The Australian industrial relations system has been flawed since Federation more than a century ago.
It goes back to the Constitution which limits the Commonwealth’s industrial relations power to deal with industrial disputes that cross state boundaries. The Founding Fathers’ aim was to limit Commonwealth power.
The opposite occurred. National unions were created in order to create the inter-statedness required to attract federal jurisdiction. And disputes were created to attract the constitutional “dispute” require. The result was decades of disruptive national dispute and a whole industrial-relations system predicated upon friction, mistrust and hostility. Yet in most businesses the interests of employees and employers are similar.
This is about to change. This week the Coalition introduced its industrial-relations changes. The changes are possible because of two things: a Coalition majority, of sorts, in the Senate and an evolution in the view of the High Court about the Commonwealth power.
A number of cases now suggest that virtually any law saying a corporation can or cannot do something will fall within the Commonwealth’s corporations power. The earlier view was that the corporations power was more limited. So a law saying corporations will do their industrial relations this way, not that way, will be valid.
It means the Commonwealth’s industrial-relations regime need no longer be based upon disputes and national organisations. The pay and conditions of non-disputing individuals employed by corporations can come under Commonwealth power.
Moreover, once the Commonwealth decides to cover the field, all state legislation in the area bites the dust.
Of course, the Coalition’s version of a corporations-based system is likely to favour employers. Also, any corporations-based system with its emphasis on workplaces and individuals is bound to be harmful for unions – which hitherto have thrived on big national dispute-based bargaining. Membership and fees were easy to get.
However, will Labor – if it ever gets re-elected — wind it back? I suspect not, despite Opposition Leader Kim Beazley’s waffle to the contrary.
It is obviously in Labor’s interests to fight these IR changes now. The Hawke-Keating changes went some way to setting up a workplace-based system, but it retained a lot of the structures that gave unions power and therefore membership and money. The Howard changes strip away much union power, directly by taking away union rights to enter the workplace, and indirectly by attacking collective bargaining. Without these rights, unions will lose even more members and money and therefore the capacity to donate to the Labor Party.
So Labor will want the money stream to continue and will fight for union rights.
But once the law is through, things will change. Within a few years union membership and importance will have fallen further and it will hardly be worth Labor’s while to fight to get it back.
Look at the money trail. From the end of World War II until the early 1970s Labor’s funding was dominated by union donations.
That is no longer the case. Labor got $2.4 million in donations in 2004-05, according to Australian Electoral Commission figures made public last month. It got a further $1 million in donations indirectly via state and territory branches. It received a further $3.4 million in non-donation sources. If you trace the state and territory branch money back, it seems Labor is getting less than a fifth of its income from unions, though it is hard to be precise.
The list of direct donations was headed by the CFMEWU at $200,000. But then, the ANZ gave $125,000. The corporate donors usually give to both major parties to hedge their bets.
And speaking of corporate donors, there is some pressure from shareholders for the practice to stop. That puts funding pressure on the other side of politics.
So with share of traditional sources shrinking, where are the major parties, particularly Labor, finding their money?
From the taxpayer, of course.
Under the public funding and disclosure (FAD) scheme, Labor got nearly $17 million after the 2004 election and the Liberals got $18 million. In all, $42 million was dished out at a rate of $1.94 for each primary vote received. FAD was a child of the Hake-Keating Governments.
And the pollies index their handouts to themselves – in contrast to the tax system, for example.
In short, the reduction in money flowing from union membership has been replaced by taxpayer money.
Union membership has fallen from 42 per cent in 1988 to 23 per cent in 2003, and probably less now, and even less after the IR bills go through. Part of it is because of shrinking unionised industries and part because of a changed IR landscape where unions are less important.
Further, Labor is also losing membership of the party itself – certainly active, fund-raising members. But never mind, the taxpayer is picking up the tab for electoral expenses along with MPs postal allowances and the like which really go into electioneering.
For a long time, Australia’s Constitutional restrictions helped create an environment conducive to big unions and an easy flow of money to Labor. The change in that environment, however, will be less financially dramatic than the Coalition might have hoped because the Hawke-Keating Governments assured themselves of a replacement source of funds.
The easy life – remote from the need to slum it with the masses selling chook-raffle tickets – will continue.