ACTU Senior Industrial Officer Linda Rubinstein outlines ACTU and union policy on superannuation, what have we achieved, and what our priorities are for the future.



The purpose of today’s seminar is to generate discussion about the direction of ACTU and union policy on superannuation.

What have we achieved, and what are our priorities for the future? How can we ensure that workers will be able to retire with decent incomes in the years ahead?

It is our intention to distil ideas from this seminar, and from wider discussion, into policy proposals for debate by the ACTU Executive.


Thinking about our involvement in super, there have been three key things that we achieved in the last 20 years or so:

Firstly, we secured superannuation contributions for the millions of workers who had no super. This was achieved through an industrial campaign, the award system, and the super guarantee legislation.

Well over 5 million people are members of the industry funds, in a workforce of around 8 million. Billions are accruing in their retirement savings accounts.

Recently NATSEM produced a report highlighting that the compulsory super system has been the single most important factor mitigating against the widening of wealth inequality over the last 15 years.

This represents a fantastic achievement by the labour movement. It is the envy of unions and workers in other countries, who cannot even imagine how a universal contributory system might be achieved in their societies.

Secondly, we set up a structure for that money:

  • through industry funds, improved corporate and public sector funds, with low
    costs, vesting, portability and equal employer/employee
  • Thirdly, these achievements have been built upon through:

  • the establishment of networks, like IFS, giving the ability to influence the
    direction and cost of fund investment and administration. New vehicles for
    investment have been created.
  • These three things remain the core of union involvement in superannuation, but having achieved them, the issues are now different and so our policy approach must move on.


    What I will briefly deal with then are the issues for the future as the ACTU sees them. I hope that this will stimulate discussion. These issues fall into 3 broad categories:

  • Super as an industrial issue;
  • The contemporary issues for the super network;
  • The political context.
  • Super as an industrial issue

    The key issue here is the adequacy of current super contributions in funding a decent retirement income. We reached 9% earlier this month, and that as you know is the limit of the SG legislation.

    The union movement never meant contributions to stop at 9%. As you will remember, there was a Labor plan for a Government/employee co-contribution, which would have resulted in 15% minimum contributions.

    15% should remain our next goal – it is what is required together with the pension to give workers a reasonable standard of income in retirement. No one other than the Federal Treasury seriously questions this assessment.

    So how do we achieve it?

    There are all sorts of models and assumptions. Obviously the results are different, depending on how long people work, and on what basis (the old assumption of 40 years full-time is no longer valid) and the rate of return on the funds.

    A modest retirement income of $25,000 per year could be obtained by someone on a $40,000 salary after 40 years, and after 30 years by someone on a $60,000 salary, but this leaves out an awful lot of people – women, part-time workers, low-paid workers, people with interrupted work history.

    On this point consider the following – all of the net jobs created during the 1990s were part-time casual jobs – and no less than 87% of those jobs pay less than $26,000 per year, and 48% pay less than $15,600 per year.

    On these sort of incomes you cannot expect 9% super contributions to amount to much of a retirement income. And a strategy cannot be planned on the basis of the full-time model of employment.

    There are a couple of key issues then:

  • We need to look at how contributions can be increased; and
  • We need to consider the contemporary nature of the labour market.
  • I think the first thing is that super must come squarely back onto our radar screens as an industrial issue.

    While the SG contribution was stepping up every couple of years it was to be expected that super would not be on the top of the bargaining agenda, although for many unions it has certainly been there.

    But now it is clear that the SG won’t increase, bargaining for increased employer super contributions will look more relevant to many workers and their unions.

    Lifting contributions across the board will of course take more than putting the issue on the bargaining agenda, although as has always been the case, we will first need to campaign industrially in order to be able to spread gains across the workforce.

    But in addition to further employer contributions we will need to consider tax changes, Government contributions and member co-contributions or a combination of these – as a way of getting to 15% – and as a way of lifting the super savings of low paid and casual and part-time workers.

    The contemporary issues for the super network

    The battle is no longer to set up the funds, and assert our role in them, although there is a constant need to defend industry funds. However, when we think about workers’ super, we need to think much more broadly.

    The industry funds are very important, and the ACTU will continue its involvement and support of them.

    But we must also recognise that many workers have their super in corporate and public sector funds as well – it is in this area that many of the difficult industrial issues arise, like BHP Steel, the vehicle industry, and Ansett.

    And it is in the corporates in particular that we can expect the pressures to increase in the short term, as companies step up the pace of contracting out the management of the funds to financial institutions.

    There’s big commissions to be made in this field, and companies will be offered big inducements to hand over workers’ super to the organisations that will maximise profits, fees and commissions, at the expense of workers.

    To protect workers from the high fees and charges that they face out of this process, I think the industry funds need to be able to compete in this market.

    Are they able to do so? If not, how can they compete more effectively? Or are we happy for more and more workers to be steered towards the master trusts? These are some issues that need consideration.

    So too must we look at the direction of the super network.

    The work that has been done, particularly through IFS and its associated bodies has been tremendous.

    Issues which are important in the future:

  • Rethinking investment – to make sure that we broaden our thinking
    about workers’ savings as long-term “patient” capital. This
    year, with the kind of low returns that many fund members have never seen, is a
    good time to debate the utility of promoting year by year returns based on more
    money chasing the same assets – the herd mentality.
  • I would like to see more imaginative investment vehicles which could provide stable long-term returns while assisting in the development of our regions and other needed infrastructure – such as housing.

  • Bringing down investment costs – the level of investment fees is
    unjustifiable, and this worrying time of negative and low returns is a good time
    to look at them.
  • Fund managers have really had it easy up till now – following indices and hopefully coming out ahead of the median. With the stock-markets the way they are today, these people will need to earn their money.

    I cannot see how managers can expect high fees for losing money, or even more fees for managing more money if they haven’t contributed to the increase in the asset base. Performance related fees must also be squarely on the agenda.

  • Another important issue is to continue to develop ways of giving workers and
    their employers access to value-for money financial products.
  • This will be a key for us in an increasingly competitive environment. To back up our industrial support for the funds it will be important to maintain employer and employee loyalty with strong products.

    Members Equity could become the key to this, and to our other investment objectives.

  • Having said that we should also focus on keeping administration fees low,
    and debating out what sometimes seems like a mindless rush to add bells and
    whistles to superannuation which are used by very few workers, but which add to
    the costs, in the name of competition.
  • The political context

    The third area I’d like to highlight is the political environment, and how union objectives for super fit in to relationships with the Government, Labor and the business community.

    Firstly it’s clear, if anyone hadn’t noticed, that behind the Government’s agenda is a desire to wipe out union involvement in super, particularly the industry funds, through:

  • pushing choice of fund, to help employers steer workers into master
  • discriminating against not-for-profit funds with ideas like capital adequacy
    requirements, where fund sponsors would have to come up with millions of
  • encouragement of retail-type super products.
  • All of this simply means that unions have to keep fighting for what is right, for what will be best for workers’ super.

    Again, it’s important that not only do we lobby politically, but that we make sure that these issues are better understood by workers as industrial issues on the job.

    Union identity with the funds which we support will be very important.

    We also need to work with the ALP to develop a policy to deliver better super to Australian workers, including ideas like:

  • fairer tax;
  • lifting contributions;
  • encouragement of appropriate ways to invest funds in national
    infrastructure, particularly in regions.
  • Finally, it is legitimate that we use our influence to elevate issues like corporate governance.

    I’m not one who thinks this should be the main game for unions, but it is nonetheless an area where we can in a practical way push for improvements in corporate governance and conduct. This is consistent with our duties as trustees.

    Big business is vulnerable in this area, following the scandals in the US and Australia.


    I hope that in this brief overview I’ve given you a feel for some of the key issues as I see them.

    And as we consider future policy it’s vital to bear in mind that super is a key to economic equality in Australia.

    While much of the public debate deals with income-related issues – such as wages, taxation policy and social security – the accumulation of assets is also critical for working people.

    While the top 20% of Australian households earn 38% of the nation’s income, the bottom 20% earn 8%.

    The distribution of assets, however, is twice as bad. The top 20% of households own 65% of Australia’s wealth, while the bottom 20% owns nothing at all.

    Things like home ownership and super therefore have an absolutely fundamental and continuing role to play in creating opportunities and a better future for the kids of working families – and that’s a key reason why we’ve got to keep working at it.

    Linda Rubinstein, Senior Industrial Officer, ACTU. 23 July 2002