Features Australia

Crony time

Big business, unions and government cut cosy deals to suit themselves

23 July 2022

9:00 AM

23 July 2022

9:00 AM

Son to father: I’m thinking of going into organised crime. Father to son: private sector or government?

Crony capitalism – it’s one of the most depressing aspects of modern market-based economies and I use the term market cautiously. It’s no longer about producers supplying quality, keenly priced goods and services to canny but grateful consumers, it’s about producers seeking regulatory and financial favours from politicians, and consumers simply having to make do.

Another sad fact is that the tendency to crony capitalism is not dependent on the political hue of the government. To be sure, centre-right governments may be slightly less inclined to enter into deal-making, but there’s not much difference compared to left-leaning governments. Let’s face it, most centre-right governments don’t govern according to their principles – the UK Johnson government is a case in point.

But with the election of the Albanese Labor government, it’s worth forecasting in what way our crony capitalist system will develop given the influences on elected Labor parliamentarians. The golden rule is follow the money so it’s reasonably certain what favours will be doled out quickly.

Of course, these favours always have alternative rationales – ensuring fair and equitable outcomes for battlers; acting on climate change; reducing the gender pay gap; reducing indigenous disadvantage and the like. But scratch the surface and you find preferential deals being handed out left, right and centre that provide financial gains and positions of power and public adulation to the designated beneficiaries. They often knock out competitors giving a substantial leg-up to incumbents.

The Labor government was quick to talk of lifting the superannuation guarantee charge from 12 per cent to 15 per cent. The union-related industry super funds will be licking their lips. It has also been decided that the timid super reforms of the Coalition may need to be rescinded, including the requirement that funds act in the best financial interest of members.


Labor will press on with legislation to define the role of compulsory superannuation which will exclude any discussion of members accessing their balances to pay for a home deposit or cover an unexpected catastrophe. The definition will focus solely on providing retirement incomes to lock in members’ funds until retirement and keep industry funds in clover forever.

On the other hand, what the hell was former Coalition industrial relations minister, Christian Porter, doing overseeing a classic exercise in crony capitalism with his exclusive roundtables on industrial relations? When something is called tripartite, the stench of crony capitalism is putrid. What gives puffed-up representatives the right to decide what is in the interests of businesses and workers, particularly as most of these representatives have never been elected?

When the ACTU and the Business Council of Australia went behind everyone’s back to seal a preferential deal – enterprise agreements would only be facilitated for union-backed arrangements – the disapproving shouts were loud. But what would you expect? It’s just typical of crony capitalism.

Climate change is a particularly fruitful space for rent-seekers in which to operate. Most of the time, the government won’t even know it is being taken down a peg or two, at taxpayers’ expense. And the ‘wise’ bureaucrats advising ministers will generally be on the side of the rent-seekers.

One current kerfuffle is about the carbon offset program whereby emissions-intensive producers can purchase carbon credits locally or overseas, as it may be more expensive (or impossible) to lower emissions in Australia. No doubt, the quality of overseas credits varies, although some UN agency is involved in their accreditation. But the real point is that the renewable industry hates them because they mean potentially less lucre for them and that will never do.

The billionaire chairman of Spanish renewable energy company Acciona, which has extensive investments in Australia, was recently bleating about the offset program because it would mean fewer handouts for his company. His supporters, academics and climate think tanks, peddle the same line.

It’s not just the federal government that is party to crony capitalism. State and local governments are up to their eyeballs making deals with mates. Arguably, that is the point of being in office – to hand out favours to companies, organisations, and individuals and, in return, the post-political careers of parliamentarians are sorted.

A recent proposed legislative amendment in Queensland takes crony capitalism to new heights – or should that be depths. You may recall my Speccie piece about ‘fake’ (aka the real deal) unions that have set up in competition with Labor-aligned registered unions. The new unions, which come under the Red Union Support Hub, have made real inroads into the membership of registered unions, particularly nurses in Queensland. (Charging considerably less than registered unions helps.) Naturally, the registered unions are not happy. Nor is the Labor party, which partly depends on direct and indirect contributions from the old unions. To them, competition is for the birds and should be regulated away.

Lip-service has to be paid to freedom of association for workers, in part because Australia has signed various international conventions. But here’s the logic of the proposed legislation. Any organisation can seek to be registered but the rules state that as long as there is an organisation to which workers can conveniently belong (that is the existing registered unions), then the application for registration by a new organisation will be denied. Geddit: the Red Unions can but they can’t.

And here’s the real sting in the tail: unless a union is registered, it cannot represent members on an industrial matter. Indeed, it will be an offence to do so. It’s a slam-dunk for crony capitalism – a win for Labor-aligned unions and a guarantee of the uninterrupted flow of money to the Labor party. What’s not to love, if you are a Labor parliamentarian in Queensland? It’s just a pity the power of competition is completely extinguished and the rights of ordinary workers count for naught.

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