Unions are a brake on prosperity

After five weeks of campaigning in which budget repair, debt reduction and reforms to improve productivity and therefore living standards have been ignored and the nation faces a downgrade in its AAA credit rating, employers are right to be concerned about a major looming hit to the economy. That is the expectation of unions that a second-term Albanese government will ensure portable long service leave is available to all workers. Analysis by industry leaders has found that such a scheme potentially could “confiscate” up to $18bn a year, money that is currently the property of businesses. It would be transferred to union-linked funds, creating a $900m a year union cash cow for returns on the fund. Under established practice, long service leave is accounted for by businesses as a contingent liability, in which companies retain the money as working capital.

The ALP favours replicating portable long service leave schemes such as those established by the Victorian Labor government and other states, chief political correspondent Geoff Chambers reports, two days before the election. The unintended consequences would be detrimental for business cashflows and profits and their contribution to government revenue, debt reduction and services. As Minerals Council of Australia chief executive Tania Constable points out, the development would “take billions of dollars out of the productive economy, from small businesses to large businesses, and lock it up in union-controlled funds – a massive hit to the economy that Australia cannot afford”. Ms Constable – representing mining giants such as BHP, Rio Tinto, Glencore and Lynas – said the move had nothing to do with protecting workers’ entitlements but would be “a compulsory union tax on every business in Australia”, creating new income streams to fuel unions’ political agenda.

After Labor up-ended industrial relations in its first term by imposing multi-employer bargaining, right to disconnect laws, tighter regulation of the gig economy, same job same pay rules and arduous controls on casual work, universal long service leave is a taste of what unions expect from a second-term Labor government. In a boost to their low membership, the ACTU also wants unions to charge non-union members for bargaining done on their behalf and provisions for all new migrant workers arriving in Australia to receive union induction to understand their work rights and the potential to join a union.

The ALP’s position – that casual employees are in “insecure work” and should have access to portable long service leave – flies in the face of established practice in which employers pay long service leave to workers who accumulate it across many years. Casual workers, in contrast, are generally paid higher hourly rates to compensate for not receiving such benefits. Australian Industry Group chief executive Innes Willox is logical and reasonable when he says “long service leave entitlements should generally only accrue where employees actually perform a long period of service with their employer”.

At the National Press Club on Wednesday, Anthony Albanese said the economy was “turning the corner”. Not on key measures of debt, productivity and living standards, unfortunately. The welcome fall in trimmed mean inflation in the March quarter to 2.9 per cent, from 3.3 per cent three months earlier, opens the way for interest rate relief. But amid runaway government spending, an $18bn impost on business would undermine labour productivity – one of the keys to keeping inflation in check. Strengthening the grip of unions, which represent only 13 per cent of workers and 7.9 per cent in the private sector, goes against the interests of most workers, enterprises and the economy.