Labor Party leaders should not have led a dodgy union

Nearly 20 years ago, I was a union organiser conducting an enterprise bargaining negotiation with an employer.

The members wanted a 4 per cent increase but the employer was willing to offer only 3 per cent. My boss, the union secretary, told me to offer the employer a new deal. We would negotiate a lower wage increase as long as the employer agreed to purchase income protection insurance for every employee. The insurance business was, apparently, a thing many unions were getting into.

The insurance was to provide income if employees suffered a non-WorkCover-related accident and were classified totally and permanently disabled, never able to work again. However, in the event of a claim, the insurance policy provided a replacement income for only two years. After this time, the claimant would revert to the disability pension.

It seemed obvious the insurance product was substandard. What use is income protection insurance that doesn’t provide an income until the aged pension kicks in? The members had shown no interest in the insurance when it was mentioned. Further, the cost of the insurance was about three times what it should be.

Clearly, the right thing to do was to accept the 3 per cent pay rise and allow people to buy their own insurance if they wanted it.

At the time, I was not told the union had a financial interest in the transaction; that the branch would receive commissions. The impression given was this was all in the interest of the workers, who could at any time fall prey to a terrible accident.

Nevertheless, it all smelled very fishy. To cut the deal made no sense and felt like the wrong thing to do. I refused.

This defiance placed me with on a collision course with the boss. I had put the interests of the members before the interests of the union. The members didn’t need the insurance product but the union needed the kickbacks. Refusing to capture this income stream for the union was seen as gross disloyalty on my part.

This week I remembered this past event when reflecting on what was fundamentally wrong with the labour movement, and the Labor Party, today.

For Labor, it all started to go wrong about two decades ago. With falling membership, unions had to look for other income streams. The enterprise bargaining system provided the opportunity to raise those income streams. A plethora of income-tax exempt union-owned businesses have sprung forth and, today, many unions don’t even need members, they just need “relationships” with key employers, and the vast amounts of money that goes with that.

Of course, unions are just like businesses; some are well run and some are not. One cannot lump them all in together. Some unions are very unlikely to be corrupt. Of the unions that are corrupt — defined by me as those that rely on a corrupt business model for revenue — each one sells a very different product to its particular market; not employees but employers in our business sector.

Each union has different ways to raise revenue, depending on which industries the union interacts with and the anti-competitive desires of the employers that dominate those industries.

For example, large employers in retail want low wages and make arrangements with a union to achieve this objective. Large employers in construction are happy to pay high wages because they pass the cost on to the taxpayer and make more profits, so these employers use the union to control competition and protect their position in the market.

One employer in the transport sector wants the competition spied on and is happy to pay a union to do so.

Twenty years ago I could see that many unions were prepared to sell out workers for their own interests. Today, I can see their business model depending on it.

Some unions do dodgy deals with large employers to cut people’s wages in return for a range of financial benefits.

Other unions rely on key relationships with head contractors, to provide them with the opportunity to stand over subcontractors and demand bribes.

And, of course, lots of the money that flows from all of this activity ends up with Labor. This is a dire situation surely.

For the labour movement, and key leaders in the business sector, these are deep, structural problems. The system, the IR club and the way business is done between big business and unions in this country is rotten to the core.

What’s more, people are finding out.

Labor’s status as the party that protects workers’ rights increasingly will be seen as fraudulent. Any leader of the party should not have held a leadership position in a union with a proven history of corruption. And that is the problem with the present leader.