Abbott Orders Probe Into Union Corruption in Australia

Australian Prime Minister Tony Abbott has ordered a probe into alleged corruption at workers’ unions after media reports of kickbacks and stand-over tactics.

“This royal commission is designed to shine a great big spotlight in the dark corners of our community,” Abbott said in Canberra today. “Honest workers and honest unionists should not be ripped off by corrupt officials and honest businesses should be able to go about their work without fear of intimidation, corruption, stand-over tactics.”

Opposition Labor Party leader Bill Shorten, himself a former union leader, has said a royal commission is unnecessary as most unions operated lawfully on behalf of their 1.8 million members. Police, not politicians, should tackle any criminality, he said in Melbourne on Feb. 9. Ahead of the Sept. 7 election, Abbott’s Liberal-National coalition downplayed plans to reshape Australia’s workplace laws for fear of alienating low and middle-income workers.

The commission, to be headed by former High Court Justice John Dyson Heydon, will be asked to report by the end of the year, Abbott said. Its terms of reference include investigating so-called “slush funds” relating to unions, their governance and the adequacy of existing laws.

A royal commission into unions would be a “witch hunt” that would cost taxpayers about A$100 million ($89.4 million), according to the president of the Australian Council of Trade Unions, Ged Kearney. “The Australian business community is clear about what it wants: cuts to wages, cuts to penalty rates, less job security in the name of ‘flexibility’ and cutting red tape,” Kearney said in an opinion piece published in the Sydney Morning Herald Jan. 30.

Criminal Networks

“Reports that senior CFMEU officials allegedly received free building materials and have links to criminal networks are of grave concern,” Minister for Employment Eric Abetz said in a Jan. 30 statement referring to the the Construction, Forestry, Mining and Energy Union. “Bill Shorten and the Australian Labor Party must stop their protection racket of dodgy union bosses and distance the party from the CFMEU by refusing their funding and involvement at party forums.”

The government has called on Labor and the Greens to support legislation in the Senate to reinstate the Australian Building and Construction Commission, an independent investigator that Labor disbanded in 2012.

In a bid to appeal to Labor party’s working-class base, then-Employment Minister Julia Gillard introduced the Fair Work Act in 2009, overturning the Liberal Party’s unpopular “Workchoices” policy, which when instigated by Prime Minister John Howard axed some worker safeguards and made it easier for employers to fire people. Gillard’s “Fair Work” laws gave unions more power in negotiating wage deals and widened the issues they could seek to address, including the use of contract labor.

Fair Work

Major employers have criticized the Fair Work regime as being too tilted in favor of the unions. Australian labor unions have excessive clout and an “industrial relations system that pits labor against capital can never lead in the long term to an efficient and productive workplace,” BHP Billiton Ltd. Chairman Jacques Nasser said in a May 2012 speech.

The Fair Work Commission, an independent body that sets workplace conditions including minimum wages, is in the midst of a four-yearly review of wage and work conditions. While Abbott, under pressure from business lobby groups, has said the industrial-relations “pendulum” needs to swing back toward employers and away from unions, he has been loathe to commit to changes to the Fair Work Act, saying he would need to seek a mandate from voters at the next election, due 2016.

Labor’s reputation has been damaged by allegations of fraud involving its lawmakers. During the previous government’s hung parliament, Labor relied on the vote of Craig Thomson, a former national secretary of the Health Services Union, to pass laws. Thomson, who later resigned from the party, is facing charges he misused a union credit card to pay for prostitutes between 2002 and 2007, before he entered parliament.

To contact the reporter on this story: Jason Scott in Canberra at jscott14@bloomberg.net

To contact the editor responsible for this story: Rosalind Mathieson at rmathieson3@bloomberg.net

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