In December 1983, superannuation for the building industry was an idea shared by a handful of senior building union leaders and ACTU Officials.

By the end of 1984, a centrally-funded national scheme called BUSS had been created with 33,000 workers and their families in the scheme. Today, 20 years later, there are now four hundred thousand workers and employers in the scheme and the fund has $5.2 billion assets.

In 1984 a unique set of circumstances made all this possible.

The IRC decision to reject in part, a building industry wages agreement opened up the possibility of the rejected part of the agreement being paid as superannuation.

Building workers were taking action in support of a demand that the unpaid section of the agreement had to be paid as an over-award payment or in some other form. The pursuit of an over-award payment could have threatened the Prices and Incomes Accord Agreement between the ACTU and the Federal Labour Government. To avoid this, the alternative was for it to be paid as superannuation.

Computer technology had developed to a stage where it could manage the complexities of a centrally-funded, accumulative benefit, superannuation scheme in a large national and casual industry like the building industry.

It was at a time when it was possible to design an economically efficient and workable scheme drawing upon the experiences gained form the operation of the NSW centrally-funded Long Service Leave Scheme for the building industry, which had operated from 1975.

Industry superannuation had the full support of the ACTU and the Federal Hawke-Keating Labour Government.

Real prospects existed for winning support for BUSS from a powerful group of major building employers, as their opposition to the Union proposed scheme was limited to two issues:

1. Union control; and

2. No provision for compulsory employee payments.

Colonial Mutual were prepared to enter into an agreement with the unions whereby they, through their subsidiary Jacques Martin, would provide the capital resources to set up the administrative structure for the scheme as well as provide the skilled personnel needed to manage and operate the scheme.

Legal and General Insurance were prepared to provide a life insurance coverage for all workers in the industry irrespective of the state of health.

The combination of these factors made it inevitable that the opposition to superannuation from certain sections of employers in the building industry, plus fierce opposition from employer organisations outside the industry, would be overcome provided the unions took steps to immediately set up a superannuation scheme.

One union, the BLF, was demanding that the employers pay a $9 per week over-award payment rather than superannuation which they considered unworkable and a “pie-in-the-sky-scatterbrain proposal.”

To overcome this problem the other unions and the ACTU had to design and establish a superannuation scheme that was an attractive alternative to the over-award demand of the BLF and they had to do this as a matter of urgency.

The proposed BUSS Scheme won the support of the building workers because it provided for full vesting, portability, life insurance and no employee payments which would have required workers to accept a cut in take-home pay to become a member of the scheme. The other appealing feature was that workers could treat the superannuation payment as a deferred payment although this aspect was phased out over time.

To head off demand that the scheme be made retrospective to the date of the wages agreement, which would have been an administrative disaster, the unions demanded that the employers payment into the scheme be $11, not $9. This was to be made up of $9 super, $1 life insurance benefit and $1 for administration. Major employers were interested in the $1 insurance provision because it would replace the life insurance provision that existed on major shopping centre projects and it would end the demand for such payments on other and future projects.

The other challenge was to create a scheme which was workable in circumstances where tens of thousands of workers and a thousand or so employers would be joining the scheme virtually over night and to do this in a cost-efficient way. This was sought to be achieved through a common flat rate of $11 payment each week of employment rather than for time worked with the payment being paid into the fund monthly. This formula would make it relatively easy to resolve disputes over whether employers were complying with the scheme and paying correct amounts.

When the builders were not prepared to accept the union’s superannuation model, the unions decided to proceed alone. They set up an interim board of trustees. They invited a number of Insurance Companies to tender for the administration of the scheme on the basis that the successful tender would receive a major part of the scheme’s investment portfolio. CML (Colonial Mutual Insurance) through its subsidiaries Jacques Martin were the successful tenders.

Various legal documents were drawn up which included a Trust Deed of Adherence meaning that once the employer signed the document they became legally bound to pay into the superannuation fund. Unions then began an industrial campaign designed to enrol employers into the scheme one by one.

An agreement was subsequently reached between the Unions/ACTU and the NICC (national organisation of Master Builders). The employers agreed to abandon their demand that employees make compulsory superannuation payments and the unions agreed that the employers would have equal representation on the Board of Trustees, on the understanding that the ACTU nominated representative would be the Chairperson with a casting vote. This arrangement was subsequently changed so that the ACTU nominates chairperson did not have a vote.

As part of the agreement the NICC agreed to recommend to their members that they join the scheme on the basis that the employees of principal contractors would join from July 1, 1984 and the employees of sub-contractors would join from January 1, 1985.

The unions agreed to the phased-in entry into the scheme because it meant that the largest body of workers would joining the scheme in the second wave when the scheme had the experience of handling the smaller first wave of entries.

Prior to the establishment of BUSS there were a few schemes operating in the building industry that covered their building workers and there were other schemes that only covered salaried staff that some employers were contemplating enrolling their building workers into. Others were considering setting up company superannuation schemes where none had previously existed.

The unions decided they would only recognise schemes that covered building workers that existed before BUSS, provided that those schemes were better than BUSS in some significant way and equal to BUSS in all other ways.

When the Lend Lease Scheme was amended to provide full vesting rights, the unions agreed to exempt the Lend Lease and their subsidiary Civil and Civic from BUSS.

By the end of July 1984 there were 350 employers in the scheme and by October 19, 1984 near on 1,500 employers were signed up into the scheme.

In late 1984 the Queensland Bjelke Petersen Government legislated to effectively outlaw the BUSS scheme. Attempts by employers in WA and SA with some limited support from the BLF in those states to set up state Superannuation Schemes in place of national BUSS were unsuccessful.

The Queensland Government’s decision outlawing BUSS gave the unions no other alternative other than to set up a state Superannuation Schemes called Mini BUSS, which was a replica of the national scheme.

The BUSS scheme became further consolidated when the ACTU and Federal Labour Government reached an agreement called Accord Mark II, which proposed that all award workers should be covered by a 3% wage equivalent superannuation scheme on the basis that the union movement would not seek wage increases to cover a 3% increase in national productivity. The agreement was subsequently ratified by the IRC despite strong opposition from employers including opposition on the basis that the Commission did not have jurisdiction.

Subsequent to this decision, the employers in the building industry following a short sharp industrial campaign agreed to increase their superannuation payments in line with the IRC decision. As a result, the $11 superannuation scheme was increased to $24.50 made up of $21 superannuation, a doubling of the death and disability insurance to $2, $1 for administration plus 50cens apprentices levy.

The concept behind the apprentices levy was that all employers should pay the 50cents per week, per employee member of the fund (other than apprentices), so that employers of apprentices would not have to pay for them to be members of the fund, but rather that cost would be met by all employers in the industry.

The apprentices fund was disbanded years later because the scheme was being abused by some employers, particularly electrical and joinery companies, who were enrolling apprentices into the fund, but were not their other employees.

The scheme was amended to provide that an employer could not enrol their apprentices into a scheme unless they had other employees in the scheme. Despite this change employers continued to abuse the scheme by only enrolling a limited number of their other employees. So it was decided to disband the scheme.

Award superannuation was established in the building industry from 1991. The delay in the introduction of award superannuation was because the award standard was less than the $40 per week standard existing at the time in BUSS and unions were concerned that if a second, lower standard was established in the industry, some employers would seek to transfer to the lower standard. The unions only pursued award superannuation when they were satisfied that it was not possible to rope in any more employers into the higher standard. The unions opted to have the two schemes, otherwise a significant number of building workers would have had no superannuation and that could have threatened BUSS over time.

There were criticisms of BUSS in its earlier years. This was to be expected as BUSS was a pioneering scheme in a large national casual industry as was the building industry. As Tom McDonald said at the time, BWIU’s position had always been, “It is better to have an imperfect scheme than no scheme at all.”

Some of the administrative problems arose because of incorrect or late returns from employers. To minimise this problem a new payment system was designed to make it easier for employers to lodge their monthly returns and payments.

Despite this criticism, remarkable progress was made, as illustrated by the fact that in 1991, 99.47% of all employer payments were being accredited to the worker that the payments had been made.

There was also a lot of criticism about how the permanent disablement provisions of the Life Insurance Scheme worked. There was strong pressure from building workers that it should cover situations where a worker was permanently disabled in respect of not being able to work in his/her own occupation. However it was finally decided that permanent disablement was to mean a situation where the worker was not able to undertake any type of employment.

By 1991 the Scheme had continued to grow and at that time it embraced 26,999 employers and 191,071 employees.

BUSS became CBUS when the BUSS and AUST funds merged in 1992.

The merger did not require any changes in substance of either scheme because the AUST scheme, which came into being following the establishment of BUSS, mirrored that scheme.

The major changes involved restructuring the Board of Trustees and deciding on the principles as to which organisations would be entitled to appoint trustees and the number of trustees each organisation was entitled to nominate.

In 1992 the Hawke/Keating Labour Government introduced as part of the Prices and Incomes Accord Agreement with the ACTU, the Superannuation Guarantee Contribution Legislation which required employers to pay a Superannuation contributions of no less than 3%, the then existing award standard, which was to be phased up to 9% of wages over a 10 year period. The Superannuation Guarantee Levy extended superannuation to all persons in the workforce who were not covered by awards. It also extended the higher scale of employer payments to those already covered by superannuation.

Liberal Coalition Parties in their 1993 election campaign advocated dismantling the award system. This would have meant superannuation would not have continued to have been an award right. They also proposed to freeze the Superannuation Guarantee Levy at the amount existing at the time. This would have effectively killed off superannuation for all those workers who were not able to negotiate through Enterprise Bargaining, a standard of superannuation payments high enough to provide for a decent retirement income.

Fortunately the Coalition was defeated in that election and by the time they won the 1996 election, the phased in payments had reached a point where superannuation had become an irreversible right of all workers.

As we enter the 2004 elections, superannuation has become a major issue as all political parties accept that 9% superannuation will not be able to provide the average worker when they retire, with an income that will afford them economic security and an enjoyable retirement.

The age-old argument has arisen as to how we fund the shortfall in superannuation savings – should it be done through the tax system, should it be funded by the employers or should it be funded by workers or a combination of these.

The attitude of the Party’s has not changed with the Trade Union Movement continuing to argue against compulsory employee payments.

There have been many factors that have contributed to the outstanding success of CBUS. The most significant being the decision of the Hawke/Keating Government to support Industry Superannuation and legislate to make superannuation a legal right of all workers, along with various other reforms, the most notable being, the 9% Guarantee Levy payment.

The progressive features of BUSS helped win the support of building workers for the Scheme ie. full vesting, portability, life insurance along with the fact that they would not have to have themselves pay into the fund, and also the fact that the scheme would help to create jobs in their industry, the building industry.

The joint union-employer Board of Trustees worked constructively together, partly because there was an understanding that the board would not deal with any industrial relations issues and that the periodical review of the amount that the employer should pay into the fund would not be decided by the board, but by the employer organisations and the unions.

The founding employer trustees, like the union trustees, were equally committed to the success of the scheme and all trustees set out to resolve issues that arose by consensus.

The fund has had very capable and committed people employed to manage the Fund. This has been particularly so in respect of the Secretary of the Fund.

The support amongst building workers for the Fund has been strengthened over the years largely because of its good investment performance along with the fact that the Fund is a not-for-profit fund.

The decision was made to give high priority to compliance from the design stage through to the present stage and included the appointment of coordinators. Another crucial factor ensuring that there was widespread compliance with the Deed of Adherence was the decision of the unions to regard the success of BUSS as being “union business”.

Having an overall strategy from day one that recognised the need to establish clear priorities and a step-by-step development of the scheme has ensured that BUSS has grown and gone from strength to strength.

The selection of a good company to administer the scheme and a company that was prepared to accept and respond to criticism in a constructive way ensured that the initial problems that the scheme faced were overcome.

Efforts made to minimise administrative problems that the scheme would face were given attention from the design stage onwards. That was one of the reasons why the Fund was an accumulation scheme and the main reason why the payments were a flat rate per week of employment etc. This helped to limit the cost of administration.

By the time the CBUS Anniversary (2004) had come around, the scheme had become popular and well-known. Its membership had reached four hundred thousand with an increasing number of new members coming from outside the construction industry.

On the other hand, retail (corporate) and personal schemes were coming under increased scrutiny and criticism because of their poor performance and high profit margins. The Sydney Morning Herald (SMH) 12/7/04 under the heading “Super Trap” referred to half a million Australians trapped in personal income schemes who could not afford to pay huge exit penalties if they wanted to transfer to more profitable schemes. The report claimed that AMP had “charged exit penalties as high as 50%” on some.

The article also said “Investment returns at Tower have averaged less than the inflation rate for the past decade but the company billed one client %120,000 to transfer his savings into a competitors fund.”

A study conducted by Industry Fund’s Service Financial Planners and reviewed by Pricewaterhouse-Coopers, showed that “projected over a 35 year time-frame, the average employee retiring in 2038 would have access to around $1.2 million from an industry fund and $771,000 from a retail master trust.”

The competition between the industry ‘not-for-profit’ funds and the retail (corporate) ‘for-profit’ has helped to ensure that all Australians will be better off than they would have been, had the union movement not established industry funds.

T. McDonald, Founding Trustee and former National Secretary BWIU now CFMEU [July 24, 2004]