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After the Royal Commission

Despite his prolonged protestations of innocence, Craig Thomson has been finally found guilty of fraudulent use of his credit card whilst an official of the Health Services Union.

In the face of a number of other complaints regarding alleged criminal conduct of unions (not the least of which included one involving the former Prime Minister, Julie Gillard) the Government has announced a Royal Commission into the activities of a number of powerful unions. There seems little doubt that the Royal Commission will unearth significant criminal behaviour involving these unions and possibly some colluding employers. The bullying, corruption and rorts instigated by some in the union movement have not only handicapped and sometimes destroyed businesses, exploited and terrorised workers but imposed a huge constraint to labour productivity in this country endangering our competitiveness.

I spent a lot of my management career trying to improve productivity, creating better workplaces and empowering employees. Most of this was done in the face of union antagonism and the gains we made were only grudgingly accepted by the unions who would much prefer to maintain the status quo of workplaces restricted by senseless demarcations and outmoded work practices. Mind you many of the gains we made were opposed as well by my management peers who were also content to maintain the status quo and not endure the discomfort of challenging accepted practice. Many such managers boast of the good relations they have with unions, not understanding that the relationship that needs to be fostered is with their employees and not the unions who purport to represent them. Indeed those managers who boast of their good relationships with unions have often given up on trying to win the hearts and minds of employees and opted for the easy fall-back option of relinquishing control to the unions frequently resulting in excessive and costly appeasement.

As Grace Collier, writing in The Australian in recent months has eloquently pointed out, the demise of manufacturing industry in Australia has many contributing causes but one important one has been increasing labour costs due to poor productivity, high wage rates and over-generous conditions. She hastens to add however, that this can’t be entirely blamed on unions because they have been ensconced in EBAs that employers have willingly signed off on!

It is a good thing then that a union movement, emboldened by the recent patronage of the Rudd-Gillard governments be held to account to ensure their activities are:
• Lawful
• In the best interests of their members, and
• Not unduly constraining of labour productivity.

However we should still remain cautious about the outcomes. Let me explain why this is so.

The Australian economy prospered under the Work Choices industrial regime established by the Howard Government. We saw healthy rates of economic growth, employment and wages. But the Government finally overstepped, allowing some employers to take undue advantage of employees. If it weren’t for the activity of such employers it is likely that Work Choices (and the Howard Government as well) might have endured.

If the Royal Commission uncovers substantial corruption in the union movement, as could well be the case, the Government will no doubt take steps to curtail the power and the influence of unions. I, for one, will certainly be happy to see unions prevented from taking unreasonable industrial action, prevented from coercion and extortion of employers, prevented from muscling into workplaces where they are not particularly wanted, prevented from ostracising and ruining the employment prospects of those employees who don’t mindlessly follow their dictates (“scabs”), prevented from unduly constraining labour flexibility and so on. However, it will be a concern if the union movement is so neutered that it can’t protect the more vulnerable employees from the unreasonable demands of unscrupulous employers.

It is ironic, however, that many of the bitterest campaigns that unions fight are not on behalf of the least powerful and lowest paid. Most often the bitterest disputes are waged in support of miners, construction workers, power station operators, plant and machinery operators, stevedores, those commencing at “greenfield” sites and so on. Generally the beneficiaries are those in cloistered labour monopolies who are highly paid. Such employees are supported for the crucial roles they play and therefore for the power they have to make extortionate claims. Consequently, union effort goes disproportionately in support of those employees who have inherently least need of it.

Of course, whilst the Howard Government overstepped in one direction, the Rudd-Gillard Governments overstepped in the other direction. It is patently wrong that:
• our school children can’t work an hour or two after school (for many of them, learning to understand the work environment is just as essential as what they learn at school)
• our restaurants can’t afford to operate on weekends (when most people would like to enjoy their services)
• there are still many workplaces where you are effectively excluded unless you are a union member
• unions can dictate superannuation options for employees
• unions can dictate that you must take out employment insurance and who you must take it from
• employers should provide paid leave for the training of union delegates
• employers can’t use contractors or casual employees without union consent
• unions have a right of entry into workplaces even if there is merely a prospect that they could recruit a member, ……….and so on.
(It is interesting that in recent days even former Labor Government minister and ex-President of the ACTU, Martin Ferguson, is urging the Government to urgently further deregulate the labour market.)

However whatever action it takes to deregulate the labour market, the Government needs to consider who is most vulnerable in this industrial landscape and then ensure that whatever action is taken to rein in excessive union power those people are still provided reasonable protection.

Whilst this was the major issue I wanted to canvas in this week’s essay, the political dynamics that the Royal Commission might ignite are certainly intriguing.

The Labor Party is in the complete thrall of the unions. Its internal rules provide the unions undue influence. The unions also supply the majority of Labor MPs and it is almost impossible to get preselected without the support of one union bloc or another. The longer term future of the Labor Party seems to me, to ride on its ability to credibly represent a majority of Australians. If the Royal Commission finds significant corruption in the union movement and if the Government finally moves to redress the considerable advantages that the Fair Work Act confers on unions, it is inevitable there will be a further decline in union membership. This will compel the Labor Party to nurture a broader support base, which will not only be good for the Labor Party but good for Australia as well.

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  1. 4 Comment(s)

  2.   By Aileen Tan on Mar 1, 2014 | Reply

    Thank you for sharing Ted, it is a subject of interest to me. I enjoyed reading the different facets that you covered in your blog and gained some useful insights into Australian trade unionism. Keep up the good work.

  3.   By Lynda Dowling on Mar 1, 2014 | Reply

    Good blog Ted. I am a huge supporter of Grace Collier. She has shone the light on dodgy union practices. She has also highlighted the role of complicit bosses. She is creating the type of debate that we have to have.

  4.   By Graham Proud on Mar 2, 2014 | Reply

    Thanks for highlighting this Ted. Perhaps there will be many protestations, accusations, conclusions and outcomes to follow. For myself, I have a preference for outcomes. What will change?

    A simple recommendation: require unions to adopt accounting standards that apply to other non-profits, for example: Not-for-profit entity requirements in Australian Accounting
    Standards. A bit of transparency and accountability would go a long way.

  5.   By Bruno Bertolo on Mar 3, 2014 | Reply

    Thanks Ted. You’ve expressed my position on this perfectly and more eloquently.
    I was often quite disgusted to see how readily the unions would roll their own members to protect their position.
    As for the Labour Party, I can’t even look at them anymore.
    I am a supporter of the union movement however. Let’s hope the commission gives us better unions.
    Bruno

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