The fine people at the Financial Review usually need little prompting to attack industry superfunds. The very existence of financial behemoths jointly run by employers and unions, and their annoying tendency to routinely outperform retail superfunds, has long irked the business daily. Rather than seeing them as a triumphant co-option of the trade union movement into the very beating heart of Australian capitalism, the AFR sees them as a poisonous blight and threat to the natural order of things.
Naturally, the revelations about corruption within the CFMEU have prompted an attempt to link it all with Cbus, the construction sector superfund with around $90 billion in assets, making it the eighth largest in the country. The CFMEU appoints three directors to the 14-strong Cbus board, including former CFMEU national secretary Dave Noonan. The Australian Manufacturing Workers’ Union, the Communications, Electrical and Plumbing Union of Australia, and the Australian Workers’ Union appoint the other three union members.
On the employer side, Master Builders Australia appoints all six directors, including Denita Wawn and Hedley Davis from the MBA itself. Wayne Swan is the chair — an appointment lashed as an “insult to construction workers” by the CFMEU — and economist and former Reserve Bank member John Edwards is the other independent director.
Not that you’d read about the make-up of the board in the AFR, especially after the excitement of the revelation that a CFMEU official boasted he could have companies awarded contracts on building projects that Cbus had invested in. The problem was, as was noted well down in the relevant yarn, Cbus doesn’t build anything. Its property subsidiary, which has its own board comprising partly Cbus directors and partly independent directors, manages projects and in turn appoints independent contractors to run them.
That didn’t stop the AFR, which unearthed finance industry veteran David Murray to suggest Cbus members consider “rolling over [their] money and putting it elsewhere”. Murray is an advocate for ending the system of employers and unions appointing directors to industry funds and replacing them with retail superfund-style independent directors — a cause the AFR has always spruiked with gusto. It’s a way of suggesting there’s something not quite kosher about industry funds even if they outperform retail funds.
Curiously, the AFR failed to mention Murray’s tenure at AMP, which ended in disaster when he quit over the promotion of Boe Pahari, who was the subject of a sexual harassment complaint. AMP, to which Murray was appointed in 2018, was one of the stars of the Hayne royal commission, which unearthed that it charged dead people fees and imposed fees for no service on its wealth management clients.
So has Cbus suffered from its links to the CFMEU? Superfund researcher Chant West gave it its highest-tier rating this year. Super Guide ranks Cbus’ default option as the fifth-best performer in the industry over 10 years (despite a relatively poor 8.6% return in 2024). It won Chant West’s 2024 awards for member services, specialist fund and responsible investment and was a finalist for Chant West’s fund of the year (it was in the top three). It won Chant West’s Integrity award in 2021 and 2022. The AFR itself even ranked Cbus Property fourth in its best places to work list.
This is all against the backdrop of industry funds continuing to outperform retail funds, to the chagrin of the AFR: despite trying to spin annual results as evidence retail funds were better than industry funds, the AFR admitted last week, “The top 10 performing growth funds over the decade to June 30, 2024 were all industry superfunds.”
It isn’t hard to find examples of the AFR desperately trying to find a reason to criticise industry super. A month ago it gleefully reported “a fightback by retail superfunds in attracting and retaining high-net-worth members”. For those who care about where the wealthy park their savings, the evidence turned out to be that the share of industry funds “of the high-net-worth super market — or accounts with a $1 million-plus balance — has remained steady at 58% for the past three years, after rising from 36% in 2016”.
The AFR has long had what looks like an editorial guideline that industry funds should only ever be wrongly described as run by unions — like this 2021 piece celebrating that retail funds were no longer losing members at a rate of knots to “union-aligned funds”. Or the once-respected Chanticleer column recently claiming industry fund boards are “chocked with union representatives who often know little about financial markets and are drifting in relevance in the wider workforce”.
Maybe retail funds should be hiring some of those union-appointed directors who apparently dominate industry funds. They might lift their performance.
Dislcosure: Bernard Keane is a member of Hostplus.
