Champion of sound policy

ONE of the main tasks confronting the narrowly re-elected Queensland Government of Wayne Goss is to rebuild support for good fiscal management.  It will be a tragedy for Queensland, and the nation as a whole, if it fails to do so.

Successive Queensland Governments have, over the past two decades, pursued a fiscal strategy -- unique among Australian governments -- based on a balanced budget, fully funded public sector superannuation, low taxes, and returning earnings within trading enterprises to fund capital.

This strategy has served Queensland superbly over the years, particularly during the 1990s.

It laid the foundation for Queensland's economic success over the past decade and it directly contributed to phenomenal job growth in Queensland.

It has set the fiscal benchmark for all other States and for the Commonwealth.  Importantly, through the 1990s, while other governments, particularly the Commonwealth, plundered national savings, the Queensland Government contributed to national savings.

During the election, no party effectively championed good fiscal management.  Both parties willingly participated in a bidding war which added between $1.2 billion and $1.5 billion to net outlays over the term of the next Government.  Although the new Government should be able to meet these commitments while still maintaining a Budget surplus, it leaves no room for new initiatives.  Worse, all parties gave support to the myth of a funding crisis.

Various interest groups and their academic accomplices have long demonised the Government's fiscal strategy, claiming that it strangled the public sector and has no resulted in a funding crisis in essential services and public infrastructure.  The Government must expose these claims for what they are:  myths.

When the Goss Government took office in 1989, recurrent spending in Queensland was substantially below the level of most other States -- about 25 per cent on average.  But my research for EPAC found that this low level of spending did not result in lower quality services, but rather was achieved by greater efficiency and lower costs.

In terms of capital spending, Goss inherited a well-endowed budget sector.  In 1989, the capital stock of the Queensland budget sector was (on a per capita basis) 10 per cent greater than the average of other States, exceeded only by Western Australia and Tasmania.  The reason is simple:  unlike most of the other States during the 1980s, the Queensland Government did not cut back on capital spending.

Under Goss, spending in the public sector has burgeoned across the board.

Between 1989-90 and 1994-95, recurrent spending grew in real per capita terms by 22 per cent -- twice the growth rate registered in other States, and easily the highest growth rate among the States.  Capital spending on social services expanded by 35 per cent while in the other States it actually declined.  As a result of this expansion, recurrent spending in Queensland is now just 8 per cent below and budget-sector capital spending is now 46 per cent above the level of the other States.

The expansion took place in all areas, but most dramatically in health, education and welfare.  Spending, capital and recurrent, on health grew by 12.4 per cent in Queensland, five times the rate of other States.  Welfare spending grew by 126 per cent, three times the growth recorded in other States.  The only areas below the rate of other States was police and public safety.

On the basis of forward estimates, this expansion in budget outlays in Queensland will continue, and exceed by a large margin the growth in other States.  Indeed, recurrent spending per head will in a few years exceed the all-State average.

The expansion in capital investment also took place in the Queensland public trading enterprises (PTE) sector.  Under Goss, capital spending in the PTEs grew by 51 per cent in real per capita terms, compared with a 6.1 per cent reduction in the other States.  As a result, in 1994-95 capital spending on a per head basis was 27 per cent higher than the other States.

If there is a problem with social services and infrastructure in Queensland, it is certainly not caused by lack of funding.  It is also not caused by a shortage of staff.  The public service has, in fact, grown markedly in Queensland (by about 3.2 per cent) during the Goss years.

How did the Goss Government achieve this dramatic expansion in spending while maintaining low taxes, budget surpluses and fully funding its superannuation liabilities?  By what can only be called "a virtuous spiral", induced by years of sound and superior fiscal policy.

As a result of balanced Budgets and low levels of borrowing, the Queensland Government's annual interest bill is now about $1.5 billion below the level of the other States.  It has also accumulated investments of more than $10 billion by setting aside funds for accruing superannuation.  These funds earn around $800 million per year.

The high levels of capital spending, combined with low taxes and charges and low public sector debt, have attracted migrants and investors from the south, boosting the economy and job growth, and providing the State with more revenue.  Despite the low taxes and charges, public sector revenue has grown more rapidly in Queensland than in the other States.

Sound fiscal management in Queensland has paid huge dividends.  Now, however, it needs a champion -- the Government.

Powerful interest groups, the seductive myth of the funding crisis, and the lure of untapped tax bases are undermining it.

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The Unions and Labor

Vol. 7, No. 5

SUMMARY

The trade union movement and the Labor Party are open about their close relationship and it is well known.  The nature and extent of the relationship of the union movement with the Federal Labor Government is less well known.

Features of the relationship include:

• A strong, often decisive, influence on Government policies, one important effect of which is to prevent or delay economic reform.
• Grants by the Federal Government to the union movement of $92 million over the terms of the Hawke and Keating Governments, and now running at around $16 million per year.
• The tax-free status not only of contributions to unions (as to employer organisations) but also of income from property owned by unions.  (Unlike the grants, this is not a recently-granted privilege).
• In total, taxpayers could now be underwriting, in various ways, activities of the union movement to the tune of $130-140 million per year.
• Financial and other assistance provided to the Labor Party by the union movement.
• Appointments of unionists to government bodies which, on the face of things, exceed those that are justified.

Trade union membership is now down to 35 per cent of the workforce, and only 26 per cent of the private sector workforce;  the time has long passed when unions could claim to represent even a majority of workers.  There is certainly no longer any case for unions or their members to receive privileged treatment by the Government, if there ever was such a case.

Privileged relationships between governments of any political stripe and particular sections of the Australian community are inappropriate.  Central elements of the relationship between the union movement and the Labor Government -- when assessed against broad national interest criteria -- cross the bounds of acceptability, accountability and even propriety in some cases.  This is a matter which involves issues which are of national interest and concern.

INTRODUCTION

The trade union movement plays a special role in the Federal Labor Party and the present Federal Labor Government.  This special role gives it unprecedented influence and power as well as access to government financial assistance.

Yet the membership of trade unions is declining -- since 1990 by almost 500,000 to around 2.5 million in 1994. ⁽¹⁾  With the workforce now approaching 9 million (including 750,000 unemployed), the right of the union movement to claim to speak even for the majority of the workforce has long since ceased to exist.  Further, if unions were not given such a privileged position, and were not permitted to enforce compulsory unionism in some areas, there is no doubt that membership would be much lower than it is.

This paper examines the extensive and tightknit relationships between the current Federal Labor Government, the Australian Labor Party, and the trade union movement.  It questions the appropriateness of the relationships which have developed in many areas.  In particular, it examines the role of grants and donations between these parties, the influence exercised by intertwined appointments and by the unions' dominant role within the ALP, and just how the Australian taxpayer is footing the bill for financial arrangements which can scarcely be seen as in the national interest.

It should be emphasised at the outset that the issue being raised in this paper is not that the trade union movement has an association with the Labor Government (and the Australian Labor Party), and vice versa.  It is, rather, the appropriateness of that Government having such a close association with an outside (non-elected) organisation and whether that outside organisation has an undue influence on Government policy, and receives undue support from the Government.  The same issue would arise were a Liberal-National Government to have an unduly close association with a business group or groups, and to provide undue support to such group or groups.

BACKGROUND

It is a matter of history that the Australian Labor Party (ALP), formed just over 100 years ago, was created as the political arm of the trade unions.  Union leaders felt that one of the most effective ways to pursue their -- predominantly industrial -- agenda was through a formal role in the political system.  Hence the Australian Labor Party was created as the entrée card of the unions into the various Parliaments of the land.

The Labor Party contested the first election for the new Federal Parliament in 1901, and the first Federal Labor Government came to power in 1908 under the leadership of Andrew Fischer.  Although short-lived, lasting only 6 months and 21 days, it set a precedent for future union-sponsored Federal Labor governments.

The ALP became the main left-of-centre/socialist party in the Australian polity, in much the same fashion as its United Kingdom inspiration, the British Labour Party.

The Labor Party has continued to be the political wing of the trade union movement.  To this day, unions dominate the ALP's policy decision-making bodies and preselections.  While some moves have been made to reduce the extent of union influence at ALP Conferences, the Labor Party has taken less action than its UK counterpart to establish itself as a genuinely broad-based party.

Of course, the parliamentary party and the Labor Government itself have their own decision-making processes.  Even there, however, the unions have been able to exercise a very substantial, if not in the end always decisive, influence on the Government's policy in relation to (for example) the waterfront, privatisation of the airports, airlines, Commonwealth Bank, Telecom (no privatisation), ANL, and industrial relations, where they wield enormous influence.  There is little doubt that, through its opposition to productivity-enhancing reforms and its attempts to protect existing jobs at the expense of potential new ones, the union movement has been and remains the biggest obstacle to economic reform in Australia.

An example of this capacity to determine policy was the unions' success, after the 1993 election, in forcing Prime Minister Keating and Industrial Relations Minister Brereton into a humiliating backdown on industrial relations reform.  The unions insisted, instead, on the Industrial Relations Reform Act, containing employment-inhibiting unfair dismissal provisions and a union right to intervene in all non-union enterprise agreements in a way that can provide an effective veto, and thereby making the labour market less flexible.

The unions have also pressured the Government to introduce changes in economic and social policies, such as the compulsory employer-funded Superannuation Guarantee Charge (SGC), the (now suspended) Training Levy, and the maternity allowance contained in the 1995 Budget.  The Superannuation Guarantee arrangements have effectively required employers to fund a national superannuation scheme via a de facto payroll tax -- but the Government has avoided the odium of imposing a payroll tax itself.

The introduction of the SGC has led to the establishment of industry superannuation funds, with union representatives constituting half the board trustees.  These funds, which now cover about 30 per cent of all members of superannuation funds and hold about 4 per cent of total superannuation assets of about $190 billion, provide the union movement with the potential to influence the investment policy of funds in ways which could create difficulties for individual firms in an industry.  To date, no such problems have emerged, and such action would necessarily be constrained by other trustees and by the professional advisers who administer each fund, as well as by prudential requirements.  Even so, the concern remains.

The Accord -- now about to enter its eighth incarnation and the centrepiece of the Labor Government's wages policy -- is an extraordinary example of the influence which a group outside Parliament has been able to exert on a range of Government economic and social policies.  Particularly during the 1980s, the effect of the Accord was to inhibit industrial relations and other microeconomic reforms.  It was also a central part of the most interventionist macroeconomic policy ever pursued in Australia -- a policy which, during the 1980s, gave Australia an inflation rate twice the OECD average, the highest current account deficit in the OECD, and culminated in an enormous blow-out in foreign debt, prolonged recession and record high unemployment. ⁽²⁾

In announcing the new Accord on 1 May 1995, a joint statement by the Prime Minister, Mr Keating, and the ACTU said:  "Today the ACTU and the Government reaffirmed their Accord partnership and their joint pursuit of progressive economic, social and industrial relations reform".  Reinforcing the closeness of their relationship -- but also, perhaps unwittingly, highlighting the unjustified nature of the claim that this relationship necessarily represents the interests of the workforce as a whole -- they added:  "Partnerships between governments and the representatives of workers, and the substantial benefits that they deliver, should not be taken for granted.  What has been achieved over the last twelve years would not have come about under the Federal Coalition.  Future gains in the social wage, and fair and orderly transitions to more efficient working environments, would not be possible under the Federal Coalition".  Needless to say, no mention was made of the role of business, or of investors generally, in providing employment opportunities and in ensuring the investment without which neither the normal nor the social wage would be forthcoming.

The union influence on Labor Governments is not simply a matter of influence currently exerted from the outside;  Labor Governments are also a favoured career path of many former unionists.  Indeed, it is almost a natural progression from the union bureaucracy into the political party in some cases.  Prime Minister Keating and his predecessor Bob Hawke were both union men.  Current Ministers who emanate from unions include Treasurer Willis, Industry Minister Cook, and Employment Minister Crean, all from the Australian Council of Trade Unions (ACTU), plus Trade Minister McMullan who was a Labor Party and union official, and Parliamentary Secretaries Sherry, O'Keefe, Snowdon, and Bevis.

ACTU President Martin Ferguson's brother, Laurie, is a NSW Federal MP.  Newly-elected NSW Senators, Belinda Neil ⁽³⁾ and Michael Forshaw, and the Victorian ALP's preselected candidate to replace the late Olive Zakharov, Ms Jacinta Collins, have had careers with the Federated Ironworkers, Australian Workers Union (AWU-FIME), and the Shop, Distributive and Allied Employees Association, unions respectively.

Ms Jennie George, the ACTU assistant secretary, was also preselected for a winnable position on the Victorian ALP's Senate ticket for the next election.  However, in May she announced her withdrawal from the ticket so that she could concentrate further on her work for the trade union movement.  Leading unionist Mr George Campbell, who is a vice-president of the ACTU and national secretary of the powerful AMWU, was once accused by Mr Keating of having the jobs of 100,000 workers "around his neck" after Mr Campbell's (then) union instigated an employment-destroying wages surge in the early 1980s.  Despite this, he has been publicly supported by Prime Minister Keating for an ALP Senate ticket and reports suggest that he is likely to obtain endorsement for a safe position on that ticket.

The foregoing are only a handful of the union-trained Labor Federal politicians.  The majority of Labor members of Federal Parliament are current union members (see Attachment A).  Moreover, the staff at offices of Federal Labor Ministers and MPs are reportedly "required" to join the ALP if they are not already paid up members.

There is a symbiotic relationship between the unions and the ALP.  Success in the ALP, it would seem, is advanced by one's union affiliation.  This is not, in itself, necessarily a bad thing.  But it becomes a bad thing if one sub-set of the community is given preferred access to the favours of Government and is able to exert undue influence on public policy.

GRANTS

The most obvious aspect of the relationship between the trade unions and the Federal Labor Government is the substantial financial assistance provided, each to the other.  This is also the most visible element from the taxpayers' perspective.  The Federal Government provides significant grants to trade unions, while trade unions provide significant donations and subscriptions to the ALP.  A Federal Labor Government brings a lot of money into unions' coffers.

Over the life of the Hawke and Keating Labor Governments, the trade unions have received a very handsome $92 million in grant funding.  Table 1 (below), which outlines all the grants paid to trade unions over the life of this Labor Government, brings out the significant increase in grants over this period.  Annual funding has, in fact, risen by a massive 800 per cent over 12 years.

In 1993-94 (the last available full-year figures), ⁽⁴⁾ the Keating Labor Government handed over $16.5 million of taxpayer-funded grants to the trade union movement for one reason or another.  This is the highest amount to date to be handed over in one year.

In 1992-93 (an election year), the unions received $14 million.  In the same year, unions donated $2.2 million ⁽⁵⁾ to the ALP's re-election campaign.

This is not the full extent of Commonwealth financial support.  Unions also receive $10 million per annum from the Department of Industrial Relations to run the Trade Union Training Authority, and the Australian Electoral Commission (AEC) provides its services -- worth millions of dollars -- for union ballots free of cost.  In 1993-94, the AEC carried out 590 union elections and amalgamation ballots, at a cost of $4.8 million.

Taking account of the tax free status of union income and the value of tax deductions for contributions to unions (see below), it seems likely that taxpayers are now underwriting the activities of the union movement to the tune of $130-140 million per annum.

As Table 1 shows, grant funding to unions is provided through a number of Commonwealth departments.  The extent and level of funding is quite extraordinary.

The grants are provided for a wide variety of purposes, but always the stated purpose is legitimate public policy goals.  These include:  grants for musicians-in-residence;  grants to fund the "yes" case in union amalgamations;  grants for input into government decision-making processes;  money for advising migrant workers of the value of trade unions and their industrial relations rights;  support for overseas aid programs -- through the ACTU's overseas aid body Australian People for Health, Education and Development Abroad (APHEDA);  and grants for developing workplace bargaining arrangements, and health and safety guidelines.

Table 2 (below) provides a list of the major union recipients of grants in the last financial year, 1993-94.  The largest benefactors were:  the ACTU ($2,065,000);  APHEDA ($2,078,000);  the Construction, Forestry, Mining & Energy Union ($1,141,000);  the Maritime Union ($548,000), the Textile Clothing and Footwear Union ($565,000) and various teachers' unions ($4,852,389).  In all, 25 unions each received in excess of $100,000 for the period.

So who do the unions represent that could possibly justify this enormous amount of public funding?

As noted, ABS ⁽⁶⁾ data show that financial trade union members are now down to 2.5 million, or about 35 per cent of Australia's 6,525,800 employees aged 15 and over in August 1994. ⁽⁷⁾  These members are drawn from both the blue and white collar sectors of the economy, although in recent times the former has declined and the latter held steady.  Union membership in the private sector has fallen to a mere 26 per cent.  The total figures are boosted by the public sector, with its relatively high levels of union membership (62 per cent).  Total union membership has fallen by over 8 percentage points since 1986, and is at a record post-Second World War low.

Table 1:  Payments To Trade Unions By The Labor Government ($'000) ⁽⁸⁾

Dept	83-84	84-65	85-86	86-87	87-88	86-89	89-90	90-91	91-92	92-93	93-94	94-95	Total
DAA	-	-	12	70	10	-	-	-	-	-	-	108	200
DAG	-	-	-	-	-	-	-	-	-	9	8	-	17
DASETT	335	663	78	1,737	1,011	496	436	340	497	1,739	75	-	7,407
DAAS	-	-	-	-	-	-	-	-	-	-	522	-	522
DHHCS	63	63	122	-	116	43	351	348	797	710	342	329	3,284
DEET	1,411	535	622	282	365	711	518	631	1,110	2,470	8,212	2,360	19,227
DFAT	26	2O	28	12	-	-	47	34	43	61	58	20	349
AIDAB	180	159	469	301	726	2,197	2,863	4,253	2,638	2,473	2,610	-	18,869
D1LGEA	210	354	447	570	514	730	693	74	-	108	-	-	3,700
DIR	143	975	1,845	1,404	890	1,165	1,972	4,244	4,811	4,749	3,923	6,473	32,594
DITAC	-	-	-	-	122	-	-	255	94	660	133	126	1,390
DPI&E	-	-	-	21	183	47	64	166	106	112	-	-	699
DPM&C	-	45	45	47	1,053	18	18	31	48	86	6	91	1,488
DT&C	-	-	-	-	-	-	-	113	15O	150	581	-	994
ATO	-	-	-	-	-	-	-	-	-	540	521	507	1,568
Treasury	-	-	-	-	-	-	-	-	-	3	3	-	6
Finance	-	-	-	-	-	-	-	-	-	-	22	-	22
TOTAL	2,368	2,814	3,668	4,444	4,990	5,407	6,962	10,489	10,294	14,392	16,494	10,014	92,336

Commonwealth Department Codes:

DAA = Aboriginal Affaire (now ATSIC)

DAG = Attorney-Generals

DASETT = Arts, Sport, Environment, Tourism & Territories (now Environment, Sport & Territories)

DAAS = Administrative Services (for 1992-93 includes Arts)

DHHCS = Health, Housing & Community Servlces {from 1992-93 includes Local Government)

DEET = Employment, Education & Training

DFAT = Foreign Affairs & Trade

AIDAB = Australian International Development Assistance Bureau

DILGEA = Immigration, Local Government & Ethnic Affairs (now Immigration & Ethnic Affairs)

DIR = Industrial Relations

DITAC = Industry, Technology & Commerce

DPI&E = Primary Industries & Energy

DPM&C = Prime Minister & Cabinet

DT&C = Transport & Communications {now separate depts;  Communications now with Arts)

ATO = Australian Taxation Office

* = incomplete/partial year

The appropriateness of this extensive grant funding can be assessed by dividing the grants into two categories.

Table 2:  Major Recipients Of Grants -- 1993-94 ⁽⁹⁾

	($)
ACTU	2,065,012
Media Entertainment & Arts Alliance	121,000
APHEDA	2,077,959
Commonwealth Trade Union Council (via ACTU)	104,000
Union Research Centre on Organisation & Technology (URCOT)	507,899
Community & Public Sector Union	47,761
State Public Services Federation	30,242
Tasmanian Trades & Labour Council	468,350
Melbourne Workers Theatre	191,436
Northern Territory Trades & Labour Council	397,445
United Trades & Labour Council (SA)	217,494
Auto, Food, Metals & Engineering Union	483,596
Construction, Forestry, Mining & Energy Union	1,141,289
Liquor, Hospitality & Misc Workers Union	525,465
Textile Clothing & Footwear Union	565,516
Metal Trades Federation of Unions (NSW)	223,873
Australian Workers Union	278,200
Union of Christmas Island Workers	55,360
Health Services Union	267,172
Maritime Union	548,000
Fed Industrial Manufacturing & Engineering Union	73,274
Trades & Labour Council of WA	227,436
NSW Trades & Labour Council	101,111
Geelong Trades Hall Council	67,070
Victorian Trades Hall Council	130,428
Shop Distributive & Allied Employees	129,369
Aust Services Union	317,043
Education Union	280,000
National Union of Workers	50,000
Nursing Federation	20,000
Trades & Labour Council of Old	56,387
Disabled Workers Union	49,692
Secondary Principals Association	141,100
Teaching Council	1,315,000
Various other teachers associations & federations	3,116,289

There are those grants which go to the unions for purposes which relate to the core of the unions' own internal arrangements and representative responsibilities to their members.  Grants that fit into this category include those to assist with workplace bargaining arrangements or amalgamation campaigns.  Other Australian institutions generally pay for the services they provide to their members out of members' subscriptions.

There are also those grants that are going to trade unions for purposes which are not directly related to their role, function or responsibilities, but are, rather, a new-found way for the Labor Government to provide funding that enlarges the role and influence of the union movement with the stated aim of pursuing legitimate public ends.  Examples of these kinds of grants are those which are designated for overseas aid projects or arts and cultural funds.  Why should a trade union receive public money to fund an artist or musician in residence?  If a union, or a company for that matter, wishes to have an artist-in-residence, that is surely a matter for its members/stakeholders, not for the taxpayer.

More generally, it should be asked to what extent union membership generally, as distinct from union bureaucracy, benefits from this and other assistance.  It is certainly the case that the other 65 per cent of the workforce, although taxed to pay for it, does not do so.  Further, it is at least arguable that, through the protection provided to existing jobholders in highly unionised occupations, the unemployed suffer.

A.P.H.E.D.A.

One of the more "interesting" avenues for grant funding is that which is provided through the Commonwealth's overseas aid body, formerly AIDAB and recently renamed AusAid, to the ACTU's overseas aid body Australian People for Health, Education and Development Abroad (APHEDA).

APHEDA was established in 1984 by the ACTU to support fellow unionists overseas.  It is chaired by former ACTU President, Cliff Dolan, and current ACTU President, Martin Ferguson, is the Vice-Chairman.  This body has its headquarters at the New South Wales Trades Hall in Sydney.  In the last financial year, 1993-94, APHEDA received more grant funding than any single union, $2,077,959.

APHEDA prides itself on the promotion of bourgeois left agendas in the developing countries.  One of its key targets at the moment is women workers.  It has a history of supporting revolutionary -- often violent -- groups, such as the ANC and the South African Communist Party in the 1980s, Palestinian groups in Israel, and Kanak separatists against New Caledonia (France).  It is also currently attempting to organise/unionise workers in the Philippines, Cambodia and Vietnam, action which scarcely constitutes "foreign aid".

While some of APHEDA's work in health care and training may be of benefit to its recipients, the Government should not hide behind APHEDA in promoting agendas which are often contrary to the wishes of foreign nations and/or the best interests of their citizens, and the Australian people.

UNION ASSISTANCE TO THE LABOR PARTY

The grants paid to the unions by the Labor Government effectively fund union activities and, as a consequence, free up other union financial resources for political purposes.  The Labor Government pays money to the unions.  The unions pay money to the Labor Party.  At the last election, for example, unions directly donated $2.2 million to the ALP's re-election campaign.

As Table 3 (below) illustrates, there is a high correlation between unions that donate to the ALP and unions that receive grants in either the year of the election donation (1992-93) or the preceding year.  This effective cycling of taxpayer funds from the Labor Government to the unions and then back to the Labor Party could in some cases be a gross misuse of taxpayers' money.  It is additional to the substantial public funding ⁽¹⁰⁾ which is provided to all political parties, the ALP included.

Table 3:  Union Donations To The ALP vs Government Grants To Unions ⁽¹¹⁾

Union *	Union Donations ($)	Grants To Unions ($)
	1992-93	1992-93	1991-92
LHMWU	254,151	575,048	222,169
AMIEU	10,040	122,163	57,000
PTU	38,500	40,499	170,000
CWU/EPU	140,648	100,000	8,869
CFMEU	314,150	1,153,682	541,774
AMEU	306,764	1,253,948	1,070,759
PKIU	44,000	100,000	75,000
NUW	266,598	1,219,518	558,928
SDAEA	446,760	65,000	25,000
TWU	76,200	-	67,681
BBEU	2,000	-	-
FSU	8,575	-	100,000
AWU	56,061	270,000	325,919
ASU	83,875	470,000	320,000
HCSU	45,912	50,000	46,500
MU	84,850	-	140,000
Tas TLC	30,000	225,548	135,130
Rockhampton TLC	2,000	-	-
TOTAL	$2,211,084	$5,655,406	$3,864,729

• See Attachment B for full name of union or association.

As affiliated members of the Labor Party the unions also contribute membership fees.  While a detailed breakdown of national membership contributions is not publicly available, Table 4 shows that subscriptions (both from unions and individuals) collected by the ALP in the year to 30 June 1994 provided 37 percent of total revenue.  Trade unions would be by far the major contributors to these membership fees.

A recent report on the financial problems confronting the New South Wales branch of the Labor Party stated that there were 700,000 affiliated union members (compared to only 15,000 ordinary members) who through their union paid $2.25 each in annual membership subscriptions. ⁽¹²⁾  This sums to $1,575,000 per year.  It was also reported that these members may be subjected to a $1 increase in their fees to help repay the branch's significant debt.  This would increase union members' fees to $2,275,000, and underline the trade unions' significance to the Labor Party's financial position.  In New South Wales, unions' membership fees will be contributing over 50 per cent of the division's funds.  To this can be added whatever donations the unions make to the division. ⁽¹³⁾  It is not difficult to see from this just how much the ALP branches rely on the trade unions for their (financial) existence.

Table 4:  Membership Subscriptions to the Australian Labor Party -- 1993-94 ⁽¹⁴⁾

Branch	Subscriptions ($)	Total Revenue *($)	Subs as % of Total
National	506,682	2,838,122	18
New South Wales	1,511,454	3,586,451	42
Victoria	1,551,628	1,989,154	78
South Australia	468,058	2,146,908	22
Queensland	1,188,930	3,505,570	34
Western Australia	574,250	979,132	59
Tasmania	57,318	198,811	29
ACT	70,397	556,921	13
Northern Territory	13,705	355,144	4
Total	5,942,422	16,156,213	37

* Includes amounts received from donations, asset sales, and goods & services sales

Apart from this significant financial support, there can be added the substantial manpower provided by unions during election campaigns, and the separate political campaigns waged by unions themselves.  The ACTU reportedly spent $1.3 million on its own election campaign against the Coalition in the 1993 Federal election campaign.  That year the ACTU received $1.2 million in Federal Government grants.

APPOINTMENTS

The second major source of trade union influence and favour is reflected in the exercise by the Labor Government of appointments patronage.  Important decision-making positions on government bodies are frequently allocated to trade union activists.  These appointments do not always appear to take into account the candidate's suitability for the particular position.

Table 5 (below) contains a sample list of government bodies to which notable trade union members have been appointed.  It is far from complete, as the Commonwealth Directory neither reveals all appointments, nor all the appointees' associations or union affiliation.

Victorian Liberal Senator Jim Short, who has followed the issue of financial support to trade unions closely through the Senate Estimates process, found that in 1990 the ACTU was represented on at least 50 Commonwealth boards or advisory committees. ⁽¹⁵⁾  He also ascertained that over half of these positions carried remuneration in the form of sitting fees and/or travelling allowance.  And that was for the ACTU alone.

Close analysis of Table 5 also shows the strong representation afforded the ACTU, and in particular Messrs Kelty and Ferguson and Ms George.

The Secretary of the ACTU, Bill Kelty, is on the Reserve Bank board, National Labor Consultative Council, Economic Planning Advisory Council, chairs the Commonwealth Regional Development Taskforce, is on NETTFORCE and the National Petroleum Advisory Council.  His close relationship with the Prime Minister, particularly negotiating the various Accords with the Labor Government, has been well documented in the media and found perhaps its high point in his participation as a witness to the secret (at the time) "Kirribilli Compact" between Mr Keating and his predecessor as Prime Minister, Mr Bob Hawke.

Table 5:  Trade Union Appointees On Government Bodies

* Council for the Order of Australia	Ms J. George
* IRC	For example, Ross, Boulton, Riordan, Munro, Marsh, MacBean, Coleman, Watson, Sweeney, Nolan, Grimshaw, Lewin, Harrison, Foggo, Blair, Maher, Acton, Hodder, & Stevens, all with union backgrounds
* Administrative Review Council	Mr T. Pallas (ACTU)
* Telstra	Mr B. Mansfield (ACTU)
* ABC	Mr L. Hingley (FSU)
* Australia Council	Ms D. Whelan (ACTU)
* Defence Industry Committee	Mr B.W Fraser (Metalworkers Union), & Mr V. Falconer (AWU-FIME)
* Aust National Training Authority	Mr B. Mansfield (ACTU)
* National Board of Employment, Education & Training	Mr L. Carmichael
* Employment and Skills Formation Council	Messrs L. Carmichael, B. Mansfield
* Commonwealth Superannuation Board of Trustees No 1	Z ACTU reps
* Commonwealth Superannuation Board of Trustees No 2	3 ACTU reps
* National Council for the International Year of the Family	Ms J. George
* Aust Korea Foundation	Mr B. Mansfield (ACTU)
* Trade Policy Advisory Council	Mr M. Ferguson (Deputy Chair)
* National Health & Medical Research Council	Ms P. Staunton (Nurses Assoc)
* TUTA -- Chairman	Ms J. George
* Joint Council ot the Aus Public Service	ACTU rep, AFMEU rep, CPSU rep
* National Labour Consultative Council	8 ACTU reps (including M. Ferguson, J. George, W. Kelty, B. Mansfield), (note:  also 6 ACCI reps, 1 MTIA & 1 ACM)
* National Occupational Health and Safety Commission	3 ACTU reps (inc. J George)
* Safety, Rehabilitation and Compensation Commission	Mr E. Alford (CWU), Ms D. Whelan (ACTU)
* Stevedoring Industry Finance Council	Mr J. Coombs (MUA)
* Construction Forecasting Committee	ACTU rep
* Telecommunications Industry Development Authority	Mr G. Campbell (AMEWU)
* Murray-Darling Basin Community Advisory Committee	ACTU rep
* National Petroleum Advisory Council	Mr W. Kelty
* Social Security Advisory Council	Ms D. Whelan (ACTU)
* Aust Tourist Commission	Mr S. Harrison (FIME)
* Tourism Advisory Council	LHMWU rep
* Tourism Forecasting Council	ACTU rep
* Maritime Services Advisory Committees	Maritime Officers Union rep, MUA rep
* Reserve Bank of Aust	Mr W. Kelty

Source:  Commonwealth Government Directory, December 1994-February 1995.

Mr Kelty's assistant Secretary, Jennie George, is on the Council for Aboriginal Reconciliation, chairs the Trade Union Training Authority (TUTA), and is on the Council for the Order of Australia, National Council for the International Year of the Family, National Labour Consultative Council, and the National Occupational Health and Safety Commission.

Meanwhile, the ACTU President, Martin Ferguson, also has a good share of influential appointments including:  Economic Planning Advisory Council, Agri Food Council, Construction Industry Development Agency, Trade Policy Advisory Council, and the National Labour Consultative Council.  He is also a director of John Curtin House (the former ALP building), APHEDA, the Advance Australia Foundation, and the Australian Centre for Best Practice Ltd.

The totality of such positions gives the ACTU and the other unions a disproportionate influence on a wide range of Australian Government policies.  But it is not simply a matter of the influence which the positions themselves bring.  As indicated by Mr Kelty's role in negotiating successive Accords, informal relationships can be even more influential.  The unions' tentacles are long and far-reaching.  Again, the issue is not that unions should be excluded from positions on government bodies;  rather, it is a matter of the extent of the appointments.

A recent example of the unions' extensive influence over government decision-making bodies was contained in an article by Mr Andrew McIntyre for the Review entitled "No ticket, No research". ⁽¹⁶⁾  This article explained how the unions were able to veto grants by Worksafe Australia, an arm of the National Health and Safety Commission, unless the proposed research was acceptable to the relevant union.  Mr McIntyre's article exposed an incident where the AWU successfully managed to scuttle an approved research project because the union did not like the possible outcome of the research, namely "to convince our membership that no radiation hazards exist in the industry (mineral sands mining)".

TAX-FREE STATUS

The trade unions enjoy special tax status.  They are treated as favourably as accredited non-profit charities or established churches.  While these concessions are not recently-granted privileges, they are nevertheless significant, particularly as the Government is increasing taxes and tightening deductions on virtually every other sector of the economy.

Under Section 23(f) of the Income Tax Assessment Act, trade unions (and employer associations) are exempt from income tax.  Contributions to unions -- often compulsory in nature -- are fully tax-deductible under Section 73 or 51(1), as are employer contributions to their associations.

Trade unions are also not subject to capital gains tax on any asset sales -- even though they advocated the introduction of that tax in 1985.

These tax exemptions extend to activities undertaken by the unions which are not related directly to representing their members.  Some union business activities and investments are consequently also exempt from income (and other) tax.

An example of this exemption being exploited involved the sale, a few years back, by the ALP of its national headquarters ⁽¹⁷⁾ (John Curtin House) to the ACTU.  The ACTU is now able to gain rent from that building which is tax-free.  When it was in the ALP's hands, the rent was subject to tax.  This tax advantage makes an enormous competitive difference in the rental market, as unions can undercut commercial rents while still maintaining above-market after-tax rental returns.  This is one of the reasons why so many unions own extensive tracts of real estate in the major capital cities.

In overall financial terms, the unions have an estimated annual income from membership subscriptions of around $500 million, ⁽¹⁸⁾ all free of tax.  At a conservative tax rate of 20 cents in the $, this is worth about $100 million per annum in tax savings to contributors, and therefore in forgone tax revenue.  Unions have net assets of around $400 million, ⁽¹⁹⁾ from which the income generated is also generally tax free.  Even if earnings amount to an average rate of only 4 per cent, the saving in tax would be around $5-6 million per annum.  All this gives them considerable financial strength -- the envy of virtually every other participant in the political environment.  Indeed, sufficient resources to encourage Bill Kelty to promote a proposal for the unions to establish their own airline, at a cost of over $40 million.

CONCLUSION

The H.V. Evatt Foundation (a research body established by the Labor movement which has been given specific tax-free status and which receives an annual recurring Federal Government grant -- currently $257,000 -- as well as grants for "special" projects) in a recent report funded with $66,000 of taxpayers' money, Unions 2001 -- a blueprint for trade union activism, was highly critical of the performance of trade unions.  This report canned union amalgamations -- although not the taxpayer grants which funded the "yes" cases for such amalgamations.  It found that union members were disappointed and disaffected, and felt ignored by the super union bureaucracies.  The recent disaffiliation of the Transport Workers Union from the ACTU indicates that this disaffection extends right up to the highest level in the union movement.

Ms Glennis Hanley, in a study for the Deakin University Economics Department, also found that most union members were dissatisfied with union amalgamations and believed their unions were distant and remote.  Many had joined simply because of a perception that it was compulsory.  The study found two in five members had "significant levels of dissatisfaction with the amalgamation process".  The survey described only 13 per cent of unionists as "committed to the movement".

Union members have been voting with their feet and abandoning the unions, and their leadership, in droves.  While the role for unions in the internationally competitive economy which Australia must eventually become is something for them to work out, the time for the taxpayer to continue to subsidise this highly unrepresentative movement is surely over.

Can $16 million a year be better spent (or saved)?

No one questions the unions' right to represent their members' interests in public policy debates or forums.  But they should not be seen as representing the interests of the great bulk of the Australian workforce and, least of all, the unemployed.

All Australians, and their representative bodies, have a right to be heard in our political system.  However, it follows that, if all are to be heard, none should enjoy special status.

Under the Hawke and Keating Labor Governments, the unions have enjoyed a very privileged position.  They are at the core of policy decision-making.  Ex-unionists make up a substantial portion of the Labor members of Parliament.  In return they contribute substantial financial and manpower resources to the Labor Party and its campaign efforts.

This paper explains the relationship.  The unions do not just have a fair say;  often they are recompensed with patronage, privileged laws and substantial public funds for their contributions to the Labor Party.

Central elements of the relationship -- when assessed against broad national interest criteria -- across the bounds of acceptability and accountability in some cases.  They represent at best a misuse, and at worst a flagrant abuse, of taxpayer funds and the power of Commonwealth Government office.

The relationship which now exists between the Labor Government and the trade union movement is, at least arguably, dangerous.  It leaves the Federal Labor Government open to allegations of improper use of office.  The relationship therefore should be fully explained to the Australian public for the undemocratic and inappropriate arrangement that it is.

The issues raised in this paper do not simply reflect my concerns.  They are widely felt, in one way or another, in the community at large.  In particular, there is a long history of concerns expressed in public opinion polls about the extent of power and influence exercised by the trade union movement.  Unions have a legitimate role in representing the interests of those in the workforce who wish to be represented by such bodies.  But the role of unions in practice has extended, and continues to extend, well beyond such a function.  With the clear evidence that now exists of the declining membership (and the even greater decline which would occur if membership was genuinely voluntary) the time has surely come for present "arrangements" to be changed.  This is partly an internal matter for the Labor Party itself.  But, given the two (major) party political system, it is also a matter which is of national interest and on which others have a right to express views and suggest changes.

Note:  nothing in this paper should be taken to imply that the Federal Government, the Australian Labor Party, the trade union movement (or any of its constituent parts) has acted outside the law.

Attachment A:  Labor Members Of Parliament -- Union Relationships *

Dick Adams	Union Organiser, Australian Meat Industries Employees Union;  LHMWU
Peter Baldwin	Federated Miscellaneous Workers Union.
Michael Beahan	Education Officer, WA Trades & Labor Council
Kim Beazley	Miscellaneous Workers Union.
David Beddall	-
Arch Bevis	Deputy General Secretary, Qld Teachers' Union;  Electrical Employees Union.
Gordon Bilney	-
Nick Bolkus	TWU/FMWU
Laurie Breretcn	Electrical Trades Union
Bob Brown	NSW Teachers Federation
Bryant Burns	Union official, Amalgamated Metal Workers Union (AFMEU)
Graeme Campbell	-
Kim Carr	President & Secretary, Technical Teachers' Union (FTUV)
Bruce Childs	Secretary, Printers Union (PKIU)
Bob Chynoweth	-
Peter Cleeland	-
John Coates	-
Bob Collins	-
Mal Colston	-
Peter Cook	Vice-President, ACTU & Secretary, WA TLC
Barney Cooney	-
Mary Crawford	-
Simon Crean	President, ACTU & Assistant General Secretary, Federated Storeman & Packers Union;  National Union of Workers.
Janice Crosio	-
Rosemary Crowley	AFUW
Barry Cunningham	-
Maggie Deahm	-
Kay Denmam	Teachers Federation
John Devereux*	National President, Electrical Trades Union (Electrical & Plumbing union)
Peter Dodd	Union official, Federation Liquor and Miscellaneous Workers Union.
Michael Duffy	-
Peter Duncan	Labor Lawyers, AJA
Mary Easson	ASU
Paul Elliott	Federated Clerks Union
Chris Evans	Industrial officer, Federated Miscellaneous Workers Union & State Secretary. Fire Brigade Union (WA)
Gareth Evans	Inaugural President, Australian Society of Labor Lawyers
Martyn Evans	ASU
Wendy Fatin	-
John Faulkner	LHMWU & NSW Teachers Federation
Laurie Ferguson	Research officer, Federated Miscellaneous Workers Union
Eric Fitzgibbon	-
Dominic Foreman	State Secretary, Vehicle Builder Employees Federation (AFMEU)
Michael Forshaw	AWU
Ross Free	NSW Teachers Federation
George Gear	-
Garrie Gibson	Qld Teachers' Union organiser;  LHMWU
Russ Gorman	MEU
Ted Grace	-
Alan Gritfin	Union organiser FCU
Alan Griffiths	Trade union official
Chriss Haviland	Delegate, Public Sector Union;  PSU
Marjorie Henzell	ASU
Clyde Holding	MWU
Colin Hollis	-
Bob Horne	-
Brian Howe	MWU
Ben Humphreys	Amalgamated Metal Workers & Shipwrights' Union
Harry Jenkins	FMWU
Gary Johns	-
Barry Jones	AJA
Gerry Jones	MWU
Paul Keating	Research officer & industrial advocate, Federated Municipal & Shire Council Employees Union.
Duncan Kerr	-
Peter Knott	NSW Teachers Federation
John Langmore	MWU
Mark Latham	FCU
Michael Lavarch	-
Carmen Lawrence	-
Michael Lee	FCU
Ted Lindsay	Federated Miscellaneous Workers Union
Jeanette McHugh	LHMWU
Jim McKiernan	Education Officer, AMWSU AMEU
Leo McLeay	FCU
Bob McMullen	Union Official
Stephen Martin	FCU
Daiyl Melham	Labor Lawyers
Allan Morris	Miscellaneous Workers Union
Peter Morris	Shop, Distributive and Allied Employees Union
Shayne Murphy	State Secretary, CFMEU (Tas) CFMEU
Belinda Neal	-
Neville Newell	-
Gavan O'Connor	-
Neil O'Keefe	Union official FCU
Roger Price	FCU
Gary Punch	FCU
Harry Quick	-
Robert Ray	-
Margaret Reynolds	Qld Nurses union
Rod Sawford	-
Chris Schacht	Federated Clerks Union
Con Sclacca	Australian Postal and Telecommunications Union
Les Scott	President, Australian Bank Employees Union;  AWU
Nick Sherry	State Secretary, Federated Liquor & Allied Industries Union (Tas)
David Simmons	ASU
Silvia Smith	-
Stephen Smith	AWU
Jim Snow	-
Warren Snowdon	Assistant Secretary, NT TLC;  NT Teachers Federation
Peter Staples	-
Wayne Swan	AWU
Lindsay Tanner	State Secretary, Federated Clerks Union
Andrew Tneophanous	-
Robert Tickner	President, NSW Society of Labor Lawyers;  Miscellaneous Workers Union
Frank Walker	Miscellaneous Workers Union
Sue West	ASU
Tom Wheelwright	n,a.
Ralph Willis	Research officer & Industrial Advocate, ACTU;  National Union of Workers
Harry Woods	-

* Includes current membership and/or past employment.

Sources:  Sanate and House of Representatives Registries of Members, Interests and Commonwealth Parliamentary Handbook 1993.

Attachment B:  Union Index

(LHMWU)	Liquor, Hospitality & Miscellaneous Workers Union
(AMIEU)	Australian Meat Industry Employees Union
(PTU)	Public Transport Union
(CWU/EPU)	Communications Workers Union
(CFMEU)	Construction Forestry Mining & Energy Union
(AMEU)	Automotive, Metals & Engineering union
(PKIU)	Printing & Kindred Industries union
(NUW)	National Union of Workers
(SDAEA)	Shop Distributive & Allied Employees Association
(TWU)	Transport Workers Union
(BBEU)	Breweries & Bottleyards Employees Union
(FSU)	Finance Sector union
(AWU)	Australian Workers union
(ASU)	Australian Services union
(HCSU)	Health & Community Services Union
(MU)	Maritime Union
(TLC)	Trades & Labor Council
(FCU)	Federated Clerks Union

---

ENDNOTES

1.  Australian Bureau of Statistics, Trade Union Statistics, as at 30 June 1994.

2.  For further analysis of the Accord, see "Industrial Relations And The Failure of the Accord:  What Should Be Done" by Des Moore in Australian Bulletin of Labour, Volume 15, June 1989.

3.  Senator Neil is also the wife of NSW ALP Secretary, John Della Bosca.

4.  Answers to Senate questions on notice.

5.  ALP Annual Returns to the Australian Electoral Commission

6.  Australian Bureau of Statistics, Trade Union Members, August 1994 (as a supplement to the Monthly Labour Force Survey).

7.  Ibid.

8.  As for footnote 4.

9.  As for footnote 4.

10.  $14.2 million at the 1993 Federal election.

11.  Australian Electoral Commission, Australian Labor Party Annual Returns 1992-93, and answers to Senate questions on notice.

12.  The Australian, 31 May 1995.

13.  In 1993-94 this was $10,000.  In 1992-93 (an election year) this amounted to $172,666.  Australian Electoral Commission, Australian Labor Party Annual Returns, 1993-94 and 1992-93.

14.  Australian Electoral Commission, Australian Labor Party Annual Returns 1993-94.

15.  Media release, 3 April 1991, "Taxpayers' funds and Government patronage swell ACTU influence".

16.  Review, Volume 47/3, 1995.

17.  Built on "free" land in Canberra given to it (and other political parties) by the taxpayer.

18.  2.5 million members multiplied by an average annual subscription of, say, $200.

19.  Research by Dr G. Griffin (Monash University) and Mr S. De Rozairo (ACTU) estimated the combined net assets of unions in 1989 was about $370 million.