It’s not corruption, but the Albanese government is guilty of cronyism

Last week, we learned the astonishing news that, in the 18 months since the Albanese government scrapped the Australian Building and Construction Commission, and transferred its functions to the more anodyne-sounding Fair Work Ombudsman, not a single proceeding has been brought against the Construction, Forestry and Maritime Employees Union. Not one.

Meanwhile, the ombudsman has discontinued more than a quarter of the existing proceedings brought against the union which had been awaiting hearing. In one case last year, Attorney-General Mark Dreyfus actually waived a big costs order awarded against the CFMEU following a successful action against it: effectively a direct transfer of $500,000 of Commonwealth property to the union’s balance sheet.

The CFMEU has a record of bad behaviour.Credit: Nine News

The CFMEU, which was resurrected from the remnants of the Builders’ Labourers’ Federation after its deregistration by the government of Bob Hawke, has earned a justified reputation for bullying, intimidation, contempt for orders of courts and industrial tribunals and, in some instances – particularly in Victoria – outright criminality.

Is there anyone gullible enough to believe that peace and harmony have suddenly descended upon Australia’s building sites? Or that the thugs, standover merchants, contemnors, misogynists, homophobes and bullies who have controlled the union for decades have miraculously metamorphosed into decent law-abiding citizens?

The CFMEU is also the biggest single donor to the ALP.

Since the Albanese government was elected, the trade union movement has had a field day. No minister in the government is more completely captured by his stakeholders than Industrial Relations Minister Tony Burke. Burke, as willing a puppet as ever dangled on a string, has delivered to the unions the most invasive industrial relations laws in many decades – so regressive that they turn back the clock to well before Hawke’s time. But, unlike Anthony Albanese, Bob Hawke had the bottle to stand up to militant unions, and win.

Of course, the trade union movement will always have great influence within any Labor government; they are structurally bound within the same entity, comprising a political wing (the MPs) and an industrial wing (the unions). Many of the members of the cabinet are themselves former union officials, whether of the right (such as Don Farrell, legendary powerbroker of the retail workers union, the “Shoppies”) or the left (such as Penny Wong, a CFMEU alumna). A handful of trade union bosses can remove a prime minister in a single phone call, as Kevin Rudd discovered.

There is nothing unusual or wrong about trade unions being powerful in a trade union-based party. It is when that power is abused, when special favours are done, and when union influence results in bad public policy, that there is a problem.

It is not just trade unions, however, who exert a powerful external influence over the Albanese government, although in other cases, it is usually covert. Among those other brokers of influence is a section of the legal profession – the self-described “plaintiff law firms”, many of which have long and historic links with the ALP.

One of the most lucrative areas of their practice is the promotion of class actions: massive suits to which citizens who have been wronged – most commonly by a large corporation – can subscribe and, if the case settles (as it usually does), or succeeds following a hearing, share in the damages.

Class actions are a good thing. They provide an avenue of redress for people who would, for reasons of practicality and cost, be otherwise unable to afford to seek compensation. But, as the industry has developed – and it really is an industry – it has also exposed various questionable practices by some of the lawyers who promote them. In particular, the law firms/promoters take in fees a massive cut of the final payment – much greater than an ordinary court proceeding would allow.

Worse, under one common business model, the same lawyers are also, through entities established externally to the law firm, the funders of the litigation. This creates a structural incentive to favour their own financial interests ahead of those of the clients/class members.

When I was attorney-general, I asked the Australian Law Reform Commission to investigate and report on mechanisms whereby such moral hazards could be avoided and the abuses outlawed. It reported after I had left parliament, in December 2018; many of its most important recommendations were implemented by the Morrison government in 2020.

In July 2022 – soon after its election – the Albanese government announced that it would wind back the ALRC-recommended reforms, including the important requirement that litigation funders hold Australian financial services licences. It also declined to accept a recommendation by the parliamentary joint committee on corporations and financial services that the fees chargeable by lawyers running class actions be capped at 30 per cent of the damages.

Some of the well-known class action firms are among Labor’s largest donors.

There is nothing corrupt in this. All donations (so far as we know) were disclosed. No laws appear to have been broken.

But corruption has an insidious cousin: cronyism. It is a world where favours are done and wheels are greased; where ministerial doors are open to some while they remain firmly closed to others; where you know who your friends are and you look after their interests.

Albanese and Dreyfus talk a big game when it comes to integrity. They can point to the establishment of the National Anti-Corruption Commission as an important legacy. Which is all to the good, but it should not divert our attention from the fact that cronyism has become one of the dominant motifs of the Albanese government.

George Brandis is a former high commissioner to the UK, and a former Liberal senator and federal attorney-general.