Unions in Labor A handbrake on reform Patrick Hannaford Research Fellow James Paterson Deputy Executive Director July 2015 www.ipa.org.au About the Institute of Public Affairs The Institute of Public Affairs is an independent, non-profit public policy think tank, dedicated to preserving and strengthening the foundations of economic and political freedom. Since 1943, the IPA has been at the forefront of the political and policy debate, defining the contemporary political landscape. The IPA is funded by individual memberships and subscriptions, as well as philanthropic and corporate donors. The IPA supports the free market of ideas, the free flow of capital, a limited and efficient government, evidence-based public policy, the rule of law, and representative democracy. Throughout human history, these ideas have proven themselves to be the most dynamic, liberating and exciting. Our researchers apply these ideas to the public policy questions which matter today. About the Authors Patrick Hannaford is a Research Fellow at the Institute of Public Affairs. Prior to joining the IPA, Patrick was an intern at the Cato Institute, the Competitive Enterprise Institute, and Reason Magazine. His writing has appeared in a number of publications including The Age, Australian, Herald Sun, Spectator Australia, Reason Magazine, Reason.com, Townhall.com, the PanAm Post, FreedomWatch, and the IPA Review. James Paterson is the Deputy Executive Director. Previously, he served as Editor of the IPA Review and Director of Development and Communications. James has appeared on ABC's Q&A, Sky News, ABCNews24, 774 Melbourne and 3AW. James' research and analysis has been featured in The Wall Street Journal, The Australian, The Australian Financial Review, The Sydney Morning Herald, The Age, The Herald Sun, The Courier Mail, The Spectator and Quadrant. 1 Executive summary The disproportionate level of union influence in Australian politics acts as a handbrake on reform. This influence is caused by the deep institutional links between the union movement and the ALP. It has both caused and been reinforced by the special legal privileges the union movement has been granted. The ALP National Platform contains 169 references to unions. Many of these grant constitutional power to affiliated trade unions. 50 per cent of delegates to ALP state conferences must be from affiliated unions. This leads to a similar representation at National Conference. These union delegates are allocated based on the size of a union’s membership. The ALP’s National Executive is the chief organisational body in the party. Of the 26 current members currently on the National Executive, 19 are current or former union officials. Half of all federal ALP MPs and Senators have previously held a paid position in a trade union. This includes 23 of 55 lower house MPs, and 17 of 25 (68 per cent) ALP senators. More than half of the ALP front bench, 22 of 43, are former union officials. 50 of the 80 federal ALP politicians (63 per cent) are backed by one of only 9 specific trade unions. Amongst ALP senators, 21 out of 25 (84 per cent) are backed by one of these 9 specific trade unions. The unions with the most influence in the current parliament are the AMWU and the SDA, who can count on the loyalty of 13 and 12 members of the caucus, respectively. This is followed by the AWU with 7 members, and the TWU and United Voice, each with 5. This influence has a significant impact on the policies passed by ALP governments. The most obvious example of this is the area of industrial relations. Despite multiple periods of reform, the union movement has been able to ensure that it maintains a legally enshrined role in Australian’s industrial relations system. The union movement also successfully demanded that the ALP abolish the construction industry watchdog, the Australian Building and Construction Commission. And blocked successive attempts to privatise state electricity assets in NSW. The union movement has also been gain a significant influence over Australian institutions, such as the Fair Work Commission. Of the 44 current commissioners, 22 come from a union background. The other half of the commission is made up of 11 commissioners from an employer association background, and 11 from some other background—at least two of whom have close ties to the union movement and the ALP. 2 Contents Executive summary ................................................................................................................................. 2 Introduction ............................................................................................................................................ 5 Section 1 – Party principles ..................................................................................................................... 6 1.1 – ALP National Platform ................................................................................................................ 6 1.2 – Union membership requirements.............................................................................................. 6 1.3 – Binding Caucuses........................................................................................................................ 7 Section 2 – Organisational structure ...................................................................................................... 9 2.1 – Union affiliation ......................................................................................................................... 9 2.1(a) – Incentives created by affiliation ........................................................................................ 9 2.2 – ALP State and National conferences ........................................................................................ 10 2.3 – ALP National Executive............................................................................................................. 11 2.4 – National policy forums ............................................................................................................. 11 2.4(a) – Policy commissions .......................................................................................................... 12 2.5 – Australian Labor Advisory Council ........................................................................................... 13 2.6 – Campaign funding .................................................................................................................... 13 Section 3 – Parliamentary party ............................................................................................................ 14 3.1 – Former ALP prime ministers .................................................................................................... 14 3.2 – Background of current MPs ..................................................................................................... 14 3.3 – Union Backed MPs in the current parliament .......................................................................... 15 3.3(a) – Union influence in the Queensland parliament............................................................... 16 Section 4 – Union influence at institutional level ................................................................................. 18 4.1 – The Fair Work Commission ...................................................................................................... 18 4.1(a) – Composition and bias of the Fair Work Commission....................................................... 18 4.1(b) – The sidelining of non-union commissioners .................................................................... 19 4.2 – Superannuation system ........................................................................................................... 21 4.3 – Legal privileges ......................................................................................................................... 22 Section 5 – Policy .................................................................................................................................. 24 5.1 – Industrial Relations .................................................................................................................. 24 5.1(a) – Historical influence over industrial relations ................................................................... 24 5.1(b) – The current industrial relations laws ............................................................................... 26 5.1(c) – Queensland right of entry laws ........................................................................................ 27 5.2 – Building and construction industry .......................................................................................... 27 5.2(a) – The Australian Building and Construction Commission ................................................... 27 3 5.2(b) – Victorian construction industry watchdog ...................................................................... 28 5.3 – Electricity privatisation in NSW ................................................................................................ 29 5.4 – Manufacturing assistance ........................................................................................................ 29 5.5 – Government promotion of union membership ....................................................................... 30 Conclusion ............................................................................................................................................