In this months ACTU Super Newsletter: Federal election 2004; James Hardie victims; Qantas; CBA; Electrolux & super; Choice of funds; Super Power Conference Syd/Melb 2004; Protection of Super Insolvency; Blue Scope Steel — AWU — Corporate governance; UK pensions.
ACTU Superannuation Trustees Network Newsletter No.26
October / November 2004
Editor: Linda Rubinstein
Fax: 03 96634051
Email: lindaru@actu.asn.au
Election Result
What is there to say, except that the Government will be able to continue
with its grand plan of delivering compulsory super to the banks and life
companies, and “incentivising” the already well-off to
contribute.
Hardie Bends But Doesn’t Break Under Pressure
Less than a week after fund managers received a letter from the ACTU asking
them to consider voting against adoption of the company’s accounts at its
AGM, Hardie announced that it was deferring the resolution.
The ACTU
argued that funds should protest the failure of the accounts to make provision
for compensation for asbestos victims.
The AGM was followed by the
finding of the NSW Special Commission of Inquiry that Hardie had a moral
obligation to make compensate victims, irrespective of any legal claims which
could be made.
Although Hardie is now negotiating with the ACTU and
victims, settlement has not been reached, and there is a need for pressure to
continue. This includes pressure from investors and consumers.
A number
of managers told the ACTU that they did not hold the stock, or had sold down
because of the uncertainty surrounding the asbestos liabilities, while a couple
said they were appalled at the company’s behaviour.
On the other
hand, other have made it clear that the moral issues are of no interest in
determining whether the shares are a good buy.
This is a shocking
attitude. If good corporate governance does not include dealing honestly and
fairly with all those affected by the company’s action it is stripped of
any real meaning.
300+ At ACTU Super MTGs
More than 300 union and industry fund representatives attended the
ACTU’s Super Power conferences in Sydney and Melbourne last month.
The
main focus of the discussion was to kick off a bargaining campaign around claims
for increased employer super payments and for agreements to provide for
contributions to be made to industry funds.
Shareholders Face Workplace Issues
The current company AGM season has found shareholders forced to consider
company behaviour towards workers and their unions.
BlueScope Steel
The BlueScope (formerly BHP) Steel AGM heard how the CEO refused to meet with
the AWU about its concerns about corporate governance.
The AWU had moved
resolutions seeking to cap executive and directors’ remuneration to
20 times that of an average worker (unless shareholders agree otherwise) and
limit multiple directorships and terms of office.
The union is currently
engaged in a difficult wage dispute which highlights the contradiction between
workers’ employment conditions and excessive remuneration and jobs for
life for directors and executives.
The AWU resolutions received around12%
of the vote at the meeting.
Qantas
Similar issues concern unions at Qantas. The ASU has been campaigning against
66% increases in director remuneration compared to 3% for workers.
CBA
The FSU is asking the Commonwealth Bank AGM to support a resolution for an
annual review of the impact of change on customers and staff, conducted by an
independent expert.
Electrolux And Super
The ACTU believes that superannuation provisions in agreements are unaffected
by the High Court’s Electrolux decision, which held that agreements
containing provisions which do not pertain to the relationship between employers
and employees cannot be certified.
In Financial Clinic the Court held
that a union claim for a single superannuation fund, to the extent that it
applied to non-members, was not a matter in which the union had a legitimate
interest in the sense of being capable of giving rise to an industrial dispute
unless there were “exceptional circumstances”.
This is a
different issue from whether or not the claim pertains to the employment
relationship as discussed in Electrolux and, in the ACTU’s opinion,
the case does not affect the validity of agreements containing super fund
specification provisions.
Choice Of Legal Advice
Unions, amongst others, have had reason to be confused by some
conflicting legal advice about the application of the choice of fund legislation
which commences on 1 July next year.
It is now clear that, in the federal
jurisdiction, if an employee fails to make a choice, the award provision
applies. If there is more than one fund specified in the award, it operates
just as it does now. If no fund is specified, employers choose the fund, just
as they do now.
A second issue is whether, in state jurisdictions,
workers who do not have a fund specified in their award must be offered choice.
One view is that because the Act exempts employers who make contributions
under or in accordance with a state award, there is no requirement for fund
specification so long as the award provides for super contributions. The same
issue applies in relation to exemption from choice for employees under certified
agreements.
While this position is arguable, the ACTU believes that the
context of the legislation, together with the Explanatory Memorandum, make it
more likely that the exemption requires specification of the fund in the state
award or agreement.
In any event, to avoid problems, unions should, as a
priority, ensure that agreements and awards, federal and state, specify the fund
or funds into which contributions are to be made.
And Watch This Space
The Government’s unexpected Senate win means that it could revisit its
move, previously blocked in the Senate, to remove superannuation from the
allowable matters which can be included in federal awards, thus wiping out the
award default provisions.
Given the commitment to another round of award
stripping, this is a real possibility.
Senate Backs Protection Of Super In Insolvency
The Coalition-dominated Parliamentary Joint Committee on Corporations and
Financial Services has unanimously recommended including super in GEERS, the
government-funded scheme to pay employees’ entitlements when their
employer goes broke, saying in its recent report on corporate insolvency
laws:
“In the Committee’s view, GEERS is an important aspect
of the overall arrangements for the protection of employee entitlements in
Australia and should continue to be a feature of those arrangements. As to
extending its coverage, the Committee believes that it should cover
superannuation entitlements, particularly in light of steps that have been taken
to ensure that employees’ superannuation contributions are being
made.”
“Gray” Directors Linked To Fraud
A study by US academics has found that the presence of independent directors
protects companies from fraud and corruption.
Published in the June issue
of Financial Analysts Journal, the study found as the number of
independent outside directors increased on a board or key committee, the
likelihood of corporate wrong doing decreased.
For the sample, the
researchers compared 133 companies accused of fraud from 1978-2001 to a sample
of “no-fraud companies”, with a focus on non-management directors
who had ties to the company under review. The issue of board members the paper
terms “gray” harks back to Enron, where critics say ostensibly
independent directors were tainted by other connections to the former energy
giant.
The study found that “fraud companies” in the sample
had a higher percentage of “gray” directors on the key audit,
compensation and nominating committees.
UK Pensions Debate
An inadequate state pension and collapsing provision of employer benefit is
forcing the UK to look at how future retirement needs are to be
funded.
Acceptance of the aged living in poverty, increased taxes,
individual savings or increased retirement age were the choices identified in
the recent report of the Pensions Commission.
Assuming increased poverty
is unacceptable, the Commission advocates a combination of the other options:
some combination of higher taxes, higher savings and later retirement
age.
A central element of the current debate is whether or not to
introduce compulsory savings by employees and/or employers.
The Brutish
unions support a compulsory scheme, while others, like the Fabian Society, argue
that:
“More compulsion is not the answer. Compelling companies to
contribute to their employees’ pensions does not, of course, produce free
money. While the costs would initially fall on companies, they would soon adjust
wages to compensate.
“Compelling companies is thus a way of
forcing individuals to save. If individuals are compelled to save, and as a
result lose entitlement to means tested benefits, they will be furious.”
The Fabian Society then proposes that the state pension should be increased
above poverty levels, and that incentives should be given to encourage private
savings, including in relation to means-tested benefits.
A public opinion
survey conducted by the Association of British Insurers found that over 70% of
people support compulsion, generally as an employer/employee partnership.
However, only 25% of people favour compulsion that would affect them
personally: most supporters of compulsion are already making mandatory or
voluntary contributions.
Corporate Governance Google
Influential proxy voting adviser, Institutional Shareholder Services, has
declared that Google, which made its stock market debut in August, has the worst
corporate governance of any company in the S&P 500 index.
ISS
identified 21 weaknesses in Google’s governance, including too few outside
directors and a capital structure that gives effective control to insiders.
The Inside Story For Fund Managers
The ACTU is holding its 2nd seminar for fund managers and other
superannuation investment professionals in Sydney on Friday 26
November.
Speakers include Greg Combet, Doug Cameron, Mike Fitzpatrick,
Heather Ridout, Bernie Fraser, Steve Gibbs, Justin Wood and John
Nolan.
The seminar will give managers an inside look into unions’
views of fund managers, corporate governance and investment priorities, as well
as some insights into how boards actually make decisions.
For more
information or registration contact Debi Bruce on 03 9664 7379 or
dbruce@actu.asn.au
Unions & Super: A Training Resource For Union
Organisers And Delegates
A collection of materials has been developed by TUEF and the ACTU, in
conjunction with STA, to help unions inform delegates and organisers about
superannuation issues.
Training activities using these materials will
assist participants to bargain to protect workers’ superannuation from
erosion and to improve current superannuation arrangements. It explains the
choice of fund legislation, the superannuation guarantee and addresses issues of
adequacy and increasing contribution rates.
The materials include:
session plans, background notes, exercises, handouts, overheads, newspaper
clippings, case studies and uncomplicated explanations of superannuation
issues.
This material is provided in hard copy and on disk to enable easy
customisation at no extra cost.
Contact the ACTU Organising Centre on
9664 7360 or sross@actu.asn.au for an order form
Bargaining For Super
The ACTU has produced a guide for union officials bargaining around
superannuation issues.
The guide covers:
Copies of the guide are available
for $5 from Saverina Chirumbolo on
03 9664 7340 or sav@actu.asn.au
