AWU membership audit ‘reduces Bill Shorten’s power base’

The union Bill Shorten used as the springboard for his ­political career has lost half its members in the past five years.

Opposition Leader Bill Shorten in question time yesterday. Picture: AAP

The union Bill Shorten led and used as the springboard for his ­political career has lost half its members in the past five years.

An internal audit forced on the Australian Workers Union by the Registered Organisations Commission following concerns about exaggerated membership numbers confirms the union’s total in December was 69,786 — a 50 per cent drop compared with the peak of 139,329 ­declared in the AWU’s 2012 financial report.

The result raises doubts about the future of Australia’s oldest union and the strength of the right-wing union power base the federal Opposition Leader has ­relied upon for core political ­support.

A halving of AWU membership puts at risk the Labor leader’s influence, using union numbers, over party policy and selection of candidates.

In the longer term, it could ­affect the ALP’s national power balance, swinging more numbers towards the party’s Left.

The AWU, which represents workers in farming, civil construction, mining and oil industry jobs, is now the same size as its dimin­ished left-wing rival, the Australian Manufacturing Workers Union, and half the size of the Construction Forestry Maritime Mining and Energy Union. Senior Labor insiders said the audited revision of AWU membership numbers reinforced their view that Mr Shorten’s union had over-inflated its numbers for many years, contradicting past claims by him and others that it was “growing”.

They said it helped explain why Mr Shorten, as Labor’s federal leader, had needed to turn to the left-wing CFMEU to consolidate his power in the ALP, and even shore up his leadership from a possible ­Anthony Albanese challenge.

GRAPHIC: Pumping up the numbers

When Mr Shorten led the AWU before entering parliament in 2007, the CFMEU was his bitter union enemy, clashing repeatedly with him over policy and competition for members.

Mr Shorten is now close politically to Victorian CFMEU firebrand John Setka.

The CFMEU had regarded the Shorten-led AWU as a “boss’s union” that undercut wages to boost its membership rolls.

AWU national secretary Daniel Walton, new to the AWU’s membership problems after taking the reins less than two years ago, told The Australian his priority was good union governance.

Although the AWU is fighting legal battles with the ROC on other fronts — most notably over an ROC-backed police raid on its union headquarters last October — Mr Walton said he had agreed to comply with requests from the nation’s union regulator to conduct further membership audits dating back to 2009.

He said the AWU would implement recommended accounting procedures for adding and subtracting members.

This further round of AWU membership audits could significantly affect past declarations in union financial reports stretching back a decade, if discrepancies are uncovered.

The AWU first conceded “inaccurate historical membership reporting” to the Fair Work Commission in 2016, shortly before its functions as a union regulator were transferred to the ROC.

Wrangling over the issue has continued, with the ROC issuing repeated warnings about legal breaches and fines if the AWU failed to purge unfinancial members from accounts.

The ROC queried “different approaches” taken by some AWU state branches, especially the Queensland branch, which has previously reported membership variations of up to 25 per cent over periods of six months.

Mr Walton last year submitted amended operating reports for ­financial years dating back to 2009 with membership revisions that he hoped would be the end of the matter.

ROC deputy Chris Enright continued to press for full audits, concerned the AWU’s reporting processes “may have been ­inaccurate”.

In a letter available on the ROC website, Mr Enright told Mr Walton: “The ROC currently has little or no information about the particular findings that gave rise to the proposed amendments.”

Mr Walton confirmed to The Australian that he and Mr Enright had since met in Sydney, where the AWU’s national office is based, and agreed to co-operate on the membership issue.

Although the ROC’s audit ­requests date back to 2009, fluctu­ations in declared AWU mem­ber­ship numbers date back much earlier to when Mr Shorten was the union’s national and Victorian branch secretary before he entered parliament in 2007.

AWU membership was stated as 136,358 when Mr Shorten was national secretary in 2002, and 102,161 when he left.

Under his successor, Paul Howes, the AWU’s declared membership rose to a peak of 139,329 in 2012 before it began slipping again.

Earlier this year, the Transport Workers Union received a $272,000 fine from the Federal Court for falsely inflating its membership. The TWU’s failure to eliminate almost 20,000 unfinancial members from its accounts in NSW, after stating it had almost 40,000 full members, meant it could double its representation on the state Labor conference floor over many years, and gain a greater say in the selection of party candidates.

The TWU’s former NSW and national secretary Tony Sheldon, confirmed as NSW Labor’s No 1 Senate candidate for the federal election, has complained about the severity of the penalty. The union plans to appeal.

The ROC warned the AWU this year that it risked an “external audit” and “court penalties for noncompliance” unless it acted swiftly to rectify inaccuracies. It is understood the AWU hopes to avoid penalties by following the recommended audit process.

AWU union membership irregularities were initially raised during the 2015 royal commission into union corruption. The hearing made no findings against Mr Shorten but did recommend that his successor as Victorian branch secretary, Cesar Melhem, face court over the alleged “false inflation of membership numbers” and “falsification of documents” during his time at the helm.

The ROC recently initiated proceedings in the Federal Court against Mr Melhem, now a Victorian Labor MP.

The Australian reported in March how the ROC had highlighted artificially boosted numbers in the AWU’s Queensland branch, formerly headed by key Shorten supporter Bill Ludwig. The ROC said the Queensland branch had failed to purge up to 45 per cent of unfinancial members over successive years.

The intense scrutiny of the AWU’s membership declarations by the ROC appears to have coincided with some union personnel changes at a senior level.

When questions were first raised about “concerns about the validity of AWU membership ­reporting” in November 2016 with then AWU national secretary Scott McDine, he asked for a week’s extension to reply to Mr Enright, then operating in his regulatory policing role with the Fair Work Commission.

A few days later, Mr McDine resigned and was replaced by Mr Walton. One of Mr Walton’s first actions after taking over from Mr McDine was to write to Mr ­Enright, saying: “The AWU ­acknowledges there is an error in its historic membership numbers recorded in its ­financial reports for June 2009-14.”