch. I hope everyone participating in this bullshit is ready to be harshly judged by history. Following orders is insufficient justification.
Where are the Liverpool Plains, again?
Chris Davis writes: Re. “Geography slip-up” (yesterday). Geography slip up number two? The Liverpool Plains are neither in the Hunter Valley nor near Liverpool 30kms to the south west of Sydney. With Google Maps so easy to access and use, anyone still confused should peruse a map of NSW.