How parliament lost its integrity over bill to rein in CFMEU

Senators letting unions off the hook reeks of self-interest.

ACTU president Michele O'Neil and ACTU secretary Sally McManus at a press conference at Parliament House in Canberra after the defeat of the Ensuring Integrity Bill. Picture: Gary Ramage

It has been a devastating and unexpected defeat for the Morrison government. The word betrayal rang through Parliament House late Thursday. This was a vital bill — to torpedo the law-breaking model of the construction union. The government felt it had an understanding with Pauline Hanson, only to see her vote at the end with Labor and the unions.

“Some kind of deal has been done and these things don’t stay secret,” Attorney-General and Industrial Relations Minister Christian Porter told Inquirer about Hanson’s backflip. Scott Morrison and Porter will keep fighting. The government will re-prosecute the bill at some point after the 34-34 Senate deadlock that meant its failure. Yet this vote will not be easily reversed.

The moral of the week is the sheer lobbying capacity of the unions to sway the key crossbenchers — Hanson and Jacqui Lambie, along with their self-interested fickleness. It exposes a more fragile and unpredictable Senate, less likely to back government measures. Once crossbenchers prosper from defeating governments they get the habit.

The stakes with the Ensuring Integrity Bill 2019 ran high. This bill was about enforcing the law, terminating the business model of the construction arm of the Construction Forestry Maritime Mining and Energy Union, and constituted a productivity reform to tackle the prohibitive construction industry costs in this country, estimated at 30 per cent higher due to union militancy and law-breaking.

This failure must cast a shadow over economic reform this term. If the government cannot secure a law to rein in the CFMEU, what are its prospects on other reforms?

The government runs an openly more modest economic reform agenda this term, yet even that seems in jeopardy given the protectionist, populist, attention-seeking and grievance politics of the Senate crossbench.

The claim that Westpac’s treatment justifies construction union immunity is a false parallel. Hanson and Lambie must manage the justified claim they have underwritten CFMEU thuggery and intimidation. Yet the populist politics in which they indulge will probably see them skate through. The Westpac money-laundering scandal became the cover for their irresponsibility. Hanson invoked the so-called double standards of the Morrison government, lecturing on the need to “clean up the white-collar crime”.

This result damages Morrison’s authority. The government was blindsided by Hanson and outfoxed by the unions, which never mentioned the CFMEU but framed their image in terms of nurses and teachers. In truth, this was a naked issue of power. It is a win for John Setka and the law-breaking CFMEU, and casts a shadow over Porter’s plans to revive an agenda of industrial relations reform with a series of upcoming bills.

Despite comparisons with Westpac there was little mention that Setka remains boss of the Victorian branch of the CFMEU while Brian Hartzer, among others, is drummed out of Westpac and chairman Lindsay Maxsted will soon follow, or that Westpac faces likely penalties in the $1bn range while the CFMEU court-ordered fines total about $16.5m.

But all this misses the main point. This is an ignominious moment for the Australian parliament because it failed its most important obligation — to protect the public interest. The parliament, put simply, is untrustworthy on critical issues of integrity. The Westpac “excuse” is untenable and disguises a refusal to vote on the merits.

Much of the public will recognise this deception. The truth is Labor is incapable of confronting the CFMEU or rejecting its funds. Many of those who voted this bill down cast themselves as supporters of a national integrity commission but their votes on this bill reveal they enshrine party or personal interest before integrity in public policy. This parliament reeks of hypocrisy.

Illustration: Eric Lobbecke

Hanson said One Nation proposed 11 amendments. Porter said: “We accepted everything that Pauline raised in the process.” He asked: Why would you propose 11 amendments, have them all accepted and then not support the bill? He branded it “exceedingly strange”, a polite euphemism, then suggested Hanson might have “reached some agreement with the CFMEU”.

After the vote Hanson talked of the need to overhaul the way administrators, receivers and liquidators acted. “That issue was never raised, not once,” Porter said, referring to weeks of negotiations. It is easy to say the government failed. But when parties refuse to negotiate in good faith, failure is inevitable.

“At the end of the day this legislation will come back,” Porter said. “One Nation will again have to decide, do you take the side of hardworking Australians who want to turn up … and just do their job without being harassed, spat at, intimidated by thugs from the CFMEU?” He plans to take the bill back to the partyroom and put it into the house next week.

Porter said the lesson of reform was that “very often” it took “two or three attempts” before legislation secured Senate approval. This is true — but it is equally true that very often the Senate sticks by its initial rejection. In this case that would pile infamy upon infamy. This decision demands correction in the public interest. While it stands it will hang around the necks of Hanson and Lambie.

Labor waged an extraordinary campaign against the bill. It was clever, hysterical and misleading, testifying to the bond between Labor and the unions. It secured a victory that many felt was unlikely — but the key players were the unions. The government is convinced Hanson has done a deal with the unions, perhaps in the Queensland state election context. Hanson’s pitch to blue-collar unionists poses a threat to both Liberal and Labor.

After her spectacular blindsiding of the government, Hanson tried to square off, saying: “Let this be a warning shot across the bows to all union bosses to get their act together and a second shot across government bows to clean up the white-collar crime.”

She held out the prospect of changing her vote on a re-run of the measure if the unions didn’t respond. What’s this, another warning to the construction union: how many hundreds of warnings do these people get? The union has run up 2166 breaches and legal contraventions in the past 15 years, with Porter saying these are repeated and blatant breaches “that actually undermine health and safety at building sites”. The poison runs far beyond Setka, with Porter pointing out that Setka is responsible for only 1 per cent of the legal breaches.

The bill sought to curb an organisation described by a Federal Court judge as “the most recidivist corporate offender in Australian history”. Another Federal Court judge said: “There is no evidence before me … of any compliance regime ever put in place by the CFMEU to address its long history of prior contraventions.”

ACTU president Michele O’Neil claimed a victory for unions against a government “demonising unions, delegates and workers”. She said the bill was designed to “shut down” and “bust” unions, and would have made Australia “a pariah in the Western world”. Secretary Sally McManus said the message was “don’t mess with working people” and that the government had different standards for big business and banks. Labor was successful in re-casting the public debate with its accusation the bill was evidence of Morrison government anti-union, anti-democratic authoritarianism — an attack on all unions and all workers — while applying a softer double standard to bad behaviour by bankers and businessmen.

Porter negotiated with One Nation for weeks. Both Porter and Senate leader Mathias Cormann believed from talks with Hanson that One Nation was on board. Porter said: “This was very disappointing especially after Pauline Hanson voted for the government amendments and the government voted for Hanson’s amendments. It’s for Pauline Hanson to explain why she voted against a bill that met every requirement she sought through extensive consultation.”

Everything was going smoothly until the final vote when Hanson, in the words of the government, “took the side of the thugs”. This is a big play by Hanson, who seeks to add more alienated blue-collar workers to the disillusioned conservative populists she already enjoys. The thing to watch is how the unions now treat Hanson. They owe her a big favour and it will surely be paid.

The government substantially rewrote the original bill in making many concessions during negotiations with senator Rex Patrick from Centre Alliance and with One Nation. Patrick refused to back the original bill but said the final bill was “proportionate” to the problem. He told the Senate: “As amended, the bill will not prevent or impede the right of unions to represent their members effectively. The amended bill is not a union-bashing bill — unless of course you are talking about a handful of unions and union officials that break the law as a matter of routine.”

Repudiating the Westpac comparison argument, Patrick said it was wrong to claim the parliament was just focused on unions. It had dealt with energy companies; this week it was dealing with the unions; it had dealt with the banks and had more legislation to deal with the banks. He said the bill targeted “unaccepted behaviour” and “not a particular union”. Registered organisations that complied with the law “will have nothing to be concerned about”.

He referenced union “scaremongering” tactics over the bill, including newspapers ads, robocalls and billboards, saying they came from “rogue unions that fear their business model of bullying, intimidation and flouting of the law will be brought to an end”. In contrast to Patrick, some Labor MPs defended law-breaking by unions as part of the story of democratic progress.

For the government, Hanson’s speech on Wednesday evening was filled with warnings that One Nation (with its two vital Senate votes, Hanson and Malcolm Roberts) was likely to become far more difficult to manage. The further risk is that Hanson will be supported by populist conservative media commentators when she campaigns against Morrison, fuelling the threat of more public alienation from the Coalition in rural and regional areas.

Given the need for economic reform, Hanson and the Senate crossbench loom as a greater danger to the living standards of Australians than was initially recognised. The one instinct that seems to unite the crossbench is grievance-based protectionism.

Hanson, while criticising the CFMEU, sang from much of the trade union songbook. She said unions represented firefighters, media, teachers, electricians, plumbers, nurses, cleaners and low-paid blue-collar workers. Hanson said: “I hate to break the bad news to Australian workers but One Nation are now the only political party left defending Australian jobs.” Siding with the unions, Hanson attacked Labor for backing the government’s free-trade agreements with Indonesia, Peru and Hong Kong.

Hanson said wages in Australia were stagnant because “we keep allowing in cheap labour from developing countries”. She said the 11 amendments One Nation proposed were designed after consultation with the unions. She wanted to acknowledge “the very worthwhile discussions Senator Roberts and I had with the CFMEU, the AWU and, in total, 10 union bodies across Australia”. She also acknowledged input from business groups and Porter.

The signs are unmistakeable: Hanson, keen to exploit blue-collar alienation, is ready to cut deals with trade unions along the way to show her credibility. Scoring off the Westpac fiasco was the easiest game in politics, with Hanson saying: “What I pick up from the public is a crystal-clear view that this government and past governments have one rule for white-collar crime and a much harsher rule for blue-collar crime.” This is despite the government’s laws that can send executives to jail for 15 years on a lower threshold than many IR provisions.

Morrison has got involved in the government’s next Senate test — its bid in the coming week to repeal the medivac law passed late last year by a Labor-Green-independent coalition allowing doctors, in effect, to authorise entry of refugees from offshore. The government will be anxious to avoid a second embarrassing defeat in successive weeks but it will not succumb to intimidation from Lambie, now the pivotal vote, and allow her to dictate on national security issues.

Asked about Lambie’s performance on the integrity bill Porter said: “Lambie’s amendments were totally unworkable. They were dropped into the Senate right at the last minute, which says to me they weren’t a serious effort to secure changes to the legislation.” Lambie said many times she would back the bill while Setka still ran the union in Victoria — he still holds office, but Lambie voted down the law. Porter said the government remained open to further suggestions from Hanson and Lambie. The truth is that our legislative process was, yet again, reduced to a shambles this week.

The final bill as amended was filled with safeguards. Only the commissioner from the Registered Organisations Commission can apply to court to disqualify an officer or deregister an organisation (such as the CFMEU). This power to apply was removed from the minister or a person with sufficient interest.

Ultimately, any decision rests with the courts. Conviction of a criminal offence under foreign laws with a jail term of five-plus years was removed as a ground for the automatic disqualification of an officer. The court cannot disqualify an officer or deregister an organisation (such as the CFMEU) unless satisfied it would not be unjust to do so having regard to the law-breaking involved. The onus rests on the commissioner to satisfy the court that disqualification or deregistration would not be unjust.

Labor Senate leader Penny Wong branded the bill a resurrection of John Howard’s Work Choices. “Work Choices is not ‘dead, buried and cremated’ as Tony Abbott promised,” she said. “It has merely been hiding. The heart still beats on those over there because they can never let go of it. The only thing that has changed in the 14 years since Work Choices passed this chamber is that this time they are going after the trade union movement first.” Wong said it was “quite likely” that Labor “will lose this vote” — evidence of Labor’s pessimism.

But she declared that the labour movement would keep fighting. “We will fight this until the next election and beyond,” Wong said. These remarks were measured compared with those of most Labor and Greens MPs. If you want to get depressed about Australian politics, then read the pages of hysteria dished up in this debate.

Morrison and Porter decided post-election to try to resurrect IR reform on a new basis — to limit their efforts to what was actually possible and what would have a meaningful impact, as distinct from big-bang ideological battles.

Yet this country is defeating itself. It perpetuates past ideological conflicts by imposing them on new debates that do not warrant such ideological rigidity and that prevent issues being assessed on merit. The Work Choices invocation is mythical yet still effective. It testifies to a nation tied to past conflict, not future prospects.