Inside Story

Doing the dirty work

An attack on the unions won’t necessarily have the expected political impact, writes Frank Bongiorno

Frank Bongiorno 19 February 2014 1916 words

The Coalition is crafting a language of IR reform that avoids an anti-worker overtone. Jessica Hromas/AFR

FOR BOTH sides of Australian politics, the 1980s has assumed the status of a heroic age. Among Labor figures, this is hardly surprising, since the era was marked by a string of election victories, significant policy innovation and economic transformation, led by two charismatic personalities – Bob Hawke and Paul Keating – and supported by many talented ministers. For the Liberals and Nationals, it is harder to see why the period should be celebrated, except as a magnanimous tribute to the past achievements of their opponents, which they can then, not so magnanimously, contrast with Labor’s recent performance.

But not so, for the conservatives have come to regard the 1980s as the happy era in which they waged war on the “Industrial Relations Club.” The term is Gerard Henderson’s, from a 1983 essay in Quadrant in which he claimed that employer groups, unions, the federal industrial relations department and the Arbitration Commission formed a largely Melbourne-based club that controlled Australian industrial relations. The individuals running these organisations, he wrote, had a “vested interest” in an IR system based on pragmatic deal-making between contending parties. They acted without regard for the economic effects of their decisions, or for the national interest more generally.

In a recent speech to the Sydney Institute, employment minister Eric Abetz compared Henderson (who now presides over that very institute) to Martin Luther nailing his Ninety-Five Theses to the church door in Wittenberg five centuries ago. Abetz claimed that Henderson, like Luther, caused reverberations that led to a “Thirty Years War.” (The real Thirty Years War actually broke out a century after Luther’s famous protest, but things presumably moved at a slower pace in those days.)

Henderson’s argument in 1983 would have been recognisable to any “public choice” theorist among economists and political scientists; his IR Club was a group whose self-interest dictated behaviour that undermined the public interest. At the time, he was working in Melbourne for the federal Department of Employment and Industrial Relations. He recalled a few years later that it “caused some disquiet” among the departmental heavies in Canberra. “It is as if the Will of Allah had been queried in a mosque.” Today, any public servant who published such an article in the policy area in which he or she happened to be employed would surely be subject to disciplinary action if not dismissal.

In the years ahead, during which he became a Liberal staffer and then the director of a right-wing think tank, Henderson was among a group of lawyers, journalists, intellectuals and business leaders who attacked Australia’s centralised system of wage determination and the union power which they believed it underwrote. Some of them belonged to the H.R. Nicholls Society, an organisation named after a former English Chartist and Australian gold miner who, in his dotage in 1911, said some hard things about the new Arbitration Court and its president, H.B. Higgins, thereby earning a contempt of court charge.

The H.R. Nicholls Society is central to the right’s 1980s heroic age myth. Initially treated as “malcontents and eccentrics” (to borrow from one of its contemporary critics), the Society took on union tyranny and – according to myth – won. The story has its martyrs: brave employers and their supporters who risked everything by confronting union power and intimidation.

Good publicity goes a long way; these IR revolutionaries gave the impression that the most serious problem facing Australia was the lack of employer power, an ill rivalled only by excessive government regulation. This hostility to regulation was also common among eighties entrepreneurs, for whom it nonetheless posed no serious barrier to the rapid acquisition of massive wealth. The “New Right” (as it was called, to distinguish itself from old-style conservatives less interested in rocking boats) didn’t spend much time worrying over the likes of Alan Bond and Christopher Skase.

The mid 1980s saw a string of employer victories in disputes whose names still carry resonance for anyone who lived through those times and read the papers: SEQEB, Robe River, Dollar Sweets, Mudginberri. In each case, the New Right claimed victory. Their collective endeavour, according to the myth, contributed to an intellectual ascendancy which meant that, by the mid 1990s, the Industrial Relations Club had been disrupted and the power of unions drastically reduced.

LIKE most myths, this one is as much an exercise in forgetting as remembering. Speaking to the H.R. Nicholls Society’s inaugural meeting in 1986, Henderson paid tribute to various employer victories of recent years – Mudginberri, Dollar Sweets and “the enormous success of the Queensland government in the 1985 power dispute.” But it’s unlikely that Henderson was celebrating a year or so later when, emboldened by many victories of just this type, the Queensland premier Joh Bjelke-Petersen launched a crazed bid to become prime minister of Australia and thereby destroyed any chance that Henderson’s former employer, John Howard, could win the 1987 election.

This is one of the forgotten dimensions of the activities of the New Right enthusiasts for an IR revolution. Their ideas contributed to disruption and disunity among the conservative parties during the 1980s and early 1990s and helped Labor occupy what is now called “the sensible centre” (even as the whole political culture moved rightward). IR reform was a helpful launching pad for the political career of Peter Costello, an H.R. Nicholls Society member who was an enthusiast for the use of the common law against unions. Costello made a name for himself as a barrister in the 1985 Dollar Sweets case, when a small Melbourne manufacturer of “hundreds and thousands” took on and defeated the Federated Confectioners’ Association, which was campaigning for shorter hours. But it was all too easy to paint the H.R Nicholls Society as a cabal of extremists with seriously wacky ideas, plotting to down the workers and destroy their unions.

For the Coalition parties over the last thirty years, industrial relations reform has been a bit like a quest for the lost lollipop. Visions of charming swirls of colour and the anticipated delights of sugar hitting the palate have usually given way to sour disappointment. It took twenty years for the delusions nurtured in the mid 1980s – the idea that employers would be able to appeal directly to their workers over the heads of union bosses and so bypass the unions entirely – to exact their full price in the WorkChoices fiasco of 2005–07. By then, Peter Costello, the ambitious young barrister of the mid eighties, was federal treasurer.

The Coalition, it is true, has learned from WorkChoices. But elements in the business community and at News Limited have been clamouring for a return to the fray. Recently, Henderson’s notion of an Industrial Relations Club has been implausibly revived in order to allow the Coalition to craft a language of IR reform that avoids the implication that it is anti-worker or even anti-union.

In the first place, as Laura Tingle pointed out in the Australian Financial Review, this move involves the notion that an important part of the problem lies not with workers or unions, but with bosses who too readily give way to union demands. Such people, it seems, need to be saved from themselves. Or, at least, the public interest needs to be protected in the face of their lack of fortitude. In the wake of recent manufacturing closures, especially in the car industry, this story now includes the assertion that the very companies that gave the union bosses overly generous deals then ran off to the hard-pressed taxpayer for financial support.

As for the unions, the government focus here is on corrupt, greedy and militant officials, rather than on unions themselves. This approach allows the government to give the impression that its actions will actually work in favour of “good” unions and the “honest” workers who support them. It side-steps, or at least obfuscates, the possibility that the government’s intention is to attack wages and conditions. The proposed revival of the Australian Building and Construction Commission would, in this story, do no more than clean up union corruption and allow a large and important industry to do its proper work for an ailing economy. It will not threaten the rights of honest employees any more than it will result in a loss of life or limb among building workers because their unions are unable to enforce proper safety standards. Or so the government and its allies want us to believe.

Recent allegations that some building union officials have been taking bribes have inflated into a royal commission the government’s election undertaking to hold a judicial inquiry into unions. Anyone surprised that bribery could happen in the construction industry might also do well to study the 1980s, when Builders Labourers’ Federation boss Norm Gallagher went to prison for accepting secret commissions (amounting to over $133,000) from developers such as George Herscu, Maurice Alter, and Rino and Bruno Grollo.

The truism that every bribe received by a union official must necessarily have been paid by someone else – most likely an employer – has presumably induced a degree of caution in those Coalition government members who might otherwise see a royal commission as a free kick for their team. Also encouraging watchfulness will be that textbook case of the royal commission that goes wrong (for those who set it up, anyway), the one called by the Fraser government into the violent and corrupt Painters and Dockers’ Union. The Costigan Royal Commission famously found that the union was being used by businesses to avoid tax via the so-called bottom-of-the harbour schemes. The perception that wealthy Australians were getting out of paying their dues was particularly damaging to a conservative government preaching austerity as the country entered the early-1980s recession. It helped bring Labor back to power in 1983.

THERE is another reason the government should be careful. Up until now, high-profile cases of misbehaviour by union officials have been Labor’s problem. Just four years ago, for instance, Michael Williamson was not only a crooked boss of the Health Services Union but also national president of the Australian Labor Party. The government no doubt hopes that its royal commission will generate more stories that will damage the Labor Party politically.

Critics of the royal commission in the labour movement and Labor Party are of course correct that it is politically motivated, and they are right to point out that few union officials are corrupt and most unions do the good job their members expect of them. Yet if a royal commission were to prompt improvement in union governance where it is needed, I can certainly think of quite a few rank-and-file Labor Party members who would not be unhappy. The idea that the party’s links with the union movement have become a liability is now far from uncommon within the Labor Party, even if it’s not an opinion you’ll hear from those whose jobs depend on union patronage.

So the question has to be asked – and it’s one that might even have occurred to the prime minister. Is Tony Abbott doing the Labor Party’s necessary dirty work for it? •