Perspectives On Proposed Royal Commission & Need For IR Reform

A Promise Abbott Should Break,  Des Moore, member of the HR Nicholls Society Board of Management, published in Quadrant Online

Today’s media  [Update: official announcement here] predicts the announcement of a Royal Commission which will cover union corruption and corporate contributions to the “corrupt” unions. We should hope that either the terms of reference are broader than that, and/or that the announcement indicates the government intends major reform of the Fair Work legislation and administration before  the next election.

Even though considerable evidence of union corruption is already available this is unlikely. The government will  want to use the Royal Commission to justify subsequent major reform, and despite belated revelations by businesses of the legislation’s disastrous consequences — Boral CEO Mike Kane’s brave column in today’s Fairfax press, for example — it will not want to break its pre-election promise to implement no major changes during this current term. As the analysis in the Australian by Henry Ergas suggests, this would be unfortunate. He perceptively points out that the underlying problem is with the legislation and its administrators

“Yet the case for reforming Labor’s industrial relations laws goes well beyond the gangrene it has caused. For the rot is only the most extreme symptom of the laws’ underlying flaws. At the heart of those flaws is what the industrial relations system seeks to do. It should serve to improve the functioning of the labour market by facilitating efficient contracting between employers and employees, thereby promoting trust and confidence in the workplace and encouraging the creation of secure, high-quality jobs.

 

Instead, under the guise of fairness, Gillard’s legislation aimed at replacing market contracting by an administrative process, in which mandatory standards, awards and collective agreements would be the primary means for determining the conditions of employment. And with that legislation guaranteeing the unions a privileged role in framing each of those instruments, she sought to entrench a degree of union power entirely unrelated to the unions’ ability to attract and retain members. In those objectives Gillard’s legislation succeeded all too well.”

The legislation also has succeeded in forcing “big business” to do deals with unions. While supporters of small business (and others) are right to criticise the apparent extent of concessions made by “big business”, many overlook the adverse effects of the legislation (and its administration) on the management of those major companies.

Simply put, big business would encounter great difficulty sustaining a competitive position if not for ‘going along to get along’. It is incumbent on the Abbott government to restore industrial relations to an above-board footing.

Fruits of their labours – Letter to the Editor by Des Moore, published in AFR, 10 Feb 2014

Prime Minister Abbott and associated ministers have rightly been criticised for their badly mistaken interpretation of the SPC’s current agreement with the AMWU.

Even so, overall working conditions (not just wages) seem overly generous in circumstances where the company faces increasing international competition.

This also seems evident for other businesses similarly exposed.

What is needed urgently is a major review of the Fair Work arrangements and the extent of union influence under those. If the Coalition  waits until after the next election to implement reforms which are obviously needed, there will be continued closures and losses of jobs.

 We’ll expose unions’ dark secrets, says Tony Abbott (The Australian)

TONY Abbott has vowed to shine a spotlight on the “dark corners” of national life by setting up a royal commission into the union movement as he accuses Labor of protecting dishonest officials.

As cabinet ministers prepare to sign off on the commission today, the Prime Minister sharpened the political contest over union finances to warn of “widespread corruption” that needed urgent investigation.

No limits on Tony Abbott’s probe into unions (The Australian, Paywall Protected)

The terms of reference allow the commission to investigate activities from years ago including the Australian Workers Union slush fund set up in the early 1990s with the help of legal advice from Julia Gillard.

The five unions targeted are the AWU, the Health Services Union, the Transport Workers Union, the Electrical Trades Union and the Construction Forestry Mining and Energy Union, at the heart of new claims about gangsters in the building industry.

When the ugly side is exposed, it may do Shorten no favours (The Australian)

It’s the ugly truth of how power is exercised in Labor.

Slush funds used by MPs and union leaders to branch-stack and buy up dozens of ALP memberships or to fund elaborate campaigns to depose another union’s leadership. All to the end of furthering their political ambitions and changing the delicate factional balance in the party.

This use of slush funds and union resources – as a series by The Age reported in late 2013 – fuels the Labor Party’s factions and reinforces, in a python grip, the relationship between Labor and its diminishing base of union comrades.

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Bill Shorten, as a factional warrior himself, should be worried by this royal commission. While the inquiry will also look at corruption more broadly, Labor’s greatest political weakness is how funny money is used to wield power within the ALP.

The way the money is raised (at times from employers) and handled create ideal conditions for corruption to flourish