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Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

A corporate challenge for Tony Abbott

Saturday, August 01, 2015

In his new book, When We Were Young & Foolish, The Australian’s foreign affairs journalist Greg Sheridan exposes the “weird silence in Australian politics” over the corporate money that funds internal union elections. Sheridan talks in historical terms. Bill Shorten’s evidence to the Royal Commission into union corruption exposes the same ‘weird silence’. Corporations still give generously to unions. This still funds union campaigns.

But the weird silence is now broken. Rather, truth screams loud to the non-political-junkie class of ordinary Australians. There is no ‘workers versus bosses’ war; that idea is a scam and a sham. Instead, corporations and unions are in intimate commercial partnerships. What’s changed from Sheridan’s historical explanation to Shorten’s current admission is what motivates the union-corporate partnerships.

Understanding that change in motivation provides a reality view of politics, unions and big business in Australia today.

Sheridan explains that corporates used to give money to right-wing unions so those unions could battle left-wing unions. It was about corporations making an investment in ‘good’ unions so those unions would stop communists in ‘bad’ unions from gaining political power and harming the corporations. Corporations never give money because they are nice; money is given to achieve outcomes.

Sheridan further explains how he, his friend Tony Abbott and many other conservatives supported and encouraged the corporate giving to unions. It happened in conjunction with and through the likes of the National Civic Council.

It was as if a separate political party almost existed underneath and across the Liberal/National and Labor Party divide. This is what was part of the ‘weird silence’. On the key political objective of stopping communism, the ‘right’ of Labor and the Liberal/Nationals were one force in silent collusion.

This underground political coalition arguably continued to function, in diminishing forms, through to the end of the Howard period. Now, however, it has been significantly dismantled.   

The reason is the rise of a new, highly sophisticated management inside unions, particularly left-wing unions. Australian unions are no longer worker organisations; they are powerful marketing businesses. And these unions are heavily funded by corporations.  Now though, both left and right-wing unions receive corporate funding. This is a new 'weird silence'.

So what’s going on? Bill Shorten has provided the answer.

All unions in the private sector space now provide a service to corporations. That service is the supply of a competitive advantage against other businesses. Yes, the main business of modern unionism is the provision of competition reduction or neutralisation across the Australian economy. It’s about providing advantage to some businesses over others. Favoured corporations pay unions, any union, for this service.

This happens in several forms. In construction, unions do deals with some top-tier firms that force subcontractors onto union industrial agreements. Unions harass the subcontractors suppressing their competitiveness. They organise price fixing. This limits subcontractors’ capacity to become competitors to the top-tier firms. Construction unions are paid handsomely for this by the top-tier corporates.

Shorten’s admissions to removing penalty rates for some cleaning companies but not others is another example. Shorten’s union was paid for this by the cleaning company. The giant transport company admitted to paying the Transport Workers Union for the TWU to harass Toll’s competitors. The examples are rolling out in the Royal Commission. Unions collude with some corporates to give those corporates competitive advantage. It’s the new union money stream.

Shorten’s Royal Commission admissions could have damaged him. But counter-intuitively it has enhanced his power within the union factions.

Unions need their anti-competitive services kept quiet. The greatest threat is exposure. If the competition regulator looked like moving against the practice, corporates would stop paying. The unions’ rivers of corporate gold would stop.

But Shorten has handled it well with a ‘so what, I’m a deal-maker!’ ‘The deals are good for Australia’ is the mantra. And, at the recent Labor Party’s annual conference, all unions fell in line behind Shorten. They had to legitimise his behaviour because they are all doing the same thing.

For Tony Abbott this is a new twist. As explained by Sheridan, payments to some unions by corporates was good because it funded a common cause against bad unions (the commies!) But now some union-favoured corporates fund all unions where there is presumably no common cause for Abbott.

Instead, some corporates and all unions have found common cause: the manipulation of competition. The union and Labor Party task is to keep this going. Labor’s financial future is tied to this.

For Abbott and the Coalition parties, there’s a dilemma. Corporations don’t necessarily like an open, free and competitive market. Corporations don’t necessarily find common cause with conservative, free-market political parties. Where then do Abbott and his team find partners in a common cause?

[First published in Business Spectator, July 2015]
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