Unions anticipate windfalls from next round of IR laws

Given the strength of their commitment to real wages growth, Anthony Albanese and Employment and Workplace Relations Minister Tony Burke should be tailoring their next round of industrial relations reforms to improving productivity. It is the only sustainable source of real wages growth. After a decade of the slowest productivity growth for 60 years, higher rates also would promote economic growth, which in turn would help ease the scale of the government’s structural budget challenge. On the information available, we are yet to see anything that suggests the second tranche of workplace changes will kickstart productivity. But trade unions will be major beneficiaries as the government encourages independent contractors – whose livelihoods depend on “insecure work”, according to Labor and the ACTU – to sign up to union membership. In addition to swelling union coffers from membership fees and increasing unions’ industrial muscle, expanding membership would boost union-controlled employee entitlement funds, chief political correspondent Geoff Chambers reports.

Unions already have pocketed more than $350m in the past decade from funds set up on behalf of workers for their benefit. In the Victorian building industry, for example, the funds cover redundancy pay, portable sick leave (which goes with workers if they change employers), training and income protection insurance. New analysis of Australian Electoral Commission data reveals such union-linked entitlement funds have paid an average of $32m a year to unions between 2011-12 and 2021-22. Across the decade, the top union recipients were the CFMEU ($189m), AMWU ($54m), CEPU ($48m), ETU ($28m) and AWU ($16m).

Mr Burke’s mantra that the Albanese government is “on the side of ending the race to the bottom on wages and conditions” does not address legitimate concerns about these union cash cows, in which some employer groups are also stakeholders. Funds across the construction industry, which are effectively unregulated, are valued at more than $2bn. Controversial CFMEU Victorian state secretary John Setka and national plumbers union boss Earl Setches are on the board of Incolink, Australia’s oldest and largest workers’ entitlement scheme. Master Builders Victoria chief executive Michaela Lihou, whose employer association benefits from the fund, is also a board member. Master Painters and Master Plumbers are also Incolink stakeholders.

The building industry engages about 400,000 independent tradespeople on contract. Under the crackdown on so-called insecure work, many are likely to be encouraged to join unions and work under regulations, an approach that does not encourage individual enterprise and productivity. Under a portable funds model, Australians in insecure work would be able to access employer-funded entitlements such as long-service leave, annual leave and sick leave. ETU acting national secretary Michael Wright is on record pushing for the government’s multi-employer bargaining laws, passed last year, to spread portable entitlements that extend beyond one employer. That approach, he said, would heighten the benefit of union membership.

Before last year’s federal election, we reported that the largest employer groups were concerned about Labor forcing businesses to pay billions in entitlements each year into union-linked funds, driving up costs for companies and consumers. The Australian Industry Group, Business Council of Australia and Master Builders were alarmed about the then opposition’s Secure Australian Jobs plan. “More gig work and short-term contracts mean less secure work,” the plan specified. “Having a secure job with sick leave and holiday pay means you can save up for a house, take care of your family and get ahead. Labor will enshrine secure work as an objective of the Fair Work Act. This means the Fair Work Commission will have to put job security at the heart of its decision-making.”