Royal Commission on Trade Union Governance & Corruption – Submission by HR Nicholls Society

The Royal Commission on Trade Union Governance and Corruption has had its operations extended to end 2015 but it is aiming to produce an interim report this year. For some months the HR Nicholls Society has been seeking legal assistance in lodging a submission arguing that the existing regulatory arrangements under the Fair Work Act, and the Fair Work Commission’s interpretation of the legislation, have created an environment conducive to corruption and restrictive practices in the labour market.  However, until recently we were unable to obtain appropriate legal advice because, we were told, of the potential conflicts of interest  in regard to other clients for whom the legal advisers were acting. One is tempted to interpret such reactions as reflecting one of the problems with the existing arrangements.

About four weeks ago we were successful in obtaining assistance from two prominent barristers and a submission has now been lodged with the Royal Commission. A copy of my covering letter and the submission is available here.

I note here just two points.

First, the HR Nicholls submission is to an extent limited by the terms of reference which do not refer specifically to the economic effects of existing arrangements. As the Abbott government has indicated that the Productivity Commission will at some stage be asked to undertake a comprehensive economic review, our submission does not attempt to cover all the adverse economic effects of the regulations, such as the minimum wage. That will be for another day. But there are both legal and economic implications in the Commission’s identification of “criminal conduct which includes widespread instances of physical and verbal violence, cartel conduct, secondary boycotts, contempt of court and other institutional orders, and the encouragement of others to commit these contempts”.

Second, my covering letter argues that the absence of any specific mention of economic implications in the terms of reference should not stop the Commission referring to them in its report(s). There is in a sense an interconnection between the legal and economic effects. The importance of having regulatory arrangements which stop or markedly reduce secondary boycotts is but one example.

Accordingly, it is suggested that the Commission should in fact give more attention than appears so far to be the case to the adverse economic implications of the existing regulatory arrangements. The provision in the terms of reference to “the adequacy and effectiveness of existing systems of regulation” seems relevant and the identification of restrictive practices in the labour market indicates that adverse economic effects occur. Hence it is recommended that the Royal Commission draw attention to the likelihood of such effects in its report.

For this purpose it may be desirable to employ one or more economic advisers to help in drafting reports.