Kevin Rudd will face many forks in the road on his way to making Labor electable in time for this year's federal election. During his travails he won't be able to count on much help from his friends. Already on industrial relations and manufacturing policy the trade union movement has urged the ALP left, when in fact the path to policy respectability veers to the right.
Another challenge to Rudd posed by his erstwhile friends from the unions will be "offshoring". The Finance Sector Union is campaigning against the major banks transferring their administrative and technical functions from Australia to other countries, notably India. It won't be long before Rudd will be called upon "to protect workers' rights". He'll be asked to promise that Labor will stop or at least discourage the practice. And no doubt he'll say that similar functions undertaken by government departments will be done in Australia by Australians.
According to the figures being quoted by the FSU, 70 per cent of all local finance jobs could be performed offshore -- equal to 200,000 jobs. In addition to the potential job losses, the FSU claims that processing and storing customer information overseas raises security and data protection issues.
Notwithstanding that banks already have extensive operations overseas, the union campaign seems to be having some effect. In November, Westpac announced that it wouldn't proceed with a plan to relocate 400 jobs offshore. Other banks have made vague promises about keeping jobs in Australia and consulting with staff and stakeholders before further decisions are made.
For a variety of reasons banks have been reluctant to confront the union campaign. Many financial institutions have embraced varieties of corporate social responsibility and these days they're afraid to defend even the basic principles of capitalism. Further, bank executives remember the 1980s and the public outcry at branch closures. Now, two decades later, rather than explain why banks need to continually cut costs, they ignore the issue and hope it goes away.
The pity is that on at least two levels the union campaign against sending bank functions offshore is a campaign of gross hypocrisy.
First, unions and consumer groups are quick to criticise banks about the level of their fees and charges on customers. But it is these same fees and charges that are paying the salaries of union members in the finance sector. When banks pay Australian employees more than their counterparts overseas would be paid for the same task then inevitably customers will end up being charged higher fees.
Second, the ACTU, to which the FSU is affiliated, has been at the forefront of calls for the federal government to lift its spending on international aid. Such is the ACTU's commitment to the issue that it even has its own international aid organisation, Union Aid Abroad.
Demanding more aid spending is easy rhetoric for the unions. And it's not even their own money -- aid is taxpayers' money. However at the same time as unions are saying the Australian government should be doing more to alleviate world poverty, the unions themselves are doing everything they can to fight Australian companies investing in less developed countries. The campaign against offshoring is a good example of unions saying one thing and doing another.
In effect, what Australian unions are saying to the poor in foreign countries is: "you can have our charity, but you can't have our jobs".
It's quite understandable that the FSU is seeking to protect the employment of its members. After all, that's the basic responsibility of a union. But actions have consequences, and the FSU is doing nothing to lift the 300 million Indians living in poverty out of their condition.
In a speech at the end of last year, Treasury secretary Ken Henry put his finger on the problem. He identified the arguments against offshoring as a new species of protectionism. "Offshoring used to be called importing. And that is what it is: importing services", he said.
His final condemnation was unambiguous: "Opposition to offshoring is based on the same protectionist nostrums that were once used to support the high tariff wall that a generation of Australian policymakers has been busy dismantling. It may be dressed in different garb, but it is no more respectable".
Given Henry's credentials as having been Paul Keating's economics adviser, these are comments that should at least give Rudd pause for thought. And it might now be nearly 14 years ago, but Keating was, after all, the last Labor leader to win a federal election.
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