Confusing messages from LGS

Details

Published: Tuesday, 25 November 2014 14:52

LGS Chair Bruce Miller “promises ESG to be retained”

On 22 April 2013, Investment Magazine, under the heading “New chair at LGS promises more growth, ESG” Chair Bruce Miller said the fund retained “its attention fixed firmly on environmental, social and governance (ESG) investment strategies”.

He continued, “the fund’s unique ESG approach to investment has proven to be a successful formula that the fund will continue to build upon.” Oh yeah?

“Chief executive Peter Lambert said “a ‘surprisingly simple’ ESG investment approach has delivered a positive return despite the doubts of some. He added that, being a discrete portfolio in itself, it’s very easy to measure whether it’s adding value to members - and it has … We do find that, over the long term, we’ve had a positive outcome”.

Ethical Investor magazine on 30 October 2013 reported “Local Government Super vows to maintain its leadership in responsible finance despite the resignation of ethical investing stalwart Ian Robertson.” A vow clearly not written in blood. A non-core vow, perhaps.

In response to the Fund’s embracing of nuclear risk, we asked some questions and, amongst other things the fund responded with a letter dated 10 October, “the screening out of uranium mining/nuclear energy has to date not had a negative impact on historical returns.”

And this view, of no loss over the years, was reinforced when the LGS CEO, CIO and Sustainability Manager presented to the depa Committee of Management on 6 November. The sector itself was described as “not a very good performing sector”.

What does all this mean? Leaving aside boasts of continuing to build on the fund’s ESG commitment of more than a decade, it means that the decision to not hold uranium mining or nuclear energy stocks didn’t cost the fund anything. Nothing, no losses, no pain, no suffering and no exposure to the Fukushimas of the world.

But, unlike the decision of the Board in 2000 (when similar testing showed that in terms of returns it didn’t matter whether the Fund owned tobacco or not and the Fund decided they would rather not), on this occasion the Board in September decided that the screening against uranium mining/nuclear energy should go. Things have changed.

Having done so, uranium/nuclear stocks held by index managers in the international portfolios that would have been shorted*, using the “surprisingly simple” approach, so that the fund effectively didn’t hold them, would now be embraced and retained.

Which means that since 1 October, the fund has held shares to a value of around $4.5 million in six international nuclear energy companies.

In the 10 October reply the fund observed “to date the response by the media has been largely positive.”

But how about the responses are of members of the fund?

(*What is “shorted”?  Shorting stock is a way of making money when share prices go down. It allows an investor to borrow stock in a company where they believe the price will go down, sell the stock at the price it was borrowed at and, when the price does go down, buy it back, making a nice little earner. The stock is then returned to the original owner with the payment of a fee and the investor pockets the profit from selling stock they knew was going to go down. Shorting also allows an investor to quantify gains or losses form the process.)

We don't care about Peter Hurst

Details

Published: Tuesday, 25 November 2014 14:42

Friday last week marked 1500 days since Wagga Wagga developer Peter Hurst reneged on an agreement to apologise to two of our members.

He had made allegations to Wagga Wagga City Council which he couldn’t sustain. We described them in the November 2010 issue as “inaccurate, baseless, derogatory and offensive allegations” and they had been dismissed by the Council’s Internal Auditor after a comprehensive investigation.

The Industrial Relations Commission had recommended that the Council seek an apology from Mr Hurst and in response to the Council, Walsh and Blair lawyers advised they were acting for Peter Hurst and “we are instructed that our client will apologise to Council staff. The form of an apology will have to be the subject of agreement.”

That was pretty impressive. We all make mistakes and it’s important to clear the air and apologise for things that happen inadvertently or where you have simply been wrong. Everyone agrees with this, it’s what our mums taught us, after all.

Well, nearly all of us – we can update you about Bankstown next time.

But we didn’t even get the opportunity to have a good old-fashioned argument about the content of the apology because Peter Hurst just reneged. No explanation, just changed his mind - obviously trying to redress the gender inequality of the traditional wisdom that only a lady had the prerogative to change their mind. You go, girl!

But we thought his agreement to apologise said a lot about the man. A big man, both literally and metaphorically, we thought.

Clearly he wasn’t, so we have run a clock ever since on our home page reminding everyone that some people are honourable, and some aren’t.
But 1500 days is enough. The clock will be removed.

NSW Premier seizes all the pencils

Details

Published: Tuesday, 25 November 2014 14:20

A happy Premier in Cabinet last week

In the September issue of depaNews we featured the Premier’s announcement that the reform of local government would mean “less pencils and more people digging up roads”. We had no idea what that meant but were concerned it may have been an old-fashioned vision of local government - it being a long, long time since anyone much worked with a pencil. It was certainly bad grammar - it’s fewer pencils, not less.

We met with Local Government Minister Paul Toole in October and the Minister and his staff were keen to shift responsibility for this nonsensical observation to the Premier as the author of the “less pencils” vision. So, it wasn’t their fault. They seemed more aware that local government has moved well beyond pencils and a focus on digging up roads. It did trivialise things, didn’t it.

But if there were going to be fewer pencils in the Premier’s grand vision of local government, what was going to happen to the pencils? Now we know.

Goodbye Gough and thanks

Details

Published: Tuesday, 21 October 2014 12:42

We don’t normally acknowledge the passing of historic figures but for those of us who lived through the Whitlam era, and the years before it, it would be remiss not to say something.

When the Whitlam Labor Government was elected in December 1972, after 23 years of conservative rule, within days the Government had abolished conscription, withdrawn troops from Vietnam, banned sporting ties with South Africa, recognised China and, after 23 years of inertia and forelock tugging, these were exciting days, never really reproduced.

Then followed the establishment of universal free health care through Medibank, the introduction of needs-based school funding, extending tertiary education and making it free, reforming family law, boosting the arts, indexing pensions, supporting equal pay for women, voting at 18, one vote-one value and aboriginal land rights. He removed sales tax on contraceptives and broke the cultural cringe and obsequiousness to Britain by introducing an Australian honours system and a new national anthem. He made relations with Asia a priority and the extraction from the Vietnam war ended Australia’s flirtation with following the US into military folly not revived until Howard invaded Iraq. Australia grew up.

It wasn’t without mistakes (after all, he appointed John Kerr as Governor General) but it was a privilege and a joy to live through this exciting era.
 

Sam Byrne is appointed as our new director on the LGS Board

Details

Published: Tuesday, 21 October 2014 12:23

Sam sat as an LGNSW representative on the Board for six years but he was really one of us. Sam was a valuable ally on issues of the proper governance of the Board and its future as well as on sustainable and responsible investment. He is also committed to the union movement and has acted as a delegate in his Federal public service workplace for the last decade.

Sam won’t let us down and is committed to monitoring and dismantling the commitment to nuclear technology adopted by the old blokes at the September meeting.

Oh no, Local Government Super goes pro-nuclear

Details

Published: Tuesday, 21 October 2014 12:06

Last month we forewarned you that the Board of Local Government Super, we expected by a seven nil margin, was likely to abandon its historic position of refusing to invest in uranium and nuclear. We expected things to happen at a meeting on 1 October but we haven’t been very well informed by our director on the Board and some of the advice contained within that article was incorrect.

We now understand that the Board unanimously voted in September to abandon the historic negative screen that prevented the investment in nuclear and uranium companies. Unanimously means that our director on the Board voted contrary to our historic values and principles.

The decision was part of an increased commitment to a low carbon future and the importance of low carbon investments and moving away from reliance on fossil fuels. We support that of course, and during my time as a director on the Board, we worked hard to have LGS acknowledged as the number one fund in Australia and in 2012 internationally for its investment strategies hedging against carbon risks as measured by the Asset Owners Disclosure Project.

In 2000 the Board resolved to never own tobacco and to introduce a range of screens against other investments which would not be describable as responsible for environmental, social or governance reasons. This ruled out nuclear and uranium.

In the argument about energy generation in the future, there is a division of opinion on encouraging renewable energy only, or a combination of renewable energy and nuclear energy. Apart from embracing technology which has been demonstrated to be incapable of properly managing risks, accident prone with devastating consequences and a security risk, nuclear is attractive to some. It’s usually attractive to some in this context who were attracted to it anyway.

LGS Chair Bruce Miller and LGS Deputy Chair Martin O'Connell

LGS Chair Bruce Miller and Deputy Chair Martin O’Connell have always been soft on nuclear and uranium - even in those years when refusing to own it enhanced the Fund’s reputation and didn’t cost the fund a cent in investment returns. Some people just like it. In handing over to our new director Joanna Davison in November 2013, Joanna was briefed on the risks:

Sadly we also lost Sam Byrne. Sam was an ex-Green Mayor of Marrickville and a great ally on all the ESG/carbon stuff and, (particularly given what is an emerging soft view by Martin and Bruce) strong and supportive against nuclear/uranium. And

Martin is a bit soft on reviewing “nuclear” as part of our sustainability overlay and so is Bruce. Beware.

In making the decision in September, the Board was provided with information showing that there had been no loss in investment returns as a result of not owning nuclear/uranium businesses and, of course, there is no guarantee that investing in these questionable businesses will do any better in the future. It means the Board abandoned the historic position understanding it had not financially damaged the Board and that there was no guarantee of any benefit in the future.

All they can be sure of is that they now embrace a risk they were not prepared to take in the past with the dangers of waste storage, nuclear proliferation and nuclear terrorism. No losses over the last decade and no guarantee of profit in the future.

Chernobyl was 1986, and the nuclear lobby was getting cocky. Then came Fukushima. What’s next?

But LGS has taken the view that nuclear has a role. In the media release announcing it they mistakenly say renewable energy “will not be able to meet all the energy needs around the world in a low carbon future” and “nuclear energy is currently the only proven alternative to fossil fuels that provides baseload power capacity.”

Both these statements are challengeable and those who challenge them believe they are demonstrably false. This is what Clive Hamilton describes as the “baseload power myth” and in his book Requiem for a Species claims:

In countries that already have experience with nuclear power, including well-established regulatory and waste-disposal regimes, it takes at least a decade for a new nuclear power plant to be planned, approved, built and commissioned. Construction time alone now averages six years. The International Energy Agency envisages a four-fold increase in the amount of electricity generated by nuclear power by 2050. This would require the construction of 32 nuclear power plants every year until then, a huge expenditure that would reduce carbon dioxide emissions from the energy sector by only 6%. Wind farms could generate the same amount of power for 60% of the construction cost without the continuing expense of supplying fuel and disposing of waste and with greater emission savings.

A debate at the Board meeting which involves people saying things like “the wind doesn’t blow always” or “the sun doesn’t shine at night” ignores the rapid development in battery technology capable of storing energy generated by renewable means. It’s old-fashioned and backwards-looking. Battery technology will be available sooner than any new nuclear power station.

Leaving aside the risks of waste storage, proliferation and nuclear terrorism, the real damage is that the money spent by government or the private sector in developing nuclear generation is at the expense of the four or five genuinely renewable forms of energy which, operating together and in conjunction with each other, are the future without the risks.

LGS Board members glowing in dark

We apologise for the inaccuracy in the last issue about the seven nil vote. It’s now clear that our representative on the Board voted to support the change at the Board meeting in September and that this issue had been considered by the Board as far back as February without any information being filtered back to depa as the shareholder. This is completely unsatisfactory.

As a consequence of having it confirmed that she had failed to keep us abreast of developments over an eight month period, failed to tell us of the resolution at all and had voted for the resolution despite telling us she had abstained, within 24 hours the Committee of Management had unanimously resolved to remove her from the Board and replace her with someone who better understands our values and commitments.

Uh oh, Local Government Super is about to do something really bad

Details

Published: Thursday, 18 September 2014 12:31

On 1 October, the LGS Board will consider doing something that will change the Fund’s historic core values in investment.

Since 2000 LGS has refused to own tobacco, has screens against gambling, logging old-growth forests, poor governance, armaments and nuclear technology and uranium. These investment strategies have contributed positively to returns and haven’t compromised the Fund by investing in things with questionable or unacceptable risks.

LGS has received many awards and recognition and has been the leading Australian fund for these initiatives and the way it has managed carbon risk as we head towards a low-carbon future.

When the Board meets on 1 October, unless seven of the eight directors wake up to themselves, something really, really significant will change.

We will deal with this, when it happens, next month. We can tell you it won’t be unanimous resolution (because depa’s director on the Board won’t support it) and in the meantime, here is a hint:

How’s Penrith going?

Details

Published: Thursday, 18 September 2014 12:31

In the interests of trying to find good in everyone, we’ll leave aside Penrith’s apparent incapacity to properly address a letter to us, to get the title of my position right (it’s Secretary not General Secretary) and to habitually remove the apostrophe from our union’s name.

And we’ll ignore their tendency to address letters to “Sir” when no one here has been knighted yet and when, to be correct, it requires a reply addressed to “Madam” and that sounds ludicrously old-fashioned. Very 19th century, just like their dress code policy.

But congratulations are due to the Council for finally understanding their obligations under clause 39 Workplace Change and Redundancy. This requires that changes with significant effects need to be conveyed to the employees affected “and the union to which they belong”. Everyone in the world knows that means the union office but Penrith has failed on the last two occasions to do so.

We now have a letter from the Executive Manager Corporate advising:

Council will provide written notification to the DEPA office in cases where clause 39 of the Award applies.

Well done.

Still, for balance, we do need to report that they think that they can develop an Enterprise Agreement effecting individual contractual entitlements for employees who have payment for untaken sick leave as a condition of their employment. You can’t, of course, because individual conditions of employment can’t be overridden by an industrial instrument.

Oh well.

Apology to Andrew Crakanthorp

Details

Published: Thursday, 18 September 2014 12:30

In the August issue of depaNews we exposed management at Wagga Wagga City Council for their failure to support an employee with secondary cancer looking for additional sick leave. He was our delegate, by coincidence, and the article made those managers named appear heartless, mean-spirited and disinterested in the welfare of their employees in need.

We specifically identified Mr Crakanthorp as being one of those responsible for rejecting a reasonable application, consistent with the sentiment and provisions of the State Award allowing a discretion to provide additional sick leave.

We asserted that Mr Crakanthorp responded to an enquiry whether the Council would be sending flowers to the employee in hospital for their surgery, by saying “aaah, it’s just the bloody precedent”. This may have been read as suggesting Mr C was scared of exercising a discretion, unimaginative and fearful.

Mr Crakanthorp was also identified as a member of the LGPA Board which resolved to oppose the introduction into the 2014 Award of half pay sick leave for the chronically ill or injured. This made him look like he lacked compassion and was disinterested in the welfare of employees outside the boundaries of his own Council as well.

We have been contacted about this article and the accuracy of our reporting.

We apologise unreservedly for spelling Andrew’s name incorrectly.

It’s not Krakanthorp, it’s Crakanthorp.

Local Government Poseurs Association still frightened of the new State Award

Details

Published: Thursday, 18 September 2014 12:30

Some of the LGPA Board and CEO (GAICD)

One of the findings of the Independent Review Panel in the report in October 2013 was to reject the submissions of the inaccurate, dilettantish, fanciful and paranoid that the “current Local Government Award lacks flexibility, focuses on skills at the expense of other attributes of staff, and builds in excessive labour costs for some activities, especially where 'out-of-hours' work is involved.”

The panel is not convinced that the award is as costly and inflexible as some believe, and believes that further efficiency and productivity gains can and should be made through negotiation… There should also be opportunities for some increased flexibility to address specific skill shortages.

Thus the award should continue to evolve through negotiation to address the changing circumstances of councils and their employees, and the needs of communities. Local government needs a system of industrial relations that will support an efficient and productive sector that can adapt to meet future challenges. In turn, this requires a climate of trust and cooperation amongst employer and employee organisations.

A climate of trust and cooperation between the employer organisation (something which they are not) and employee organisations (and they’re not that either) is something that the Local Government Poseurs Association can’t contemplate. This was a recommendation LGPA didn’t embrace, preferring to reiterate their view about the mysterious third force of general managers and HR professionals (sic) needing to be in negotiations.

But if it’s about trust and cooperation, they don’t have the pre-requisites.

depaNews publicised their views in July and now they’ve done it again. In a letter to Keith Rhoades, President of LGNSW (they got the address wrong but at least spelled his name right this time) LGPA President Paul Bennett complained “the absence of direct involvement by the professional leaders in the negotiations themselves, has meant we believe the significant negative consequences the award changes may not have been fully contemplated” (we think we know what he meant) and “the new State Award will make sustainability even harder to achieve, if not impossible.” Poor Paul believes that the award creates an “untenable position”. Professional leaders, indeed.

And, in case his letter was insufficiently melodramatic and hysterical, he was joined by CEO Annalisa Haskell to write to the Minister for Local Government Paul Toole (described as Paul Tool, in their publication and on their site) raising “a potentially significant impediment” to his reform commitment and calling on the NSW State Government “to do everything possible to assist councils in having unfettered access to the Federal Award system for commercial undertakings.”

LGPA in both letters says their views “are expressed purely out of our unwavering commitment to assist the government” but, despite their attempted seduction of other professionals and their boast to be “the peak body for all local government professional in the state”, they are really the GM/finance/corporate services/careerists and aspirants’ group.

But reform initiatives advocated by the highest paid employees which victimise and punish the lowest paid employees in the industry only make them look self-seeking, unimaginative and hypocritical.