The Press Council considered a complaint from Industry Super Australia about an article in The Australian on 3 December 2015, headed “Industry Super must be taken to task” in print and “Industry super must be taken to task over monopoly” online. The article discussed standards of governance of industry super funds.
Although the complainant said it had several concerns about the article, it focused its complaint on statements in the article that industry super funds’ “supply chains are tightly held by union-related entities — in relation to funds management, investment, financial advice and custodial services” and “[t]he market is never tested because doing business with union mates is so much easier, it would seem”.
The complainant said that although the statement about supply chains being tightly held by union-related entities appeared as a “COMMENT” article in print and “OPINION” online, it was a statement of fact and was inaccurate. It said custodial services for industry funds are provided almost entirely by major commercial financial institutions that have no relationship whatsoever with unions. The circumstance that one organisation providing custodial services is a listed company, which acquired an entity originally set up by a number of super funds, does not make it a “union-related” entity.
The complainant said that while some funds management and financial advice providers are owned by groups of industry super funds—many of which are half-owned by unions and employer associations—the service providers operate as commercially separate businesses and it is not accurate to describe them as union-related. The fact that individual board members of these organisations may have had previous careers in, or links to, the union movement is irrelevant because this does not make the entity union-related.
It said that in any case it is inaccurate to say “supply chains are tightly held by union-related entities” as demonstrated by publicly available information on the funds’ websites. This demonstrates that the vast majority of mandates for such services have not been awarded to industry/employer association-owned entities. Custodial services are all provided by commercial organisations. Fewer than 15 out of 80 not-for-profit funds have financial advice services provided by an industry-owned entity. Industry funds spread their funds across a large number of investment managers and the vast majority are not owned by, or related to, industry funds at all.
The complainant said the statement “[t]he market is never tested because doing business with union mates is so much easier,” is also a statement of fact, notwithstanding the addition of the words
“it would seem”. It said it was not fair and balanced and was inaccurate since service providers owned by industry super funds compete with other providers for industry fund mandates in an open market through rigorous tender processes generally conducted by an independent third party.
The complainant said as both statements were inaccurate, a correction or clarification by the publication would have been appropriate. It said the inaccuracy would not be properly remedied by an opinion piece by the complainant, even if an opportunity to publish such an article were to be provided, because the matter was not just a contest of opinion.
The publication said that the statements were made in the context of a comment article and should be read as opinion and not as statements of fact. The author of the article was a leading economics commentator providing a reasonable and balanced approach to a contentious issue from an outsider’s point of view. The author was putting an overarching argument about industry super funds in the nation’s financial system and the statements were not inaccurate or misleading. It said when the article was published, the issue of federal government regulation was a contentious point and the complaint to the Council should be seen as part of the complainant’s campaign against proposed regulation.
The publication said “tightly held” was a phrase without a defined meaning and there was considerable evidence to support the views expressed about industry super funds’ supply chains being tightly held by union-related entities in relation to the four areas identified and the market not being tested.
The publication said custodial services are provided in some cases by organisations that are union-related because a business set up by super funds to provide back-office functions to super funds had failed and was sold to a listed entity with guaranteed contracts to provide such services to industry funds. Although some custodial service providers used by the funds have no obvious links with a union, this is not inconsistent with the article.
The publication referred to: industry super funds using a bank owned by 29 industry super funds and several board members with union links; three organisations with several board members who have union links and one named firm with union links; the establishment of an organisation funded by a number of industry super funds and now sold off to a listed entity but with guaranteed contracts with industry super funds; and interconnecting directorships of persons with links to the Australian Council of Trade Unions. It added that it was not simply a matter of considering numbers or percentages, as qualitative and functional aspects were also important.
The publication said the statement that “the market was never tested” is the opinion of the author, as is made clear by the words “it would seem” and said allowance had to be made for the fact that it was the view of someone outside the industry.
The publication said it would be open to publishing a balancing opinion piece to contribute to a robust debate on the issues, but it was not prepared to make a correction or clarification as there was no inaccuracy, and the complainant did not make such a request before lodging a complaint with the Press Council.
The Council’s Standards of Practice applicable in this matter require that publications take reasonable steps to ensure that factual material is accurate and not misleading and is distinguishable from other material such as opinion (General Principle 1), and presented with reasonable fairness and balance, and that writers’ expressions of opinion are not based on significantly inaccurate factual material or omission of key facts (General Principle 3). If the material is significantly inaccurate or misleading, or unfair or unbalanced, publications must take reasonable steps to provide adequate remedial action or an opportunity for a response to be published (General Principles 2 and 4). The Council notes that a comment article may contain factual material, notwithstanding that the piece overall is presented as the comment of the author.
The Council considers that although the article was headed “COMMENT” or “OPINION”, the statements in the article that industry super funds’ “supply chains are tightly held by union-related entities — in relation to funds management, investment, financial advice and custodial services” was expressed as a statement of fact and not merely an expression of the author’s opinion.
The Council considers it meant that union-related entities dominated each of the named supply areas. The Council is satisfied on the material available that the publication failed to take reasonable steps to ensure this statement was accurate and not misleading.
The Council considers the statement that “[t]he market is never tested because doing business with union mates is so much easier” is also presented as a statement of fact, notwithstanding the addition of the words “it would seem”. The Council considers that the publication did not take reasonable steps to ensure this statement was accurate and not misleading, having regard to its definite terms. Accordingly, the publication breached General Principle 1 in these respects and the complaint is upheld.
As the publication offered a balancing opinion piece in response, given the nature and context of the material, the Council considers that the publication has taken reasonable steps to provide adequate remedial action. Accordingly, it does not consider that General Principles 2 and 4 were breached.
Relevant Council Standards
This adjudication applies the following General Principles of the Council.
Publications must take reasonable steps to:
1. Ensure that factual material in news reports and elsewhere is accurate and not misleading, and is distinguishable from other material such as opinion.
2. Provide a correction or other adequate remedial action if published material is significantly inaccurate or misleading.
3. Ensure that factual material is presented with reasonable fairness and balance, and that writers’ expressions of opinion are not based on significantly inaccurate factual material or omission of key facts.
4. Ensure that where material refers adversely to a person, a fair opportunity is given for subsequent publication of a reply if that is reasonably necessary to address a possible breach of General Principle 3.