Data published on Wednesday by the Australian Prudential Regulation Authority (APRA) shows Cbus led the pack in terms of contributions to industrial bodies during FY2022-23 with $2.5 million, followed by First Super at $2.34 million.
Both saw a large chunk of their industrial contributions head to the Construction, Forestry and Maritime Employees Union (CFMEU). Indeed, just $5,510 of First Super’s contributions went somewhere other than CFMEU, while Cbus sent about $993,000 the union’s way.
BUSSQ also contributed $519,000 towards CFMEU, while Mine Super contributed a relatively modest $36,408 to the embattled union.
The combined figure of $3.9 million represented about 28 per cent of the $14 million super funds contributed to industrial bodies in FY22–23.
Responding to APRA’s figures, the Coalition took aim at the funds contributing to the union, calling on the CFMEU administrator to engage with APRA on investigating the superannuation fund payments to the militant union.
In a statement on Wednesday afternoon, shadow treasurer Angus Taylor noted that the asserted purpose of payments from super funds First Super, Cbus, Mine Super, and BUSSQ range from sponsorship, conferences, cost for premises to administration and other.
In September, APRA launched action seeking civil penalties and the disqualification of First Super director and co-chair Michael O’Connor, who is also the national secretary of the manufacturing division of the CFMEU.
“This is Australians’ money – not the fund managers, not the government’s, and certainly not the union movements,” Taylor said.
“Given the significant criminal allegations against the CFMEU, it is essential that these payments be investigated to ensure they comply with the rules.
“Australians trust super funds to save their earnings for their retirement – not to see it channelled to possible criminal purposes.
“It is essential for the social licence of superannuation for the CFMEU administrator and APRA to get to the bottom of the purpose of these payments.
“The trustees of these funds must provide immediate clarification about the purpose of these payments and how they are consistent with the best financial interests duty.”
Shadow minister for employment and workplace relations and shadow attorney-general Michaelia Cash said the CFMEU administrator needs to ensure the funds were not used inappropriately or “ended up in criminal hands”.
“The Albanese government has an opportunity to show it is serious about cracking down on the unions by supporting Peter Dutton’s legislation to re-establish the ABCC and to ensure those with criminal records are permanently removed from construction sites,” Cash said.
“Labor cannot continue to turn a blind eye to union lawlessness by some of their biggest donors.”
Marketing spend
The data also showed that a total of 73 super funds spent a combined $422.56 million on marketing during 22–23, though this made up a relatively small chunk of the $5.6 billion funds spent on “administration and other expenses”.
The regulator had earlier flagged that this category took up the bulk of spending at 53 per cent, with total industry expenditure at $10.83 billion for the period. Investment-related expenses accounted for more than 33 per cent of spending at $3.8 billion, while advice accounted for 11 per cent at $1.3 billion.
AustralianSuper was the top spender on marketing at $60.2 million, followed by Australian Retirement Trust at $41.8 million.
Cbus came next with $34.7 million, with HESTA and Aware Super close behind at $34.2 million and $33 million, respectively.
However, among the top spenders, HESTA and Cbus had higher marketing expense ratios – the proportion of their cash flow adjusted net assets spent on marketing – at 0.05 per cent, while the other three funds had a ratio of just 0.02 per cent.
On Tuesday, APRA’s Margaret Cole said the prudential regulator has opted out of “naming and shaming” super funds with high discretionary spending on items like travel, entertainment, and conferences.
The deputy chair, speaking at the AFR Super & Wealth Summit 2024, called scrutiny of fund expenses a “priority frontier” for the regulator amid “growing concerns” about spending behaviour.
Fund expenditure will be reviewed and scrutinised with intensity, Cole said, as APRA intensifies its focus on trustees’ compliance with the best financial interests duty introduced by the 2021 Your Future, Your Super reforms.
According to Cole, APRA’s reviews have already uncovered questionable spending, with some trustees lacking the documentation to justify certain expenses. Despite three years under this duty, adherence remains inconsistent, she said.
Cole said that APRA has sifted through over 42,000 lines of data from FY22–23 alone to spot outliers and potential misuse.
“Following the evidence”, the prudential regulator identified unusually large or questionable expenditures, prompting follow-ups with trustees and, in cases of serious concern, enforcement action.
As APRA’s data collection grows, now exceeding 50,000 entries for FY23–24, the regulator anticipates uncovering even more areas of concern.
“As one of my colleagues puts it, we lifted up one rock and found a significant number of concerns,” Cole said.
“Given the sheer scale of the collections, our decision to intensify our scrutiny of expenditure does not mean we plan to review every single expenditure item reported.”
APRA last week signalled it will closely scrutinise trustee expenses where member benefit isn’t immediately evident or reasonably justified. Key areas of focus include discretionary spending on travel, entertainment, and conferences, as well as outliers in spending size and payments to specific types of vendors.
