Permanent building watchdog would call unions to heel

How do you solve a problem like the CFMEU? In answering this question, I offer a hint to the Labor Party and the Greens: the Construction Forestry Mining and Energy Union is a serious problem and no amount of money being donated to your coffers should blind you to this fact.

The CFMEU is essentially the reincarnated Builders Labourers Federation, a union that was deregistered by the Hawke government. Who can forget national secretary Norm Gallagher, who enjoyed staying in his luxurious beach house funded by bribes (sounds familiar?) while banging on about the class struggle and oppressive bosses?

If you are under the illusion that the CFMEU has changed its ways from those bad old BLF days — note Bill Shorten and Richard Di Natale — and is simply a responsible corporate citizen representing its members and protecting workplace (and public) safety, you have not been paying attention. To be sure, the union has become more adept at hoovering up money from various ­sources, including income-protection insurance, superannuation, redundancy funds and the like. But threats, blockades, boycotts, extortion, bullying, thuggery, bribes: these are still part of the playlist.

Ironically, enterprise bargaining, which first burst on to the scene in the early 1990s courtesy of the Keating Labor government, has provided a useful device for the CFMEU to tame subcontractors and extort money and favours from them.

The combination of evidence from the Royal Commission into Trade Union Governance and Corruption and the court cases that the union has been forced to settle (for vast sums of money) tells us the CFMEU is out of control.

If you are energetic, you can look through some of the ins­tances that the now-defunct Australian Building and Construction Commission investigated. Just be prepared to read about CFMEU members donning balaclavas and attempting to run a bus of Australian Workers Union members off the road. Charming.

But can the CFMEU be tamed? Just last week, Boral scored a win against the union by securing a settlement that could run to be between $7 million and $9m, including the company’s hefty legal bill.

But the real kicker in the settlement is the agreement by the CFMEU to behave itself for the next three years (I’m not sure what happens after that). Any misconduct is assessed by an independent person and the fines imposed on the union escalate according to the number of instances of prohibited behaviour. This must really hurt the union.

Note that the case against the CFMEU’s alleged secondary boycott of Boral is not finished, with the Australian Competition & Consumer Commission pursuing its action against the union, with huge fines a distinct possibility. (The maximum fine is $10m.) The fact the union has settled with the company must surely strengthen the ACCC’s case.

Earlier in the year the CFMEU agreed to pay Grocon more than $3.5m to settle a case in relation to the blockade of the Emporium site in central Melbourne. Even the weakened Building Industry Inspectorate within the Fair Work Commission has managed to land quite a few blows on the CFMEU, with multiple fines being levied.

So is the CFMEU about to run out of money? While the financial records of the union are difficult to decipher (the different divisions and each state provide separate financial accounts, with the national office essentially a shell), it is one of the wealthiest unions in Australia. The legal costs, the settlements and the fines are hurting, but the CFMEU is not about to go bust. Take the construction and general division, Victorian and Tasmanian branch. Last year, the revenue was more than $27m and its net asset position was $59m, including nearly $26m in property, plant and equipment. Or take the mining and energy division: its revenue last year was $10.4m, with the division having net assets of $37m, including $22m in property, plant and equipment.

In some of the accounts there is a separate declaration of annual legal costs, but not in others. There is no consistency to the way the accounts are presented and there is clearly quite a lot of fudging in the revenue figures.

It is clear, however, that there has been a call on members to finance the additional costs of the union of being sued and dealing with the royal commission.

There is an extremely strong case for the law to insist that trade union financial statements be meaningful and accessible to members. And just as companies must consolidate their accounts, this is a requirement that must be imposed on federated and divisional unions as well.

Of course, insisting on a clean set of accounts is hardly likely to lead to a big turnaround in the behaviour of the union. But you might have thought that seeing union officials taking bribes and having their houses built for free could make a few members feel rather cross.

But the union does secure above-market rates of pay and conditions for its members, many with few skills, so they simply cop these stories on the chin. (Workers on the new light rail project in the ACT will be paid 80 per cent above the award.) The fact there is much less building activity overall probably never occurs to them.

Now if you are an apologist for the union from the Labor Party or the Greens, your response to damaging material about the behaviour of CFMEU officials is to suggest these matters should be handled by the police. This advice is about as useful as advising victims of mafia extortion to contact the police. The reality is the parties that pay bribes do so for a reason, and that reason is that their businesses (and therefore their livelihoods) will be damaged, even destroyed, unless the bribe is handed over.

The head contractors also need to toughen up and refuse to accept the condition that all subcontractors must sign CFMEU enterprise agreements to secure work. You can’t expect these subcontractors to do a Boral (spending millions on legal costs).

The only way of dealing with the problems in the building industry is to have a standing royal commission such as the ABCC that can handle complaints, compel witnesses to provide evidence and impose substantial fines for prohibited behaviour.

It is quite extraordinary that most of the crossbench senators are refusing to support the reinstatement of the ABCC. It is one of the most important jobs of newly appointed Employment Minister Michaelia Cash to persuade them to change their minds.