Interview with Ross Greenwood on Sky News Business Now

Subjects: Cbus Deloitte Report, Wayne Swan's Senate appearance.

E&OE……….

Ross Greenwood

Now, just one thing about that you should know, the BFID that Wayne Swan referred to is the Best Financial Interests Duty, which compels a superannuation trustee to always act in the best interests of their members. Because of that, and in light of the Deloitte Report findings. Senator Andrew Bragg now wants Wayne Swan to reappear before the Senate. And he joins me now Andrew, good to chat to you. Why do you want Wayne Swan back in the Senate?

Senator Bragg

Good afternoon, Ross. I think it's very important that we get to the bottom of what's happened here because Mr Swan has appeared as a witness at the Senate Committee, and it is a contempt to give false or misleading evidence to the Senate. And I have to say that his testimony just doesn't match up with the Deloitte Report, which you just canvassed there. So, Deloitte says one thing and Mr Swan says something completely different. So, it's very strange.

Ross Greenwood

So, let's go to what Deloitte actually did say. We've got the statement here, one of the key passages that is inside this Deloitte Report. If we have a look, the review found that although individuals are focused on ensuring expenditure achieves the relevant strategic objectives and member outcomes, it then goes on and says, the related documentation did not always clearly articulate how the two concepts, specific expenditure and member outcomes, were aligned. This may result in the trustee not being able to appropriately and adequately meet the BFID requirements. That's the key to it, isn't it?

Senator Bragg

Mr Swan was very clear that the partnership agreements were measurable and were delivering strong measurable benefit to members. Deloitte was clear that that was not the case, that there were no benefits to members in some cases, and that there was no measurement, no framework. So Mr Swan, I think, is at great risk of having misled the Senate. So we do need to, at some stage, clarify why exactly this evidence was given to the Senate, particularly given that Mr Swan read the Deloitte Report because he mentioned the report in his evidence.

Ross Greenwood

So then you asked him straight out, right, how much money that the Cbus fund had given to the CFMEU in exchange for whatever services they claimed. How much money did he actually come up with? Because it's in the Deloitte Report, though he didn't have the number at hand.

Senator Bragg

Well, we know that in the last year, the unions received more than $2 million from the Cbus fund, and the CFMEU, in particular, received over $1 million dollars. So I find it very hard to understand that Mr Swan did not know about those figures. These are figures which were already reported in the Cbus member statement. So, I think the people who are running this fund need to be honest with the Australian people and honest with their members about why they are making these payments. I believe it is very clear that some of these payments are uncommercial. There is no basis for them other than they want to give away money to their mates, the CFMEU.

Ross Greenwood

Okay, but the fund also gives money on the other side to the Master Builders Association, the Industry Fund, the Building Industry Association. So it goes both sides to employers and to the unions themselves. Do you think there should be some rule that industry super funds cannot simply make these payments under any circumstances?

Senator Bragg

Well, I don't think the employer groups are any better than unions. I mean, they're all part of the IR club. They're all sucking millions of dollars out of these super funds. And when the super funds incur big fines, as may happen in Cbus' case for the non-payment of insurance claims, the employer groups and the unions don't have to pay any money. So they're happy to take dividends from the fund, but they run for the hills when something goes wrong. So I think it is a very sick system where the shareholders get away with blue murder here and that it's used the super system as a cash cow.

Ross Greenwood

So, do you think that these funds are now getting too big, that something needs to be done? To me, in some ways, they're mutuals, just like the old AMP, National Mutual, Colonial Mutual, MLC were in the old days, they were not-for-profit mutual funds. They got too big. It seems to me that these industry superannuation funds now exert extreme control, not only over companies and company behaviour but indeed in the way in which capital is deployed.

Senator Bragg

Well, the governance is a shambles, clearly and the Cbus is just one case study where Mr Swan came to the Senate and gave evidence which clearly was inconsistent with the expert review that he was sitting on. But more broadly, the fact that these organisations are not supported by their shareholder organisations, they don't capitalise these funds, and they have virtually no independent directors means that they are running a 1950s governance model in the 21st century. And I think it is very unreasonable for Dr Chalmers, the Treasurer, to dodge questions on this. He is very quick to bash up the Commonwealth Bank and very quick to call for the heads of the people at Westpac when they had their issues in 2019. But he seems silent on Cbus for reasons that may be obvious to you.

Ross Greenwood

Okay. And there's, of course, one other big issue that's sleeping inside, isn't it? Is their non-liquid investments in a range of issues, including infrastructure and private equity investments.

Senator Bragg

Yeah, and that's a matter for APRA. APRA has to step up here and do its job. They need to make sure that they are mark to market and valuing their assets properly. But APRA, I think right now, has its hands full on trying to make sure that it can get some straight answers from Cbus, from the Senate testimony from APRA. I think they were also displeased. So, it is a real mess at the moment, and we need to get to the bottom of why there appears to have been misleading evidence given to the Senate.

Ross Greenwood

Yeah, brilliant. Andrew Bragg, great to have you on the programme. Many thanks for your time.

Senator Bragg

Thanks, Ross.

[Ends]