Swift action by the USU has resulted in NSW Treasurer Eric Roosendaal writing to Unions NSW confirming there will be no forced merger of the Local Government Superannuation Scheme (LGSS) and Energy Industries Superannuation Scheme (EISS). While the Government has expressed in-principle support for a merger, Treasurer Roosendaal has confirmed that "until the trustee boards of both schemes provide written advice that they support the merger I will not sign the regulation that would authorise the formation of a single superannuation scheme." “The Treasurer met with us yesterday and has listened to our concerns,”
said General Secretary Ben Kruse. “We now have confirmation that the
forced merger of LGSS & EISS is over.”
USU Puts a Halt to Treasury Proposal The USU was first informed of Treasury’s plans for a forced merger on Wednesday 9 December. After demanding and receiving an emergency briefing by Treasury Officials on Friday 11 December, the USU Executive voted to demand that the forced merger be put on hold. The Executive resolved that any proposed merger or reform initiatives only be considered after full disclosure, consultation and agreement. Following urgent representations to Acting Treasurer John Hatzistergos, the merger proposal was removed from the agenda of the Executive Council meeting of 16 December. Nevertheless, the Union had continuing concerns that the forced merger may reappear in the New Year.
Representations to the Premier & Treasurer General Secretary Ben Kruse briefed Premier Kristina Keneally on the concerns held by the USU at a meeting of Unions NSW affiliates on Friday 18 December. USU General Secretary Ben Kruse and Manager South Graeme Kelly met with Treasurer Roosendaal yesterday afternoon. At this meeting the Treasurer confirmed that there would be no forced merger and that any agreement to merge the super funds would only go ahead with the consent of both super funds. This undertaking has now been confirmed in writing.
Where Matters Stand Now On Friday 18 December the board of EISS voted to support the merger. However, the board of LGSS remains opposed, particularly due to the fact that there has been no consultation and virtually no details are publicly available about the Treasury merger proposal. Leo Kelly, the Chair of LGSS has written to the Treasurer as follows:
“…neither the Board nor our stakeholders (the Local Government and Shires Association and the respective unions), let alone the members, have been consulted in any way of the proposed merger.
To date we have been unable to receive any documentation of the proposal, a situation we find untenable given our fiduciary duty to act in the best interests of our members.
Any merger proposal needs to be thoroughly examined on its merits and should only take place if both parties have consulted widely and are of the shared view that there are tangible benefits in doing so.”
Lack of Due Process; Lack of Consultation Yesterday EISS authorised the release of an extract of a report prepared by Super Ratings entitled Review of Potential Merger with Local Government Superannuation Scheme. Notably, EISS, Chifley and & FuturePlus CEO Richard Powis failed to consult the CEO of LGSS, or LGSS union representatives. Both the USU Executive and LGSS board have called for the resignation of Mr Powis. This lack of due process was exacerbated when the NSW Treasury then also failed to consult with the USU and USU superannuation trustees and instead set about constructing a proposal for a forced merger. Thankfully intervention by the USU and Treasurer Roosendaal has now killed off the concept of a forced merger.
Information Needed Apart from obtaining a one page summary briefing paper, the USU has still not received any further information about the Treasury proposal including the absence of key documents such as the constitution for the proposed merged entity. As far as we know this information remains withheld from USU super board representatives. On this basis alone the USU remains strongly opposed to the merger proceeding. How can a judgment be made about the merit of the proposal without knowing what the proposal is?
USU Commitments Regarding Consultation and Reform:
The USU will continue to oppose any merger unless there is support from USU members, branches and the boards and membership of both EISS and LGSS.
The breach of trust associated with the recent forced merger fiasco means that there is little immediate likelihood of an agreed merger eventuating.
Any reform proposals developed by or on behalf of the Government must be fully disclosed and be the subject of widespread consultation.
The USU will continue to argue for superannuation reform that promotes best practice superannuation results in terms of investment outcomes, governance arrangements and the reduction of administration costs.
USU Members are invited to review the KPMG report commissioned by the Union and the Super Ratings report and provide comment about these proposals by contacting infocentre@usu.org.au or mailing the USU at PO Box A1154 Sydney South NSW 1235.
