Shorten -Pub Test Fails

The Missing Pub

Shorten’s second day at the Royal Commission concluded with agreement today from the media that the “pub test” failed. There also seems general agreement that the RC will want another session with Shorten.

As The Australian’s editorial points out below, “much more is at stake at this royal commission” than emerged from  the various exchanges at the RC viz “the integrity of our workplace relations regime”. Also, “we are now learning in vivid detail about how cosy relations between the AWU and various companies are leading to poor outcomes for members”. The editorial concludes with the same theme as yesterday viz “there is a strong case for outlawing such cosy and clandestine deals”. But a much greater reform than that is needed.

Some other media commentary are attached. Note in particular:

  • The Age claims Shorten was “far from convincing” and did not explain “to what end” the AWU obtained “the many hundreds of thousands” from companies. Unlike the response from Labor’s political leaders that the RC is simply a political attack on Labor by Abbott, The Age says it is “providing some rare insights into the machinery behind political power… Mr Shorten and his supporters might not see it that way, and that is the problem”. And, “as The Age has argued before, Mr Shorten needs to break the nexus between the union movement and the Labor Party”.
  • The Australian’s journalist Anthony Klan draws attention to payments over several years to AWU by  Huntsman (a US manufacturer in Australia and distributor of chemicals) to meet the cost of  employing a “facilitator”. According to Shorten, this employee facilitated “education and training”. But  according to Huntsman’s HR manager his  role encompassed keeping industrial peace, including “stopping trouble” and ensuring workers “didn’t disrupt operations”. A statement by Huntsman in June said the employee had been a full time “workplace change facilitator” since the mid-1990s. His role had been to “facilitate  employee relations, balancing the needs of the unionised workforce and the company”. No mention of this situation was made in any EBA.
  • Judith Sloan describes the size of the kickbacks from employers to the unions “as something of a shock” and that the shift to enterprise bargaining “has greatly enlarged the scope for side-deals … behind the backs of workers”. The payment of $100,000 plus GST per year to the AWU from Thiess-John Holland Connect East consortium was not for services rendered by the union. But the AWU is not the only union “up to these shenanigans”.

From a policy perspective, the legal governance framework is “completely ineffective” in keeping workers informed and protecting them”.  Payments from employers to unions “should be prohibited by law” (as in some overseas countries). The regulation of workplace relations is ineffective, as illustrated by the failure of the administrators of the Fair Work Act to prevent industrial action outside defined protected periods. This failure helps explain why “companies pay unions to keep the peace”. Also, “there is an anti-competitive element in the current arrangements”, which includes deals by companies with unions that do not apply to competitors. This  has been ignored by the ACCC.

In summary, the “explanations” by Shorten to the RC have gone a long way to providing evidence to justify a major reform of the regulation of workplace relations and to make it much more difficult for Labor to characterise the RC as simply a “political” attack on Labor and the unions. The RC report later in 2015 will presumably not provide the economic case for reform. But the exposure of “keeping the peace” payments by businesses to unions should be particularly helpful to the Productivity Commission in making the case for reform to workplace relations and competition policy before then. Business organisations will also need to review their attitudes to keeping the peace payments.

Of course, these are issues which have been raised before and let pass. But particularly given the apparent media reactions to Shorten’s “evidence”, it will be harder for both major political parties to deny the case for reform.

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