Firstly can I welcome all of you to this Seminar organised by the Australian Council of Trade Unions in the form of a dialogue between the ACTU and the investment community.

We have people here from many parts of the Superannuation Industry, including in particular fund managers, asset consultants and representatives from Superannuation Funds.

My name is Joe de Bruyn, I am the Senior Vice-President of the ACTU, the National Secretary of the retail union, the Shop Distributive & Allied Employees Association, and I am also a Trustee Director of R.E.S.T., the Retail Employees Superannuation Scheme.

You will have noticed that in recent years, unions have become more active and involved in all of the issues arising out of Superannuation. This has included a range of issues dealing with investment, the running of superannuation and corporate governance. The Trade Union Movement collectively has almost 2 million paying members in Australia, making it the largest single organisation in this country representing working people with superannuation and covering all sectors of the Australian economy.

Trade unions of course conduct their traditional role of bargaining with employers on wages and working conditions, achieving increases in minimum award rates of pay, and in dealing with industrial issues such as job security, hours, rosters, health and safety, and so on at the workplace - all this designed to achieve the well-being of working people and their families, and a fairer society for all. The role of unions in superannuation is a natural and logical part of their overall work.

The union involvement in Superannuation is relatively recent. In fact, the spread of Superannuation through the whole of the workforce through the Superannuation Guarantee Charge arguably represents the single most important social advance in this country over the last 50 years.

Let me talk a little bit about union involvement in Superannuation, using the Retail Industry as the example with which I am most familiar.

Fifteen years ago, most workers in the Retail Industry had no access to Superannuation at all. Superannuation was entirely at the discretion of the employer, and it was mostly limited to managers and executives of the company. Some retailers did offer super to full-time employees after a defined period of service, but many ordinary shop floor employees declined to participate even though they were eligible because of the lack of information and knowledge of Superannuation at the time.

The Company Funds with their extremely limited coverage had poor vesting provisions, no portability, and provided little real information to members. I remember on one occasion asking a major retail company for a copy of the Trust Deed of the Company’s Superannuation Fund in order to assist a union member with a question about her Superannuation. The company refused to provide the information, and this left the union with enormous difficulty in resolving any Superannuation issues which were brought to it for resolution.

In 1987 all this changed forever. The union movement decided it would pursue an entitlement to the benefit of a 3% increase in productivity, not by seeking an increase in the award rates of pay, but instead by claiming Superannuation calculated on the ordinary time earnings of each employee. This claim had been preceded by a decision of the High Court that, despite previous decisions to the contrary, Superannuation was now to be regarded as an industrial matter and therefore within the jurisdiction of the Australian Industrial Relations Commission to consider.

In the Wage Case that was run, the Commission decided that each union was entitled to claim Superannuation at a level of 3% of award earnings but it had to be negotiated directly with employers, award by award.

By 1990, as a consequence of the intense work of unions, most workers covered by awards had an entitlement to Superannuation. Suddenly Superannuation had changed from being a privilege for the few to an entitlement for the vast majority.

The original 3% award superannuation grew to 9% last year in the Superannuation Guarantee Charge Legislation passed in the early 1990s. We know that 9% superannuation is not enough, and one of the big debates for this country in the future is how we can increase Superannuation further to a new target of say, 15% of Ordinary Time Earnings.

The other major issue in the late 1980’s was where this Superannuation money would be paid. While many employers and employer organisations were prepared to enter the Industry superannuation Funds that were established at this time with equal representation from employees or unions, and employer organisations, other employers expressed their fears about these new arrangements and claimed the right to have Occupational Superannuation paid into specially constructed company funds. In the Retail Industry, this issue was argued out in the Federal Industrial Relations Commission and in each State Industrial Commission around Australia, with the result that, with few exceptions, the Superannuation paid by retailers was to be directed towards R.E.S.T., the then recently established Retail Employees Superannuation Trust.

As the money flowed from employers into the Industry Funds, a new vehicle for Superannuation for working people in Australia was born.

Today, the Industry Funds are a well established and prominent feature of the Superannuation Industry.

Despite any concerns that may have been held by either side, there is an extraordinary degree of consensus in the decision making on the Trustee Boards of the Industry Superannuation Funds. Employee and Employer representatives come together and make decisions in the best interests of the members of the Fund, and almost invariably reach unanimity in their decision making.

The Industry Superannuation Funds have shaken up the Superannuation Industry. They are characterised by low fees and efficient administration. They provide cost effective insurance for Death, Disablement and Income Protection. They also provide competitive returns. The frequently heard suggestion that this is “the second year of negative returns” is unknown to the Retail Employees Superannuation Trust, where we have credited 3.5% and 4% respectively in the last two completed financial years.

Industry Funds provide additional benefits to their members, including Member Investment Choice, Allocated Pensions and many other benefits. Many Industry Funds now are Public Offer Funds and some have ventured into providing a Corporate Division to take in Corporate Superannuation Funds looking for a new home for the future.

The Industry Funds have shaken up the Superannuation Industry to make it more transparent and more efficient, forcing it to lower fees and charges, and to stimulate better returns. There is also a far more constructive and open debate about the real Superannuation issues to which I hope this Seminar will make a further contribution.

The significance of Superannuation for ordinary working people should not be underestimated. A shop assistant today, with the benefit of the recent $17 per week National Wage Increase won by the ACTU, is entitled to a minimum Award rate of pay of $507 per week. Such an income is, of course, miniscule when compared with the incomes of most people in the Superannuation Industry. Think of the significance, then, of Occupational Superannuation which is now providing a small, but significant nest egg for the retirement of these low income workers in the Retail Industry. The $15,000 or $30,000 that a shop assistant might retire with today in their R.E.S.T. Superannuation account is money that would not have been there had Occupational Superannuation not been won.

We obviously have a long way to go to make sure that this Superannuation becomes a significant contribution to the retirement income of ordinary working people, but we have made a big start and we intend to build further on this in the future.

Having established Superannuation, we are very proud of what has been achieved. We are obviously interested in how the funds of working people are invested in their long term interests. That is why we are talking to you directly as trade unions. We believe that we will all gain from establishing and maintaining a dialogue about issues of mutual interest. We have structured this Seminar today in such a way as to provide time for discussion as well as questions. We want to hear from you as well as speaking to you direct.

In conclusion, can I welcome you once again to this Seminar and I trust that you will find it an engaging and engrossing discussion with some of the most senior representatives of the Trade Union Movement on the issues facing Superannuation today and tomorrow.

Opening/Welcome by Joe de Bruyn, SDA National Secretary/Treasurer Melbourne 24^th July, 2003