Unions on a mission to return industrial relations to the 1980s

Remind us once more: Which rules do the unions want to change?

That’s right, they’re the rules introduced by the previous Labor government and the one before that. The ACTU wants to change the Fair Work Act, introduced by then workplace minister Julia Gillard in July 2009, an act on which the Coalition has barely laid a glove. For good measure, the unions will also trash Paul Keating’s legacy by reversing the reforms of the 1993 Industrial Relations Act.

It seems only yesterday that then ACTU president Sharan Burrow was describing Gillard’s ­reforms as “a historic step forward for the rights of working Australians”, the culmination of “an ­unprecedented campaign by Australian workers based firmly on the Australian belief of a fair go”.

Now the unions are spending millions on another campaign, ­unprecedented since the last, to overturn the legislated unfairness they imagine is embedded in the Fair Work Act.

The Even Fairer Work Act, as it may be known, will be the biggest overhaul of workplace law for more than a quarter of a century.

The dystopia is horrible to contemplate. The return of collective bargaining raises the prospect of sector-wide industrial disputes.

It would allow the Construction Forestry Maritime Mining and Energy Union, for example, to bring Australian ports to a standstill, disrupt supply chains and paralyse the entire economy.

No doubt the Even Fairer Work Commission, as it might be called, will be stacked even more heavily with union appointees than its predecessor. It will be granted draconian powers to arbitrate disputes it declares intractable, saddling centrally imposed arrangements on employers and employees alike, with little heed to market conditions.

The result will be an industrial relations system custom-built to impair productivity, stunt growth, reintroduce wage inflation, frighten investors, put Australians out of work and turn the clock back to the 1980s.

That the unions and Labor ­imagine this will make the world a better place is an indication of the decline in economic literacy that is enfeebling the Left. All pretence of acting in the ­national interest, as the ACTU once did with Bob Hawke, has been abandoned. The union movement has become a special interest group, the most powerful in the country, largely serving the interests of educated middle-class professionals in service industries whose wages are paid largely by taxpayers.

In his presidential address to the 1989 congress, yet to be purged from the ACTU’s website, Simon Crean called for wage responsi­bility. He called for “the freeing up of rigidities and inefficiencies in the labour market” to increase growth and productivity.

By contrast, Michele O’Neil’s presidential address in July was framed in the rhetoric of rights and confrontation, rallying comrades in defence of the workers against the evils of insecure work, outsourcing, privatisation, contracts, slave-like conditions, wage theft, corporate greed and unscrupulous bosses.

The language of proletarian uprising is merely for show. The unions are no longer benevolent associations of wage earners seeking better employment conditions. They have reinvented themselves as quasi-corporate entities driven by pure self-interest.

Research by the Menzies ­Research Centre to be published this week concludes unions are powerful, cashed-up institutions earning revenue on favourable terms from dubious activities such as training, security and insurance. They campaign against corporate tax avoidance while paying no federal taxes themselves.

Union revenue has surged ­despite free-falling membership, which has declined by 41 per cent in the private sector in the past 14 years. Revenue has increased by 42 per cent in real terms in the same period. The collective wealth of the 15 biggest unions has tripled to $1.5 billion, greatly exceeding ­returns on the ASX.

Their battle against the big end of town is confected since most of their workers are in the public sector. Others, like those in private health or the construction industry, are frequently employed in projects financed in part, or whole, from the public purse. The majority of wage settlements negotiated by unions are an impost on taxpayers, not shareholders.

The consequences of the Hawke and Keating reforms, largely unintended, allowed ­unions to financially future-proof themselves from further membership decline. Compulsory superannuation and enterprise bargain­ing have provided unions with lucrative long-term revenue sources independent of their membership base. Their influence has been augmented by the amalgamation of smaller trade-based ­associations into super-unions with ­industry-wide clout.

Their conflict of interest as ­employee advocate on the one hand and the vendors of services to their employers on the other ­remains unresolved. They negotiate agreements that include the provision of services of which they are the exclusive providers.

While the proportion of union members in the workforce has shrunk dramatically in most sectors, there has been a substantial increase in members in the health and education sectors. These changes have strengthened the political as well as the industrial power of the movement.

They use revenue to buy influence, mainly through the Labor Party but strategically through minor parties and crossbench ­independents, allowing them to block adverse legislation in hung parliaments or upper houses.

Another troubling development in the union business model is the growing resort to lawfare as a means of achieving industrial or political aims. It is particularly ­apparent in the construction sector, where law-breaking has ­become an established part of the union modus operandi.

In any other sector of the economy such behaviour would be ­intolerable. Most employers would baulk at recompensing ­employees for so much as a parking fine. Yet the loose governance of unions is being cynically ­exploited for crude self-advantage.

Unions in Australia are not alone in the developed world in suffering from an exodus of members. Yet the special circumstances here have given the union movement the power of self-engorgement and wealth to buy except­ional ­influence in the industrial, political and cultural spheres.

Financial muscle has replaced industrial muscle with devastating effect.

Nick Cater is executive director of the Menzies Research Centre.