March 31, 2022

Industrial relations

The great wealth redistribution

By Josh Bornstein
Russotwins / Alamy Stock Photo

Russotwins / Alamy Stock Photo

The repressive regulation of unions has decimated employee bargaining power, leaving wages going nowhere

On November 6, 2019, two inspectors from the Australian Building and Construction Commission (ABCC), the building industry watchdog, attended a construction site at Monash University in Melbourne’s south-eastern suburbs. Upon entering the Lendlease-operated site, they moved to the lunchroom where workers retired for their break periods. There they observed seven posters, placed on the walls by a number of construction unions, promoting health and safety, and collective action. One poster featured a chicken wearing a hard hat alongside the words: “The chicken has a brain the size of a pea, and even it knows to get undercover when it starts raining. Don’t let the boss make a chook out of you. When it’s raining, come inside.” The inspectors duly noted that the posters “bore the logos, mottos or indicia” of the various unions.

The inspectors took photographs of the posters before moving outside to an even more disturbing sight. Attached to the deck of one of Lendlease’s tower cranes was “a flag bearing symbolism associated with the Eureka Rebellion (more commonly and conveniently referred to as a ‘Eureka flag’)”. More photos followed.

Subsequently the regulator issued a notice alleging that Lendlease had breached the Commonwealth Code for the Tendering and Performance of Building Work. The construction site had tested positive to trade union culture.

In early March this year, a comprehensive legal challenge mounted by both Lendlease and the unions was dismissed by the Federal Court with a finding that the ban on posters and flags did not impermissibly violate the implied constitutional freedom of political communication.

Now compare the court’s ruling with an announcement by the corporate regulator, the Australian Securities and Investment Commission, in the recent case of Crown Resorts. ASIC said that it would not prosecute the directors of Crown Resorts notwithstanding findings by an independent inquiry that Crown had engaged in “conduct that was variously illegal, dishonest, unethical and exploitative” over many years. According to the Finkelstein inquiry, the illegal conduct included money laundering, lying to the gaming regulator and tax cheating. Its board was found to have failed to ensure that the company met its legal obligations.

After a flurry of prosecutions inspired by the banking royal commission and political pressure to act, ASIC’s announcement signalled a reversion to the status quo. Not so much a tough cop on the beat as a big business thought leader. That is exactly what the federal government and its large corporate backers want. As insiders in the world of corporate regulation have shared with me, ASIC’s every move is monitored intensely by the office of the treasurer, Josh Frydenberg. In the past year, Frydenberg has gone to extreme lengths to protect company directors and management from accountability for wrongdoing. He will be well pleased with ASIC’s retreat.

Meanwhile, the former Crown directors are free to pursue their other directorships. The former chair of Crown, Helen Coonan, remains chair of the Australian Financial Complaints Authority and the Minerals Council of Australia.

Within days of ASIC raising the white flag, reports emerged that a major bank had reinstituted sales targets that reward staff for increasing customer indebtedness – just at the moment where wage stagnation, high household debt, the growing cost of living and pressure to raise interest rates are forming a potent economic cocktail.

It’s almost as if the wall-to-wall scandals that constituted the Hayne royal commission didn’t happen.

For years now, wealth has been redistributed as company profits have continued to soar while the share of the pie going to employees has plummeted to its lowest level on record. Over the past decade of stagnant wage growth, there have been many and varied explanations for the malaise by economists, politicians and bureaucrats: artificial intelligence, the laws of supply and demand, immigration, automation, the unemployment rate, the underemployment rate, the pandemic, the gig economy and workers too timid to ask for a pay rise. The Reserve Bank declared a “crisis” of low wage growth in 2017. An economic crisis like no other. The federal government urged patience. Nothing changed. Countless predictions by Treasury officials of a revival in real wage growth have been issued, only to be rendered obsolete shortly thereafter.

All the while, the truth is staring us in the face. It’s not so much the case that lax regulation of corporations is driving the low-wage crisis. Rather, it’s the uniquely repressive regulation of unions and employees that has ground employee bargaining power into the dust. Eureka flag litigation is the thin end of the wedge. Unions and their officials are frequently prosecuted for breaching complex and stifling laws that restrict union access to workers and impede collective bargaining.

And, unlike ASIC, the union regulators are on a mission.

A prosecution of union officials who visited a union delegate to catch up over a cup of tea was condemned by a federal judge as “a case where the ABCC should be publicly exposed as having wasted public money without a proper basis for doing so”. And who can forget the televised raids by federal police on the premises of the Australian Workers Union in late 2017? The spectacle suggested a most sinister state of affairs. The reality was, in fact, banal. The raid was in aid of a highly politicised investigation by the Registered Organisations Commission into whether the union had complied with its paperwork obligations to authorise political donations a decade earlier.  

In his zeal to prevent union officials from attending workplaces, Nigel Hadgkiss, then the head of the ABCC, published misinformation encouraging employers to restrict unions from accessing workplaces. Such conduct was found to have contravened the Fair Work Act, and Hadgkiss was forced to resign in 2017. Two years earlier, two union officials had their lives turned upside down when they were charged with blackmail over a coffee meeting with company executives to discuss an industrial dispute. The charges fell apart three years later. These cases are a small sample of our workplace laws in action.

Why the radically different approach to regulating corporations and unions? Politics determines both what is regulated and how it is regulated. Successive waves of neoliberal “reform” have delegitimised unions and suppressed their capacity to function. At the same time, the independence of regulators has been whittled away – in much the same way as the fate of the public service and statutory authorities such as Sports Australia. The Morrison government’s direction to the regulators is not subtle: lay off the big companies, go hard at the unions.

This is not unique to the Morrison government. In 2007, shortly before the federal election when Kevin Rudd looked likely to lead Labor to government, news broke that Ingeus, a corporation owned by Rudd’s wife, Thérèse Rein, may have underpaid some of its staff. Acting at the urging of the Howard government, the Fair Work Ombudsman dropped everything to give priority to an investigation that the government hoped would help to taint Rudd’s candidacy. I flew to Brisbane as part of a legal team to ensure that no prosecution was launched against Ingeus. The issues were resolved quickly, and the government’s hopes were dashed.

What sets the current federal government apart is the lengths to which it has gone to stack, control or compromise the institutions that are meant to support democracy. Those institutions now march to the beat of the drum of ministerial offices. Workplace regulators prosecute unions over trivial matters seeking to cancel collectivist workplace culture. Corporate regulators look the other way, as far as politically possible.

Wage rises happen when workers are able to effectively bargain for them. Our suffocating laws have eliminated wage bargaining from most of the labour market, leaving wages going nowhere. Absent fundamental change, we’re heading in the direction of the United States, where average workers’ pay has increased by just 12 per cent since 1978.

Josh Bornstein

Josh Bornstein is an employment and industrial relations lawyer and writer.


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