The politicisation of superannuation continues: good-on-ya, MOC

This week came the news that the sub-scale industry superannuation fund, First Super (what a misnomer), was selling its News Corp shares, having made a real killing by holding them.

AUSTRALIAN industry fund First Super is to sell down its holdings in News Corporation in protest at the “defeat of proposals for a more independent board” at the company’s annual general meeting. The fund for 72,000 members in the timber, pulp & paper and furniture and joinery industries has asked its fund managers to dispose of shares in News Corp, publisher of The Australian, over the next few months.
The holding is worth approximately $7 million, and First Super is not listed in the top 20 shareholders on the News register.
A proposal for an independent chairman was unanimously voted down at the News AGM in October, after the board recommended against the proposal.
First Super co-chair and investment committee chair Michael O’Connor said the fund was withdrawing its investment due to the failure of proposals for an “independent News Corp chairperson and more independent directors”.”Open, transparent, representative governance is not only overdue but essential for improved risk management within the company,” Mr O’Connor said.
“Further, the interests of minority shareholders have too often been compromised.  But these issues are apparently of no concern to Rupert Murdoch, so our board decided to take his advice and sell down our shareholding.”

Here are a few points to note:

  • Michael O’Connor, former boyfriend of Julia Gillard, is the brother of Labor politician, Brendan.  There is another brother hanging around the union movement (recently elected to HSU).  Quite the dynasty – a bit like the Murdochs, really.
  • Where was the employer co-chair in this announcement?  Why did he not speak?
  • I just love the notion that the independent trustee of this fund is Bob Smith, former AWU official.  Que? Independent?
  • The annualised return to News Corp shareholders in the past twelve months is close to 45 per cent, which sits rather strangely with the proposition that poor corporate governance and poor shareholder returns go hand in hand.
  • How does the trade union movement stack up when it comes to standards of corporate governance, transparency and disclosure?
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39 Responses to The politicisation of superannuation continues: good-on-ya, MOC

  1. blogstrop

    Perhaps the CatFiles administrators should just put a link to Tom Dusevic’s classic article about Labor Mates in the sidebar. It’s getting to be more relevant every week, and that will save time and pixels.

  2. Bruce

    I am astonished that self managed super funds are so popular. Truly astounded.

  3. .

    I know this sounds like a plug, but I’ve been trying to do smsf for a while and it is tedious, I’ve got an account at ING now, and I am waiting to roll over one union run fund and an okayish market fund.

    They offer an SMSF but this was easier

    http://www.ingdirect.com.au/super_and_retirement/living_super.htm

  4. Alice

    Womdering if i should an smsf one Dot. I dont much like unisuper etc
    Probably tedious…how expensive is this to set up etc?

  5. Woolfe

    SMSF, best thing i have ever done, they don’t make it easy to set up but worth the hassel as you then control the money. Told my accountant that i dont trade the shares I bought, his reply was “good”!

  6. Alice

    Dot that link just looks like a service provided to an smfs already in place….eg the cash component or term deposit already in the smsf

    so “um? read the link I suppose” doesnt quite answer the question grumpy

  7. John Mc

    Hey dot, if you trade the shares within the ING Direct Living Super, what is the tax situation with capital gains?

  8. .

    Alice did you try the other links?

    http://www.ingdirect.com.au/super_and_retirement/living_super/how_it_works.htm

    You have to be careful about what you recommend. All I’m saying is the paperwork was non existent and that is what threw me off a regular SMSF.

    I chose the shares option.

    http://www.ingdirect.com.au/super_and_retirement/living_super/where_are_the_fees.htm

  9. .

    Hey dot, if you trade the shares within the ING Direct Living Super, what is the tax situation with capital gains?

    Seek qualified advice, as will I.

  10. Keith

    A proposal for an independent chairman was unanimously voted down at the News AGM…

    Does not compute. If First Super was for the proposal, how is the vote unanimously against?
    Didn’t they bother voting? Holding non-voting shares? What?

  11. stackja

    Sex abuse inquiry just arrived in time is seems to take the attention off of labor mates. One day an inquiry into all the labor mates will show not just NSW ALP has problems.

  12. stevo

    I recently completed an MBA-type course at a major-australian-university and several lecturers seemed fixated on these alleged issues at newscorp.

    I took a look at newscorp financials and though i am financially quite uneducated they looked pretty acceptable over the long term to me, in comparison to other corps. When I let my opinion be known there ensued a barrage of scorn, mostly on the grounds of some vague notion of ‘inappropriate immorality’. There’s a good chance I lost some marks due to my opinion.

    Frankly, I just don’t get what the issue is, and no-one, professor or student, was able to provide a rational explanation. Somehow newscorp/murdoch bashing has become part of the curriculum .. but why? mystery to me.

  13. Milton Von Smith

    Is there anyone in the union movement who isn’t a former boyfriend of Julia Gillard?

  14. Rabz

    This week came the news that the sub-scale industry superannuation fund, First Super (what a misnomer), was selling its News Corp shares, having made a real killing by holding them.

    I’m presuming these geniuses will now invest in fauxfacts instead?

    After all – what could possibly go wrong?

  15. John H.

    Seek qualified advice, as will I.

    If you wish to manage your own SMSF then don’t forget the smaller investment firms in your area. I was surprised when I read the PDS’ of some my brother’s company offers(property investment, financing and mortgages, typically over 1 year with monthly returns as high as 10%pa), solid returns and quite safe. The problem is determining which of those small companies to trust. For me that was easy because I’ve done some work for my brother so know the books. They only had one investment go bad, many years ago, and that arose because they took it over from a failed firm. Given that many of these smaller firms have collapsed, an effect of Rudd deciding to protect the Big 4 post GFC,. the better ones might be the survivors.

  16. And Another Thing

    Then there will be 72,000 people worse off for letting these clowns manage their money.

    By the way, how many other of Gillard’s ex-boyfriends are going to come out of the woodwork?

  17. I’ve asked before, but missed the replies if any. Are there any Super funds that are not union cookie jars, or exposed to Green infrastructure like Eco Crucifixes or those water purification disasters?

  18. blogstrop

    AAT: You’ve heard of kleptocracy, but sleptocracy is just waiting to be coined.

  19. Keith

    Winston, the only way to be sure is to look at the board, which fund managers they use, and what the nominated investment vehicles reveal about actual industry sectors/companies. If any offer an ‘ethical’ or ‘sustainable’ investment option, run away. It will be full of green rent-seekers looking great thanks to government subsidies.

    In general, industry funds must have union representation on the board. Retail funds don’t necessarily have unionists, but gouge you with fees.

  20. wreckage

    I was consulting with a professional the other day, and there are funds that are less admin heavy than SMSF but which allow you to control the portfolio via the trustee. Apparently, and remember this is just hearsay on the internet, full SMSF is only necessary if you want to be able to handle land / property investment with it. If you just want to control the specifics of your super investment, and not include land, then there are funds that will do that.

    Seek professional advice, there are more and better options out there than you might think.

  21. wreckage

    How does the trade union movement stack up when it comes to standards of corporate governance, transparency and disclosure?

    PFFFFFFFHAHA HA HA HA HA GASP HA HA HA HA HA HA!

    Oh gosh, oh my sides, I can’t breathe.

    *wipes tears*

    Comedy gold!

    What standards???

  22. mareeS

    Labor is something special. Have a root with Julia and your wildest dreams will come true. Go to the top of the union, go to the top of the union superannuation fund, and eventually go to the top of the industrial court. What magic there must be in the hidden thicket.

    Anyhoo, we set up our SMSF in 1998 and brought our kids in as they began work. Their compulsory contributions go into their industry funds ( many employers still won’t pay into fund of choice), but on July 1 each year the balance is rolled over into the SMSF.

    Apart from the 2008/09 years our fund has had growth, small in 2010 but better all the time. I did a half-year look this week, and returns are well ahead of the offsprings’ industry funds, which seem to be returning less than bank interest (which is about 0.1%).

    I wouldn’t like a Michael O’Connor making political decisions on my retirement savings, especially considering the company he has kept.

  23. Steve of Ferny Hills

    Labor is something special. Have a root with Julia and your wildest dreams will come true.

    I blame Freddie Mercury.

  24. Leigh Lowe

    Womdering if i should an smsf one Dot. I dont much like unisuper etc
    Probably tedious…how expensive is this to set up etc?

    Should cost about $500 for a vanilla flavoured trust deed – once off.
    I pay about $750 per annum for mandatory audit, $180 to the ATO for Supervisory levy.
    I do my own accounting and that might cost $1,000 – $1,500 per annum.

  25. Boambee John

    Rupert bashing has long been part of the curriculum in Australia. In my long almost forgotten youth at the Uni of Qld, there was an activist group known as RPIG (Rupert Public Interest Group, nudge, nudge, tee hee!)

  26. mareeS

    unisuper has badly underperformed the index. My husband still had some leftovers in there last year from some work he did a while back, and the rate of return was well into the negative.

    At least switching funds within super attracts no transaction fees.

  27. Leigh Lowe

    Presumably these Union Hacks would be attracted to the “lunatics running the asylum” type governance at Fairfax.
    Just so sad that Fairfax has “governanced” itself to the brink of the plug hole, losing 90% of it’s value in the last five years whilst News has recovered from a GFC low of $9.00 to $25.00.

    I remember the ABC making a big deal of the Anglican Church in the UK divesting of a few million in News shares last year. The holding sold by this tinpot First Super Fund represents 0.035% of News issued capital.
    A dog’s piss in the Atlantic.

    But why does the ABC think this is newsworthy?

  28. Alice

    There is a core of double dipping overpaid defined benefits professors and senior lecturers who you could not surgically excise from their jobs, no matter how much they dodder about, even after “so called” retirement, who are costing unisuper a fortune and have absoltely stuffed Unisuper for the vast majority of contracted labour in unis.

  29. Leigh Lowe

    Hey dot, if you trade the shares within the ING Direct Living Super, what is the tax situation with capital gains?

    The fund will pay tax at the prescribed rate (nominally 15%), although CGT is taxed concessionally at 10%. The tax status of the member doesn’t have any impact, except when the member reaches tax free status (eg over 60 and retired).

    But, yes, make sure you get advice.
    I guess the point is that taxation will not be markedly different between super funds, however …..
    (1) an SMSF can transact in a tailored manner depending on the needs of it’s members (no more than four);
    (2) the main focus should be on FEES, not taxation.

  30. Alice

    Thanks Leigh. Good to know.

  31. Alice

    Wreckage

    What I want to do now is move real a estate property into super (Im approaching in ten years or so but not retired) but I want to control it and so far Ive trusted no-one and it really is the majority of my super in the sense of retirement savings but Ive never trusted anyone else’s (fees etc) and I dont trust super now!!. I have some legit fund stuff as well but I dont like it.
    There are certain benefits to super in transition to retirement and as long as I can keep full control (and whip it out if the authorities or various fee merchants look like robbing it!) Im happy.
    So how the hell do I now move a debt free owned rental house and half a rental unit into super now? Is it possible?
    I heard smsf can borrow to buy property now? Maybe it could borrow and buy it from me and then how do I pay the loan back?

    It all gets a bit much for me..so complicated.

  32. Tel

    Yeah, super has become a way to separate the owners of the business from having any say whatsoever in what the business does.

  33. mareeS

    Alice, you’re barking up the wrong tree, I think. If you own the property and are either living in it/family members/friends/people known to you are living in it, or you derive rent from such people, or you have direct management, it will not qualify as a superannuation fund asset.

    It must be completely past arms-length and be seen to be impersonal. There are clearly-defined rules about assets that qualify as superannuation fund assets, and those that don’t.

    For example, we have a fairly extensive art collection within our home that cannot be transferred to our super fund unless we keep it stored off-premises with a third party and never avail ourselves of the pleasure of looking at it. We have a boat that we use regularly, but if we transferred ownership to our super fund we would never be able to use it for personal purposes.

    Every tangible asset in your super fund must be kept at arm’s length, which is why shares and commercial property are the best things to pass the test.

    As for borrowing on assets, that’s also clearly defined. The fund can borrow on its assets, but you as an individual cannot use the fund to borrow for your personal purposes.

    Talk to a financial advisor.

  34. Steve of Glasshouse

    I just love unions. Only found out the other day that they fall under the gamut of FBT rebatable bodies; right up there with charities..

  35. Tel

    Every tangible asset in your super fund must be kept at arm’s length, which is why shares and commercial property are the best things to pass the test.

    Because when people have assets and also look after those assets it is a anathema to a healthy national economy. I mean, what to do with all the useless layers of middle-men and compliance checkers?

  36. By The Dozen

    News Corp is a carbon neutral company, apparently. Perhaps the board of First State have assessed the costs involved in staying carbon neutral against anticipated future earnings and have calculated a negative present value. Quite frankly, any company stupid enough to impose on itself totally unnecessary costs don’t deserve a future as good as its past, let alone, any beta. Anyway, industry funds don’t need to make a return. They would have already done the sums on administration costs versus 12% and beaten zero even if ever so slightly.

  37. Andrew

    All, be careful. SMSFs are NOT cheap for all but the larger balances. I have one – I’m a very happy eSuperfund client – but I got it for very specific purposes (owning extremely “exotic” assets, plus access to retail T/D rates of 8% back in 2010 that I couldn’t get in a wholesale fund). I work with industry funds who have other advantages (much cheaper for boutique fund managers, access to scale investments) and I intend to split my money between them and my own SMSF.

    A cheap wrap is often a better option for what 99% of people want to own – you might even be able to buy shares directly in your industry fund.

  38. Alice

    Maree
    Both are strictly investment. We dont live in them and neither do friends or rels. Its my savings but I saved outside super and reinvested the gains outside super (and Ive done better this way with my after tax earnings than what I have in mandatory super). What if I now wanted to transfer these assets into super?
    It is all arms length anyway, now.
    One reason I did this is because I didnt want the government or the fund to keep taking pieces out of my retirement savings (on the way in and on any profit). Thats the problem with smsf
    suddenly I need a new layer of people telling me what I can and cant do with my assets (bugger them all!).

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