Rear Window
BUSSQ’s stunning governance deadlock
Myriam RobinRear Window editorIt can be hard to make sense of what’s driving the extraordinary recent events at Queensland-based construction industry superannuation fund BUSSQ.
With the Australian Prudential Regulation Authority sniffing around – as is entirely warranted given the fund’s board lacks quorum and is unable to function after the abrupt resignation of three directors last month – those in the know won’t stop talking about their fiduciary duties. Which tend to revolve around getting the fund’s governance operational rather than spilling the beans.
Still, informed observers not so encumbered do have a theory, which rests on the $6 billion superannuation fund’s governance structure and its deadlocked position on a merger with Cbus, the other, far larger construction super fund.
BUSSQ’s ownership is equally split between Master Builders Queensland and that state’s branch of the Construction, Forestry, Maritime, Mining and Energy Union. (The former, whose board directors all resigned, has twice this month been picketed by members of the latter, who blame it for the governance impasse. Naturally.)
Both bodies get three directors apiece – there are no independent directors – and the chairman (presently ex-CFMEU officer Paula Masters) does not get a casting vote. With the board equally split, non-consensus decisions simply do not occur.
And there exists no consensus on BUSSQ’s long-mooted merger with Cbus. Particularly given the ascension of bolshie CFMEU Queensland chief Michael Ravbar to the fund’s board last November.
The month before, Ravbar reiterated warnings that the Wayne Swan-chaired Cbus had “lost its way” over an internal EBA dispute, calling on CFMEU members to question whether they want their retirement savings at an institution that is “now attacking and undermining its employees and their rights at work”. Master Builders Queensland, including its CEO Grant Galvin, is understood to be far keener on a merger.
Cbus, notably, is the only other superannuation fund with a legal exception to rules preventing the charging of balance-poor members for insurance. But given the entrenched positions at a board level, the merger simply cannot be done. Unless – and this is the theory – things became so non-functional that APRA has no choice but to get involved.
The regulator has long taken an interest in inefficient small funds. It cannot currently force their merger with larger ones. But as APRA’s super tsar Margaret Cole flagged in this paper on Wednesday, it’s a power she’d very much view as “helpful”.
Even so, she noted, “we use the tools we have ... to try to nudge those things along and get things done”.
BUSSQ has 70,000 members whose savings are currently wrapped up in a fund whose board cannot make decisions. It’s hardly ideal. And that, a cynic would conclude, could be just the ticket.
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