Retirement Raid
By David Hughes
First published in the MRC’s Watercooler newsletter. Sign up to our mailing list to receive Watercooler directly in your inbox.
There was an unprecedented attack on our nation's retirement savings this week. Jim Chalmers has directed Australia’s Future Fund to invest in Labor’s ideological priorities — things like housing and renewables where the Government is failing to deliver its promises.
To understand the gravity of this decision we need to take a step back and consider the genesis of the Future Fund.
Before the fund was created, Governments spent well beyond their means delivering benefits to the current generation and passing on the debts to future generations — those too young to vote or not yet born.
The first priority of the Howard-Costello Government was to extinguish all government debt. When that task was completed, they moved to establish a new fund to:
help cover government superannuation costs;
help cover spending pressures faced by future generations, and
help increase national savings.
Fast-forward 20 years, the fund now has $230b in assets thanks to expert stewardship. In contrast, the Australian Government’s gross debt is projected to reach $1 trillion by 2026-27 and spending is growing rapidly. Labor's turn to the Future Fund may not surprise us, but it should outrage every Australian.
A Future Fund can only succeed if it operates independently in a free market. Its success depends on the ability to direct capital to the highest-value uses. This all falls over at the slightest attempts at external interference. Once political ideology infiltrates investment decisions, the Fund’s integrity and returns are compromised.
Would Jim Chalmers gamble his own savings on his political agenda? It's unlikely because he knows many of Labor’s priorities are high-risk investments. For example, should the Future Fund accept the cost and the risk of Chris Bowen’s fanciful green hydrogen agenda, despite Origin and Fortescue backing out? The Government seems increasingly comfortable treating Australians’ savings as a piggy bank for its political agenda.
Australia has one of the biggest retirement savings pools in the world through our superannuation sector. Concerningly, the same political forces are seeking to erode the independence and objectivity of that sector too.
Australians have $3.6 trillion of their own money held in super funds. Our seven biggest super funds are all union-controlled Industry Super funds. They market themselves as independent funds operating in the sole interest of their members. In reality, Industry Super is an industry of vested interests and they are looking to flex their muscles even more.
Our largest Industry fund, AustralianSuper, isn't just chasing good investments. It’s actively pursuing influence to advance its own agenda — pushing for a board position on a resource company and eyeing off a position on the board of Origin Energy.
Similarly, HESTA, the super fund run by the Health Union wants its own people on the board of Woodside Energy. The fund has also pressured Woodside to transition away from fossil fuels. HESTA has a history of using members' funds for political activism projects and in 2015 sold its stake in Transfield Services because of their involvement in running offshore detention centres.
These funds are fundamentally compromised because their boards are stacked with Union-appointed political operatives who often lack experience in governance and financial management. Several disgraced CFMEU officials have sat on the board of CBUS Super, who oversee $95b in retirement savings of construction workers.
CBUS is a glaring example of the governance failures and conflicts of interest inherent to union-controlled super funds:
ASIC is currently taking legal action against CBUS for contraventions of the Corporations Act because the fund mishandled 10,000 insurance claims from vulnerable members and their families.
Earlier this year, a CFMEU official bragged he could use his contacts at CBUS to steer work to union-favoured contractors on apartment block projects it was financing. Prior to this there were allegations that a CFMEU official pressured CBUS managers to leak the names and contact details of over 300 member names to the union.
The CFMEU appoints and controls half of the board of CBUS. When the CFMEU was forced into administration earlier this year for corruption and collusion, CBUS lost its union appointees. That presented an opportunity to sharpen up the board. But we learned this month that of the three directors appointed to the CBUS board, one, Paddy Crumlin, previously ran a super fund dubbed by regulators as the worst in Australia. Another, Jason Mara, is the general manager of operations at the Canberra Tradesmen’s Union Club. The third, Lucy Weber, is a union lawyer.
But, it gets worse:
The ‘Independent’ chairman of CBUS is actually Wayne Swan, who also serves as Federal President of the Australian Labor Party. His skills at financial mismanagement are well known.
In the last 12 months, CBUS and Swan handed over $2,242,287 of members' money to big Unions. The biggest donations were to the CFMEU, which received $1,810,865. This is around the same amount that CBUS gave the CFMEU in the year prior, which is extraordinary considering in the last financial year the CFMEU entered administration on account of corruption and collusion.
Despite a year of turmoil at CBUS, Wayne Swan approved a $187,626 bonus to the fund’s CEO on top of his $1.4m salary. Swan himself was paid $234,300 in 2024 by the fund.
Last year, Industry Funds like CBUS gave their union masters $16m—an increase of $9 million from the previous year. Over the same period, unions donated $17 million to the state and federal ALP.
CBUS is desperately in need of competent and independent directors to oversee this mess. Its Governance policies state that ‘Directors are required to undertake a minimum of 30 hours of professional development each year.’ Yet the most recent financial statement claims part of this training came from ‘external presenters’ on the topic of climate change. Clearly more training on governance is required.
The consequences of mismanagement and potential illegality in the CFMEU and CBUS stretches far beyond their members. The CFMEU has a stranglehold on projects funded through the Federal Government's $60b infrastructure programme. We know through recent analysis that CFMEU militancy inflates construction costs by an additional 30% in Australia.
Australia’s retirement savings, whether in the Future Fund or superannuation, are too important to be politicised. These funds are institutions of a global scale that should be free from interference, ensuring they serve Australians’ best interests—not sectarian political interests.
It’s time for Australians to demand accountability and safeguard our hard-earned savings from reckless political meddling. Over the next few months, the Menzies Research Centre will be undertaking important work to highlight the problems with our union-controlled retirement savings system. We will be proposing reforms to help a future government clean up this sector and ensure it is independent, transparent and focused on delivering long-term financial security for all. You can contribute to this important work by making a tax-deductible donation here.