Paul Keating gets the credit as the father of compulsory super. Even the current Prime Minister has said Keating deserves enormous credit for it. But the deal behind super tells you a lot about who it was really built for.
In the mid-1980s, under the Prices and Incomes Accord, the Hawke-Keating government and the ACTU struck a trade. Unions agreed to give up a national 3% pay rise and put it into super instead. Under the 1985 Accord, that 3% was paid into an industry fund, and the unions were already building those funds.
So who won? The government got wage restraint, with cabinet expecting future pay rises to be moderated by the super levy. The unions got brand new funds, with their own nominees on the boards and a guaranteed flow of members’ money. Workers got a pay rise they couldn’t touch for 40 years. Sounds like a dream, right? The question is, a dream for whom?
In 1992, Keating made it compulsory for almost everyone through the Superannuation Guarantee, starting at 3% of earnings. Today it’s 12%. All of it funded by workers and the small businesses that employ them. That’s us.
Fast forward to July 2026. Anthony Albanese told a room of super fund CEOs and bankers there was real potential to treat super as a national asset that works “not just for individuals and for retirees, but for the nation”. He’s described it before as an “extraordinary national asset”.
Read that again. A national asset. That’s your employees’ wages he’s talking about, the ones you’re required by law to pay.
This should worry every one of us. Super isn’t a gift from the government. It’s part of what a worker earns. On paper, it’s theirs, but they can’t touch it, can’t vote on who runs it, and have little say in where it’s invested. If workers don’t control their own wages, who does?
And since 1 July 2026, you’re the one sending it to the super funds every pay run. Under Payday Super, 12% of every employee’s qualifying earnings must land in their fund within seven business days of each payday.
So who does control it? For a huge chunk of that money, it’s a board where half the seats are reserved for unions and employer groups, often with a former politician in the chair. After working inside the industry and seeing under the bonnet, I started asking what this all means and how it really works in practice.
How much money sits in industry super?
About $1.8 trillion. APRA figures for the year to 30 June 2026 put total super at $4.77 trillion, with industry funds holding $1.8 trillion, or 38% of the total. They’re also the fastest-growing part of the system.
Industry funds were set up by unions, and most still run on what’s called the equal representation model. A typical board, like HESTA’s, has six directors appointed by employee bodies, six by employers, plus an independent director and an independent chair.
To be clear, unions don’t control these funds on their own. Employer groups hold the other half. But a set number of seats is reserved for unions by design, and that’s the part worth questioning.
How many former Labor politicians run these funds?
More than you’d think. Right now, three of the biggest industry funds are chaired by former senior Labor politicians.
| Fund | Chair | Political background | Fund size |
|---|---|---|---|
| Cbus | Wayne Swan | Former federal Treasurer and Deputy Prime Minister, elected ALP national president in 2018 | $90bn+ |
| HESTA | Nicola Roxon | Former federal Attorney-General and Health Minister | $100bn+ |
| Rest | James Merlino | Former Labor Deputy Premier of Victoria | $105bn+ |
Together, that’s close to $300 billion of workers’ wages overseen by former Labor politicians.
And it isn’t new. Former Victorian Labor Premier Steve Bracks chaired Cbus before Swan. Former Queensland Labor Treasurer Andrew Fraser chaired Australian Retirement Trust, one of the country’s largest funds, until November 2025. Former ACTU boss and Labor minister Greg Combet chaired Industry Super Australia and IFM Investors, the investment manager the industry funds own, before he was appointed chair of the Future Fund.
Here’s what gets me. Roxon and Merlino hold their roles as independent chairs. Under the rules, a former Labor Deputy Premier counts as independent. To me, that looks a lot like a jobs-for-mates culture.
To be fair, it isn’t only Labor. Former NSW Liberal MP Peter Collins once chaired Industry Super Australia, and Peter Costello ran the Future Fund for 14 years.
These chairs may well be capable people. But the same political network keeps turning up at the top of funds built on compulsory wages. Think about who signs off on where billions get invested. Think about the relationships these people carry with them from Parliament and the union movement. When it all lines up that neatly, it starts to smell a bit fishy, and members deserve to ask whose interests come first. Suddenly, “profit to members” sounds less like a promise and more like a marketing slogan.
Should unions still have guaranteed board seats?
This is the question that matters most. Union membership has fallen from around 40% of workers in 1992 to roughly 13% today. Yet the board structure that hands unions a fixed share of seats hasn’t moved.
So a worker who has never joined a union, in a business that has never dealt with one, can have their compulsory super overseen by union nominees. They didn’t vote for them. You, as the employer funding the contributions, didn’t either.
This isn’t just theory. In February 2025, a Coalition-led Senate inquiry said union heavyweight Paddy Crumlin failed the fit and proper persons test required of super fund board members, in relation to his role on the Cbus board. After the CFMEU was placed into administration, APRA required Cbus to commission an independent review of its directors’ skills.
Unions and the ACTU strongly defend the model. Their argument is that funds with worker representatives deliver better returns. We’ll come back to that, because it deserves a fair hearing.
What did I see from the inside?
Before HR Gurus, I worked in the industry super sector. And I’ll be honest, when I started, I was genuinely excited.
The pitch was hard to argue with. Run only to benefit members. Profits to members, not shareholders. Looking after the workers who keep this country running. I believed my work was making a real difference to people’s retirements.
The longer I stayed, the more questions I had. Not about the mission, and not about most of the people. Many of the people I worked with were extraordinary. What I started to question was the spending. Where the fees went. Who was sitting around the board table and what they were paid. How decisions got made, and who they really served.
I’m not going to name names. That’s not what this is about. But I saw enough to stop taking the “not-for-profit” label at face value. Not-for-profit doesn’t mean nobody profits. It means the money goes somewhere other than shareholders, and it’s worth asking where.
Where do the fees actually go?
For years, nobody outside the funds could properly answer that. Then APRA started publishing spending data, and some of it is eye-opening.
Payments to unions. In 2022-23, Cbus led the sector with $2.5 million in payments to industrial bodies, followed by First Super at $2.34 million. These were described as sponsorship, conferences, premises costs and administration.
Marketing. The same year, 73 funds spent a combined $422.56 million on marketing. That’s members’ money spent persuading people to join, in a system where contributions are compulsory anyway.
Pay at the top. A BDO review of 27 funds found directors averaged $107,000, CEOs averaged close to $900,000, and eight funds paid their CEO over $1 million. Back in 2017, TWU Super’s chair was paid $290,700 for one day a week, while its average member balance was around $70,000.
What happens when members need it most. In 2025, the Federal Court ordered Cbus to pay a $23.5 million penalty for serious failures in handling death and disability insurance claims. That came on top of a $32 million remediation for around 7,400 affected members and families. These were grieving families and injured workers left waiting.
Most of this spending is perfectly legal. But if you were a shareholder in a company spending like this, you’d want answers. Super members, and the businesses funding their contributions, deserve the same.
Who decides where your staff’s super is invested?
The board and its investment team. Members get almost no direct say.
Here’s a recent example. In July 2026, AustralianSuper announced a further $500 million into India’s National Investment and Infrastructure Fund, taking its total holdings in India to $3.3 billion. The announcement landed while India’s Prime Minister was visiting for the Australia-India leaders’ summit, and AustralianSuper’s CEO attended. Convenient timing.
To be fair, AustralianSuper says its original 2019 investment has been one of its best-performing infrastructure assets. This may well be a good investment.
But industry commentators described it as part of the “super fund diplomacy” the government has used to deepen ties with key allies. That’s the bit that should make you pause.
Workers’ compulsory savings are supposed to be invested for one reason only: their best financial interests. When the timing of a big offshore investment lines up neatly with a government’s foreign policy goals, members are entitled to ask whether returns were the only thing on the table. And they have no vote either way. To be fair, AustralianSuper also owns big Australian assets like Sydney Airport and WestConnex. But it still feels upside down to me. Why are billions of Australian workers’ savings building India’s infrastructure when we have plenty of projects crying out for funding here at home?
But don’t industry funds perform better?
Often, yes, and it would be dishonest to skip this. The Productivity Commission found that not-for-profit funds as a group systematically outperformed for-profit funds, with retail funds making up most of the worst performers. It also found some industry funds were in that group too.
The Commission’s fix wasn’t to keep the old board model either. It recommended at least one third of trustee board seats go to independent directors as best practice.
So the honest position is this. Good returns and good governance are two different questions. A fund can deliver solid returns and still have a board structure, spending habits and conflicts that members would never sign off on if anyone asked them.
Is 12% compulsory super even good for workers?
That’s a debate in its own right. The Grattan Institute found workers mostly pay for higher compulsory super through lower wages, and argued the rise to 12% wasn’t worth it for most people. The super industry disputes this, and studies funded by Industry Super found no wage trade-off. Either way, the 12% isn’t free money. You, the business owner, hand it over every payday, and if Grattan is right, your workers pay for it too through slower wage growth.
Should workers be able to take some of it now?
That debate is live. In September 2026, One Nation proposed letting renters and mortgage holders take a quarter of their future super contributions as pay for up to three years. Employers would still pay the full 12%, with the fund paying 3% straight to the worker if they opt in. One Nation says a full-time worker on $90,500 would get about $2,300 a year after tax.
The backlash was instant. The peak super funds body called the plan economically disastrous, warning it would push up inflation and leave retirees poorer. Judo Bank’s Warren Hogan said it would give short-term relief but raise the cost of living over the long term.
Those are fair concerns, and smaller balances at retirement are a real risk. But look at the reaction. The moment someone suggests workers get a say over a slice of their own wages, the whole system closes ranks. That tells you who it really answers to.
What happens when people take control of their own super?
Much the same. Self-managed super funds now hold about $1.1 trillion, or 23% of all super. These are the Australians who have stepped outside the big funds and chosen to make their own investment decisions. I’m one of them, and I can tell you it’s not for the faint-hearted. The red tape and compliance are mind-numbing. In my view, it’s made hard on purpose, so fewer of us take the leap.
In June 2026, the Albanese government struck a deal with the Greens to ban SMSFs from borrowing to buy residential property, as part of getting its budget tax bill through the Senate. Existing loans are protected, and SMSFs can still borrow for commercial property or buy residential property outright.
The SMSF sector said it was blindsided, and tax experts called it policy on the run. The Opposition pointed out the Treasurer had ruled out this kind of change only the year before. And by the government’s own numbers, SMSFs make up less than 1% of residential property borrowing.
The official reason is housing. The Greens argued the ban would stop SMSF investors outbidding renters and first-home buyers. You can agree or disagree with that. But step back and look at the pattern.
Workers who want a slice of their own wages now? Shut down. People who run their own super and invest it their way? Restricted. Meanwhile, the big funds keep growing, and plenty of them are chaired by former Labor politicians.
So why does this government seem so uncomfortable with Australians managing their own money outside the system? I can’t prove motive. But when every move nudges more money towards funds run by its own people, it’s hard not to wonder who really benefits.
What should business owners do now?
You can’t opt out of super, and you shouldn’t try. Payday Super is the law and the ATO is watching. But you can stay compliant and still be informed.
Get Payday Super right first. Contributions must reach the fund within seven business days of each payday, and the ATO’s Small Business Superannuation Clearing House has closed. Check your payroll settings and keep proof of payment. This is where the real risk to your business sits.
Respect your employees’ choice of fund. Most employees can choose their own fund. Give them the choice form and let them decide. Don’t push staff towards or away from any fund, because recommending a fund can stray into financial advice.
Point people to independent information. The ATO’s YourSuper comparison tool lets anyone compare MySuper products on fees and performance. That’s a neutral starting point.
Ask better questions about your own super. You’re entitled to read any fund’s annual report, check its board make-up and see what it spends. If you’re choosing a default fund for staff who don’t pick one, look past the marketing.
This isn’t financial advice. It’s a nudge for all of us to look under the bonnet of a system we’re now paying into every single payday.
At HR Gurus, we cut through the BS on the rules that hit your business. If you’re not sure your payroll is Payday Super compliant, get in touch and we’ll help you get it right.
FAQs
What is Payday Super? From 1 July 2026, employers must pay super with each pay run, not quarterly. Contributions must reach the employee’s fund within seven business days of payday.
Do unions control industry super funds? Not on their own. Most industry funds use an equal representation model, with half the board nominated by unions and half by employer groups, often plus independent directors.
How much money do industry super funds manage? About $1.8 trillion as at June 2026, which is roughly 38% of all Australian super.
Do super funds pay money to unions? Some do. APRA data shows funds made millions in payments to unions and industry bodies in 2022-23, mostly described as sponsorship, conference and premises costs.
Can I choose which super fund my employees use? Only as a default for staff who don’t choose their own. Most employees have the right to pick their own fund, and you must offer them that choice.
Do industry funds perform better than retail funds? On average, the Productivity Commission found not-for-profit funds outperformed for-profit funds. But performance varies fund to fund, and returns are a separate question from governance.