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From the Desk of the Executive Director

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.

Turnbull's corruption fix

Tuesday, November 10, 2015

Some months ago I happened by chance to find myself sitting at a dinner function next to a senior company executive of a large firm named in the Royal Commission into Union Corruption. Evidence at the Commission revealed that his company had made secret payments to a union in return for certain ‘favours’. He was one of the executives involved in decisions to make the payments.

The discussion between he and I was somewhat explosive to the extent he stood up and left just as entrée was being served. (I think it was rather fine slices of ham with melon.)

He was upset that I wouldn’t accept his explanation that the payments were industrial relations ‘reality.’ They had to make payments, he said, to ensure industrial relations peace. I maintained that it looked like corruption. Yes, maybe it wasn’t strictly ‘illegal’, and yes, ‘everyone does it’, but!

Last week submissions to the Commission cleared Bill Shorten of criminal conduct during his time as Australian Workers Union national secretary. But the Commission has also been advised that Shorten’s right-hand man and successor may have committed criminal offences. Other union officials could likewise be implicated.

The Coalition seems delighted. What’s developing is a perfect anti-union storm in which the evidence of corrupt unions working against workers trashes the Labor brand. There are senior Coalition MPs openly salivating at the idea of a union-bashing election campaign.

But I’d caution against such Coalition enthusiasm. The Australian public is not so stupid as to fall for a simple union-busting campaign. The evidence from the Commission reflects a more nuanced understanding of what’s going on. It’s something I suspect Australians intuitively comprehend.

It takes two to be corrupt, both the receiver and payer of corrupt monies. As well as alleging possible criminality by union officials, the Royal Commission submissions have likewise pointed to possible criminal behaviour by companies and their executives. What has been seen for decades as ‘normal’ industrial relations processes and ‘realities’ is being exposed as possibly criminal.

This is where the Coalition needs to be careful. If they run an ‘anti-union’ line they could find themselves being perceived as running a protection racket for employer criminality.

Likewise Bill Shorten and his lot are squealing that the Commission is a political set up. Sorry Bill, you'd better drop that one!

This is a story now of corruption and an industrial relations system and practices that provide a pseudo-legal cover to that corruption. All the alleged criminal behaviour evidenced in the Commission has involved Fair Work Australia-endorsed industrial agreements. These provide an appearance of legal sanction to the alleged criminal secret side deals.

The Commission in my view is only scraping the surface of the extent of the story.

What is to be done then?

I predict that a Turnbull Coalition anti-union slam job would politically backfire on Turnbull. He’d risk being seen, by default as a standard Coalition pro-employer protectionist. Likewise Shorten bleating about a political set up is already backfiring.

The problem is not unions. The problem is corruption and a pseudo-legal system that gives corruption an appearance of legitimacy.

Recently I had a long chat with one of the independent Senators. The Senator explained with passion how unions are necessary, and how if anyone wanted to do a union bash job, they would be denied that Senator’s vote. But present something against corruption capturing anyone involved in corruption then it would be different.

What Turnbull must do, based on the Commission evidence so far, and what Shorten must support, is legislation banning the payment of monies, any monies from businesses to unions.

The Commission may recommend the laying of criminal charges against some union officials and some companies’ executives. If this is all that were to happen the risk would be that those union officials and company executives could simply be fall guys for a corrupt system. The system would continue.

At the core of the problem is an industrial relations system that includes legalising agreements where companies pay money to union long service leave, Christmas, training, insurance, superannuation and many other funds. It’s a massive, legalised but corrupt system. Because this is ‘legal’ it’s a small step to secret commissions, false invoices and brown paper bags.

For both Turnbull and Shorten to have credibility they must accept the evidence of corruption and act against it. To be simply anti-union or bleat about political set up is to raise the scepticism and annoyance of Australians.  

[First published in Business Spectator, November 2015]

Peter Sandery commented on 19-Nov-2015 11:47 AM
Excellent article, I hope our pollies take note but, unfortunately doubt it as they seem to be in hock to that travesty of sound political acumen, those that call themselves "pollsters". Until such times as pollies listen to the electorate we are doomed to a blancmange of a polity and hence government.

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