Flat White

Time to get tough on business-union sleaze

24 March 2017

6:25 PM

24 March 2017

6:25 PM

Nearly sixteen months after Dyson Heydon handed down his final report following the Royal Commission into Trade Union Corruption, Malcolm Turnbull and Michaelia Cash have announced action on one of its key recommendations – banning corrupting benefits between trade unions and business.

According to Heydon, these secret payments and kickbacks are proffered for one of two equally unscrupulous purposes – assuaging threats of industrial chaos and securing favours from officials that undermine the level-playing field of an open competitive market.

In terms of the first category, the $3.2 million paid by employers to the Maritime Union of Australia demonstrates how these payments are used as a proxy for bare faced extortion. In one incident involving the Blacktip gas field project in the Timor Sea, the project operator Sapiem sought the use of foreign tugboats due to a chronic local labour shortage. Fiercely opposed, MUA boss Chris Cain warned Sapiem’s project manager that his workers would ‘disrupt the project’ – in other words, commence industrial warfare and derail the entire project. Cain later conceded the issue could be resolved by a $1.83 million donation to the union’s ‘training fund.’

Sapiem eventually forked out $1 million as recompense for using foreign workers to fill the project’s dire skills shortage. Heydon concluded that this and other employer payments to the MUA were neither made voluntarily, nor for any legitimate purpose. They were strongarmed into buying industrial peace.

As for the second category, the infamous pay deal between the AWU and cleaning company Cleanevent illustrates how these secret pay offs are wholly incompatible with the idea of union officials acting with undivided loyalty to the interests of their members. Facing the expiration of a Workchoices era enterprise agreement that saved Cleanevent $1.5 million by paying staff well below the relevant award wage, the AWU agreed to extend the agreement for an extra $25,000 a year in ‘membership fees’, presumably to save the union having to ask it’s underpaid members for their annual dues themselves.

This added sweetener went unmentioned in the formal wage agreement and was never disclosed to the union’s gypped workforce. As a result, Cleanevent’s workers were left substantially worse off as a result of entrusting the AWU to negotiate their rights at work.

Defenders of the union movement have been quick to argue that money simply changing hands is no proof of corruption.


But when vast sums of money are paid out following threats of unsanctioned industrial warfare, hundred thousand dollar payments look less like voluntary donations than a protection racket.

Moreover, in virtually every position comparable to a union official where an individual is entrusted with making decisions that affect the rights and interests of others, the mere appearance of a conflict of interest or double-dealing is totally unacceptable.

A company director, fund manager politician or judge facing a conflict between their personal interests and the duties of their position are rightly expected to resolve that conflict, or recuse themselves from any potentially tainted decision.

It doesn’t take a law degree to understand that a company’s interest in maximising profit is frequently at ends with a union’s task of bettering workers’ pay and conditions. So why should the standard be any less when a union official receives benefits worth tens of thousands of dollars from a company while simultaneously agreeing to pay cuts for the workers they claim to represent?

The Cleanevent and MUA controversies are two of more than a dozen equally damning examples detailed by the Heydon Royal Commission’s final report. But given both the businesses and unions involved in these deals have no incentive to make them known while the workers and shareholders ripped off go largely unaware, there’s every reason to believe these are just the surface symptoms of a rot that runs to the core of our industrial landscape.

The biggest winners of this racket are unions who enjoy beefed up balance sheets and powerful leverage over gutless employers. The political arm of the labour movement wins too, with proceeds trickling down to coffers that fund the union movement’s formidable election ground game – or in Bill Shorten’s case, a fulltime campaign staffer.

The losers are workers left dudded by the sweetheart deals, as well the shareholders and customers to whom the costs of these gratuities are inevitably passed on.

However, the damage to society when bribes and corruption become a cost of doing business is greater still. It teaches business that money and patronage, not hard work and enterprise, is the best way to gain ground over their rivals. It teaches the union movement that operating as a closed shop backed by standover tactics is the path to preserving power and influence.

The almost non-existent prosecution record of the current mishmash of laws targeting at bribes and secret commissions is ample cause for the Government to take swift action.

A Commonwealth offence banning corrupting benefits in relation to registered organisations – embracing unions and employer groups, is desperately needed. Registered organisations should be made to disclose all third party payments, both publicly and to members. And critically, penalties for any breach should hefty enough that the sums of purchasing peace in the face of threats of industrial chaos no longer add up.

While newly minted ACTU boss Sally McManus seems to think obeying the law is a bit passé, parliament should be less cavalier. At a time of waning trust in our politicians and governing institutions, a strong stand against backroom collusion between unions and business could be just the bump the Government needs to flip the switch on its polling funk.

John Slater is Executive Director of the HR Nicholls Society

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