More Needed than Heydon RC Recommends & Turnbull Proposes So Far

So far I have read only Volume I of the Overview and introduction of the final report of the Heydon Royal Commission into Trade  Union Governance and Corruption. Volumes 2-4 largely deal with specific cases and Volume 5 with policy and law reform. Based on the Overview there appears to be a first rate analysis for the Turnbull government to use in framing major reforms of regulatory arrangements covering the role of trade unions and relations between employees and employers.

Of course, the report does not itself deal directly with the regulation of relations between employees and employers under the Fair Work Commission. Rather, it presents eleven case studies involving what the Commissioner judges to be corrupt or inappropriate conduct by certain unions or certain union officials. The conduct uncovered in these   studies reveals the provision of benefits to a union or union member in return for employers receiving industrial peace or coming on favourable terms with the union or its leader or being “allowed” (by the union) to pay less than award rates to some employees. There are also case studies where union leaders have been able to use union funds for their own purposes (the Health Services Union incidents have already been well publicised in this regard).

While there are only 11 case studies, the report claims the aberrations are not the work of a few rogue unions or individuals. “The  misconduct exhibits great variety. It is widespread. It is deep-seated”. In many parts of the  union world “there is room for louts, thugs, bullies, thieves, perjurers, those who threaten violence, errant fiduciaries and organisers”. Nearly 100 individuals or organisations have been referred for prosecution, including 48 for criminal matters. Nor do employers escape criticism: in addition to the large number of union officials/unions recommended for prosecution, a number of business officials are too. And it is recommended that the Fair Work Act be amended to make it a criminal offence for employers to offer a benefit to a union or union official.

The Turnbull government’s press release says in response to the Heydon report that it will “re-introduce legislation… “to re-establish respect for the rule of law in the construction industry”; introduce additional legislation to strengthen the Registered Organisation Commission; have the police taskforce continue its investigations of possible criminal action by unionists; and establish a working group of regulators to deal with civic referrals by Heydon. It will also announce a detailed response in early 2016. All of these are desirable and necessary bits of policy flowing from Abbott’s initiative in establishing the Royal Commission.

However, at the heart of the many deficiencies identified by Justice Heydon are the advantages given to the trade union movement by the Fair Work Commission established under the Gillard government. The Heydon analysis reveals that these regulatory arrangements are unworkable. It could not be a better time both economically and politically to announce that the existing regulatory arrangements under the FWC will be replaced and that, as there is today no intrinsic imbalance of bargaining power between employers and employees, individual agreements will be freely allowed. The media response suggests there is a basis there for pursuing such a major reform of policy. Note  in particular the editorial comment in the SMH viz “It is clearer than ever that the union-linked Labor Party of 2015 can never argue for fairness and good governance while the union sore festers”. The editorial in The Australian is similarly calling for reform (both eds available here – Dec 30 and Dec 31).

Yet the relatively limited nature of the Turnbull government’s press release (why stop at regulatory reform in the construction industry)  is of concern. What was the government doing while the proceedings of the Heydon commission churned out over two years  provided example after example of deficiencies indicating that existing regulatory arrangements needed fundamental reform? One might have expected a much wider response when the report was released.

It is reported that Shorten has indicated that Labor is prepared to fight an election on workplace relations. But there is no need for that. If the detailed response to Heydon’s report promised for early 2016 announces a meaningful new policy aim on workplace relations, the Heydon report provides the evidence for a debate during 2016 that “educates” the public and gets its support in the lead up to an election at a normal time.