ALP business model a boon for unions, a bust for economy

Workplace Relations Minister Tony Burke is delivering on the business model at high speed and with maximum force. Picture: Getty Images

It is perhaps the supreme irony of Australian politics that of our two largest political parties, the one with the best business model, by far, is the Labor Party. The party of labour has perfected a superbly efficient way of turning political power into cash, and vice-versa. Key to the model is that it quite nakedly solicits cash from its key stakeholders and delivers them favourable policy in return.

Since the Albanese government came to power, its three most reliable donor groups, unions, industry super funds (whose generosity is mainly indirect, via the unions) and the plaintiff law firms, have had policy triumphs raining down on them. This column will have a closer look at the union beneficiaries of this largesse.

Before doing so, it is worth noting how comprehensively the conservative political parties have been outplayed. Once upon a time, cash for policy could arguably have been said to be a Liberal Party business model. Big business would support the Coalition and get favourable policy in return. Not any more.

When the Coalition allowed industry super funds to become the most vocal and influential source of ownership of listed companies, it yielded control of political donations by big business to those funds. It is no surprise these funds expect big companies to either donate nothing to conservative political parties or to donate equally to both sides of politics. The control the industry funds have over the board elections of listed companies ensures a tight discipline on that donation policy. The aim and result are clear: to strangle the funding base of the Coalition.

Even when the ALP threatens drastically punitive action on business such as the current threats of mining taxes and multi-employer bargaining, business responds with single-issue campaigns complaining about those specific issues rather than wider backing for the Coalition.

Meanwhile, the funding of the ALP has been supercharged. Wealthy industry funds find ways of giving money to unions, which in turn give it to the ALP, which in turn rewards its benefactors with favourable policy. Now that is a business model to conjure with.

Workplace Relations Minister Tony Burke is delivering on the business model at high speed and with maximum force. His attempt to recentralise Australia’s workplace relations laws by reinstituting multiple-employer bargaining (and thus industry-wide strike powers) and beefed-up arbitration has horrified industry. Yet, the absence of an electoral mandate for this – Jim Chalmers specifically denied industry-wide bargaining was ALP policy when asked on the ABC’s Insiders before the election – is of no concern to a government hellbent on delivering for unions.

The sharpest, most concerning current case study of Burke delivering for unions is the intractable dispute between tugboat operator Svitzer and three maritime unions, led by the notorious MUA division of the CFMEU.

For three years, Svitzer has tried to renegotiate the enterprise agreement with unions that expired in 2019. That EA contains legacy provisions first negotiated about 20 years ago, which give unions unconscionable power over hiring and staffing decisions, as well as exceptional work conditions, pay and overtime.

Svitzer is in a commercial bind. Though it enjoys a monopoly in many ports, the Danish-owned tugboat operator has been losing work to competitors not bound by the same restrictive and inflexible union employment arrangements. That has forced Svitzer to lay off 130 workers. After a three-year guerrilla war of rolling industrial action – 1100 cases of protected industrial action since October 2020 and more than 250 industrial stoppages since October 20, 2022 – Svitzer sought to lock its workers out, thereby precipitating arbitration towards a modern agreement that reflects competitive realities.

Burke’s reaction was telling. The minister pounced on the politics, asserting his proposed changes would fix this problem, and accused Svitzer of “industrial vandalism”.

But who are the vandals here?

Let’s be clear. The MUA’s rolling industrial actions are not about pay or conditions. Svitzer workers are paid from $138,000 a year for mostly unskilled deckhands, about $210,000 for engineers and up to $212,000 for masters – for a 26-week year, and before overtime, leave bonuses, other loadings and superannuation. You don’t have to be a genius to work out that with redundancy payments reaching more than $300,000, some workers might welcome Svitzer being forced to close down some operations and pay workers out.

This dispute is actually about the brute power of the unions to maintain a closed shop. Under the current EA, unions won’t allow maintenance work on weekends or public holidays. Unions decide who is called in to work when someone is sick. Union delegates sit in on interviews when new workers are recruited. Unions dictate a worker can be paid up to four days of pay if called in for four hours. And on it goes. Put simply, if the rules that apply on Svitzer tugboats were imposed on workplaces across the country, we would be an economic basket case.

Meanwhile, after the FWC went to water, Svitzer is back to where it started, continuing to face off against the militant MUA, and other unions that control ports. The FWC decision last week to simply suspend the lockout for six months does no more than guarantee a bit of peace in the lead-up to Christmas while Burke spruiks new IR laws he wants passed by the end of the year.

Then, next year, Svitzer will be back where it started, dealing with the militant MUA, facing more industrial action unless the company surrenders to the union’s shakedown tactics.

Far from condemning this kind of industrial blackmail, Burke is reduced to Orwellian doublespeak in calling Svitzer the vandals. Such is the power of the ALP business model – one that is marvellously effective for unions and for Labor coffers, but rotten for the rest of the country.