Crippling unions: Tim Lyons address to Chifley Research Centre, 29 October 2014

And as such, in some quarters it has become accepted shorthand for describing matters raised in the Commission. 

But let’s think about what widespread really means.

More than half of women experience discrimination during pregnancy, parental leave or when returning to work[7]. 

Forty percent of the Australian workforce is employed in insecure work.[8]

One in four Australian employees – over 2 million workers – are casual employees, with no job security and no right to paid leave, even when they get sick.[9]

A worker is seriously injured or killed every 6 minutes in the industries the CFMEU covers.[10]

I would say that all of these things are widespread.

Most unions have had no contact with the Royal Commission whatever. Even in unions directly targeted, a minority of Branches have been involved.

Unions, like the rest of society, are not immune from people doing the wrong thing.

I suspect that if you threw $50 million and coercive powers at eight corporations in Australia that had recently been reported negatively in the media, you would find wrongdoing; but probably not the same breathless conclusion that it was widespread.

 

BUT SURELY WE CAN ALL AGREE WHAT IS AND ISN’T LAWFUL AKA YOU HAVE NOTHING TO FEAR

In his opening remarks, the Commissioner assured us that the “terms of reference do not assume that it is desirable to abolish trade unions.”[11]  

I found it as about as reassuring as the Prime Minister’s comments that “good unions have nothing to fear”.[12]

Subsequently, the proceedings have unfolded in a manner that reveals little or no sympathy for the purpose of trade unionism. 

The overall tenor of the evidence adduced to date does not fill me with confidence that Counsel Assisting’s Submissions will fairly reflect the valuable role unions have and continue to play in our community, let alone in our economy. 

I smell a fundamental clash of world-view.

DO YOU HAVE ANYTHING SPECIFIC TO BACK UP THAT RHETORIC?

What are we to make of it, for example, when Counsel Assisting is openly contemptuous of the idea that people might do something out of solidarity as he was when cross-examining a former official?[13]   

Solidarity makes perfect, intuitive sense to me.  

In the absence of understanding solidarity, the Commission views conduct through the prism of competition law; cartels and collusion.

In fact, one thing that unions have always tried to do, and still try and do everywhere, is to take wages and conditions out of competition. 

Ideally, this means firms compete on the basis of service, innovation and productivity and not on the basis of labour costs. 

Unions must attempt to organise across industries and sectors, otherwise the wages and other standards will inevitably be undermined by firms paying less. 

And it is not just the labour economics text books that set this out. 

In the Metal Trades Case of 1935[14] the High Court firmly stablished a principle in relation to Awards that a union has a direct and legitimate concern in maintaining and protecting standards of wages and conditions generally.

I fear that much of the underlying approach of the Commission is informed by an assumption that collective power, union power, is de-facto illegitimate, to be tolerated at the margins, if at all.

But, unionism is inherently about power. Weber’s definition of power is as good as any:  “power is the ability to get your way even in the face of opposition.”[15]

 The essential message of trade unionism is that workers are entitled to a measure of power of their work and therefore over their lives. 

That informs nearly everything we do. 

A union with no power is of not much use to anybody. 

When people decry union power, what they actually mean is that workers should never have their view prevail over their employer’s, and have no real voice against capital in politics.

An employer who has agreed to something they would rather not have (for example to contribute to an industry entitlements or insurance fund) may complain. 

As some have under oath in this Royal Commission.

But in itself, this is evidence of nothing more than organised workers having some power to get their way.  

We could produce any number of groups of members who would, if they had their way, have better wages and more secure jobs. 

The fact they agreed to something different doesn’t make the actual agreement illegitimate, it’s just a reflection of power and circumstance.

The achievement of collective goals does, not unusually, regularly involve employers agreeing to things that they would rather not.  And so what? As Eugene Debs put it, the question raised by unionism is not what a paternalist employer may decide to do, but rather “what can we do for ourselves?”[16]

The Commission’s questioning of employers – why they would contribute to a training fund, why they would sign up to industry superannuation funds, why they would buy insurance products other than in the commercial market – implicitly assumes that they are rolling over in the face of an illegitimate exercise of power.

But it is not wrongdoing. It is not corruption. It is bargaining.

Matters also appear to be proceeding on the basis that unions looking to build institutions to support members or bargaining about anything more than wages and hours, is de-facto problematic.  

Again, this ignores the international experience: globally, unions are involved in bargaining for and delivering, a huge range of collective services or social insurances in pensions, healthcare, unemployment insurance, training, and financial services.[17]

The Royal Commission’s focus on superannuation is a good example.  

Questions asked in the Commission seem to reflect an assumption that there is an inherent conflict in union involvement in superannuation funds, and that this conflict means bargaining should be restricted in some way.

In doing so, the Royal Commission “forgets” the history of superannuation in Australia.

From the late 1970’s Unions, led by the ACTU pushed for a universal, fully vested and portable superannuation as an economic right, and as deferred wages – that is, workers’ money. 

This saw the creation of a third pillar of national retirement incomes policy (along with private savings and the pension).

Until then, superannuation in the private sector was the preserve of elites – coverage was less than 40% of workers and largely limited to higher paid, white collar managerial staff.  

Even the schemes that did exist generally lacked accountability transparency, portability and full vesting.  

Those schemes that did exist were defined benefit schemes that served only those lucky enough to work a long career at an individual company.

Superannuation was not given, it was won. 

Won on the job, often by bitter disputation and spread through the Award system in often hotly contested arbitrations (and completed more than a decade later via legislation). 

And it took power to win it. Union members had to be able to get their way even in the face of bitter opposition. In short there was an industrial contest.

To give one example, a large retail employer, during a dispute over contributions to a new industry superannuation fund that involved strikes and lockouts of thousands claimed that it was nothing less than an attempt by unions to control investment markets. 

They also noted that they couldn’t give superannuation to the storemen, as if they did, next thing the clerks and shop-assistants would want it too. [18]

The focus on industry superannuation – and the bargaining that delivers superannuation outcomes for workers – is consistent with the longstanding antipathy of the Liberal side of politics. 

It reminds me of the views expressed by then Opposition Leader John Howard, who, in a parliamentary debate around superannuation payable under the Accord, called industry superannuation a “Chicago-style protection racket”[19].

Super has given security in retirement to millions of Australians they would otherwise not have.

Given this history of consistent opposition to superannuation in general and industry superannuation in particular, you will forgive my scepticism that agitation around super in the context of the Royal Commission is nothing more than an old fight in a new ring.

Unions are collective, industrial, campaigning, political organisations of workers. 

Fierce debates exist within the union movement about how best to organise, and how best to bargain. 

The debates are fought out in political contests of ideas, including through contested elections.[20]

A failure to appreciate the nature of contests – as the Commission may have in relation to a number of elections it has interrogated – will inevitably mean that the Commission draws the wrong conclusions. 

It means they will not question the credibility or motivations of complainants who have lost out in those political contests.

If the commission sees the role of elected union officials and elected committees of management, mostly volunteers, as akin to the shallow gene pool appointments to corporate boards, they will misunderstand the challenges of union governance. 

The challenges the movement has been working to address since it convened the Independent Panel on Best Practice for Union Governance, and since it supported the previous government’s changes to the Registered Organisations Act, and since it rolled out training to nearly 4,000 people in 18 months.

There is a clear prohibition against using union members money to benefit one candidate over another in a union election – and it should be enforced vigorously. 

But fundraising to participate in the political process is not unlawful, nor should it be.

WE KNOW WHERE THIS WILL END

This week Counsel Assisting the Royal Commission, Jeremy Stoljar SC, will make closing submissions – his take on the evidence presented so far. 

The findings of fact he thinks the Commissioner should make; findings limited by the focus of the terms of reference.

And he will make closing submissions on the policy recommendations he believes will address the problems he has defined. Recommendations and problems shaped by the world view that underpins the project.[21]

I think it is safe to assume that when these submissions morph into an interim report, and then a final report, a Bill or Bills to enact 100% of the Commissioners recommendations will be presented to the Parliament.

I also have little doubt that most of these recommendations will be inconsistent with the concept of free, independent, member-controlled trade unions with the ability to win for workers. 

 

CONCLUSION

This Royal Commission into Trade Unions, like those that preceded it, is about getting new ammunition to fight old battles. What is really being fought about, or more correctly fought about again via proxy, are age old political economy questions about the legitimacy of unions and collective action.

It is sometimes difficult to remember in Australia, but in most of the developed world (ex the US whose virus we seem to have caught) unions are accepted as a “basic ingredient of liberal-capitalism”^[22].

Unions may be complained about, but they are accepted even by conservatives and business.  No less a figure than JS Mill opposed “laws against combinations of workmen” and held that “trade unions, far from being a hindrance to a free market for labour, are the necessary instrumentality of that free market”.^[23]

Indeed, in his seminal work The Great Transformation, economic historian Karl Polanyi demonstrated that the emergence of unions (and working-class political parties) where an organic and near universal response to laissez-faire and industrialisation.^[24]

Unions are part of the natural order of things.

But in Australia, our political debate is dominated by more doctrinaire form of liberalism – at least as far as the labour market goes.[25]

In this view collective action is collusion, it’s coercion, it’s unfair and an illegitimate exception to what is otherwise the operation of the law. 

We hear more echoes of Hayek and his language of “prejudice or at least bias”[26] against unions than we do of Mill.

Here, we have no such real acceptance of unionism, however grudging. In in important ways the Royal Commission risks being of a piece with that zeitgeist.

As well as having some of the most invasive laws around the operation of unions in the developed world, we have amongst the most restrictive regime around bargaining and industrial action. 

In The Wealth of Nations, Adam Smith said that “we have no Acts of Parliament against combining to lower the price of work; but many against combining to raise it”.[27] 

Today, we have minimum wages at least, but laws against combining effectively to raise wages remain all too common.

In almost all circumstances we restrict bargaining to the level of the individual enterprise, where most of the world, consistent with international conventions, allows bargaining at industry, sector or national level as well.

Our law “is not designed to recognise or respect the right to strike….. [its] premise….. is that industrial action is illegitimate for all intents and purposes, except for bargaining impasses.”^[28]  On the right to strike, perhaps it is enough to refer to a current UK Conservatives plan to ‘toughen up’ strike laws.  

If enacted, UK law on quorum and other matters in relation to strike ballots would closely reflect the Fair Work Act written by the ALP.^[29]

Establishing this Royal Commission was part of a State and Federal conservative agenda which includes legislation restricting or removing rights in relation to organising, industrial action, right of entry, public campaigning, political action and expenditure, litigation, access to arbitration and the right to be self-governing[30]. 

An agenda that would undermine collective bargaining, further restrict the right to strike, and functionally remove organising rights in workplaces.[31]

The agenda is aimed at making unions weaker, poorer, and slower; and ultimately, making us less effective and less appealing to members. 

A union is not a law firm, an advisory service, a help-desk or a labour inspectorate like the Fair Work Ombudsman (although we regularly perform some of those roles along the way). It is not about “insurance”[32] or “services”[33].

We are about building permanent institutions that are capable of changing workers lives, and our country for the better.

And we will not be distracted by this Royal Commission.