Introduction
Since its formation in 1927, the Australian Council of Trade Unions (ACTU) has been the peak trade union body in Australia. There is no other national confederation representing unions. For 90 years, the ACTU has played the leading role in advocating in the Fair Work Commission, and its statutory predecessors, for the improvement of employment conditions of employees. It has consulted with governments in the development of almost every legislative measure concerning employment conditions and trade union regulation over that period.
The ACTU consists of affiliated unions and State and regional trades and labour councils. There are currently 43 ACTU affiliates. They have approximately 2 million members who are engaged across a broad spectrum of industries and occupations in the public and private sector.
The ACTU and its affiliated unions founded industry superannuation and won the right for all workers to be entitled to super. The ACTU continues to be a leader in the superannuation sector, advocating to ensure workers retain rights over their retirement savings, and that superannuation delivers adequate retirement outcomes for workers.
The ACTU welcomes the opportunity to comment on the Australian Prudential Regulation Authority’s (ARPA) discussion paper Strengthening prudential requirements for remuneration and draft Prudential Standard CPS511. The ACTU welcomes measures within the proposed standards to increase board responsibility over remuneration policy and implementation and for more regular reviews of remuneration policy.
The proposed requirements do not adequately address the causes of misconduct attributable to remuneration as outlined in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Royal Commission), and ignore the harms variable remuneration causes front-line staff, customers and members. APRA should use the opportunity the Royal Commission has offered to review whether or not variable remuneration for financial services is beneficial to the long-run interests of companies, investors, members and customers alike. Similarly, APRA should use this opportunity to review the quantum of executive remuneration. The size of average executive remuneration of banks, super funds and other financial services companies dwarfs their workers’ pay and average worker pay, and executive remuneration growth significantly outpaces average wage growth.
The ACTU proposes APRA consider the following when reviewing executive remuneration:
- A holistic review of the merits and detriments of variable remuneration for both senior executives and front-line staff and its effects on customers or members,
- The reconsideration of allowing variable pay for RSEs where time-horizons for beneficiaries are divorced from executive and staff tenure,
- The removal of the definition of a ‘Significant Financial Entity’ and requiring higher standards to be applied to all financial services entities, regardless of size, and,
- Greater oversight by the regulator on the implementation of variable remuneration for frontline staff.
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