Cleanevent staff lost $400m under deal by Bill Shorten’s AWU

The commission has contacted executives connected to a controversial cleaning company.

Opposition Leader Bill Shorten is to front the royal commission into union corruption today. Picture: Britta Campion

The royal commission into union corruption has been contacting key executives connected to ­controversial cleaning company Cleanevent to give evidence ahead of today’s appearance of Bill ­Shorten.

The Australian can also reveal that the reduction of employee conditions under a 1998 enterprise agreement signed by Mr Shorten’s AWU Victoria and Cleanevent cost 5000-odd workers as much as $400 million, substantially more than previously thought.

The royal commission has in recent weeks contacted former Cleanevent senior executive Steve Hunter to provide evidence, following reports in The Australian detailing serious concerns he had about the relationship between the union and the cleaning group.

Mr Hunter has said the 1998 sweetheart enterprise bargaining agreement left workers far worse off and had been denied to Cleanevent’s rivals, placing them at a disadvantage. He said AWU ­Victoria had good reason to be friendly with Cleanevent, given Cleanevent had in place in the late 1990s and early 2000s an unusual arrangement, which artificially bolstered union memberships.

Mr Hunter has said Cleanevent staff were automatically signed up as AWU members on employment, unless they actively ticked a box to opt out. That arrangement meant “up to 90 per cent” of Cleanevent’s workers were union members at the time.

The opt-out agreement is understood to have been changed sometime before 2008, with the commission hearing very few of the company’s 4000-5000 staff were union members at that time.

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Mr Hunter became particularly aggrieved with the sweetheart Cleanevent deal after leaving the firm in 2003 over differences he had with Cleanevent’s founder and then chief executive Craig Lovett. Mr Hunter set up his own cleaning business at that time but despite several years of negotiations, AWU Victoria refused to provide his company an enterprise bargaining agreement similar to Cleanevent’s. “Cleanevent was paying $18 an hour for casuals while we were paying $28-$29 an hour to staff — straight away, you are $10 an hour behind,” Mr Hunter has told The Australian. “With an event like the Big Day Out you’re looking at several thousand hours; it doesn’t take long before you are out of the equation.”

When contacted this week Mr Hunter said he was currently unable to comment on any matters relating to the royal commission.

Cleanevent’s former major shareholder, Melbourne’s wealthy Liberman family, is also understood to have been approached by the commission for information regarding the company.

The Liberman family and Justin Liberman, who was involved with the Cleanevent investment, have declined to comment when contacted by The Australian. In 1998, while Mr Shorten was AWU Victoria state secretary and Cleanevent’s union representative, an EBA was entered, which reversed worker-friendly deals, removing night-shift penalties and weekend loadings.

The deal was highly beneficial for Cleanevent because the bulk of cleaning work was conducted outside office hours, and during weekends, cleaning up after events.

Between 1998 and 2004 the deal saved Cleanevent more than $60m, when adjusting the annual wages bills for the savings arising from the EBA. That was larger than originally estimated given new accounts had surfaced.

Spotless bought Cleanevent in 2011, after beginning negotiations to buy the company in 2009.

Analysis based on wages bills conducted by The Australian, with the aid of industry experts, shows that taking into account the differences to the EBA introduced in 1998 workers were collectively about $420m worse off than they would have been had leave loadings not been removed from the EBA.