Releasing the interim report of the Royal Commission into Trade Union Governance and Corruption on December 19, Employment Minister Eric Abetz said the findings showed the decision to hold a royal commission into unions had been “vindicated”. But if almost every substantial case examined by the Heydon Commission was already making its way through the legal system, surely that suggests the system was working. A royal commission is a tool the executive arm of government can effectively employ when there is a serious failure by the existing regulatory system.
Counsel for the CFMEU in the Commission, John Agius, pointed out in his oral submission to the Heydon Commission in November that the role of a royal commission “traditionally and [which] ought still to be the case is one of using its coercive powers to discover evidence that might not otherwise be available to investigative bodies”.
In December 2013, three months after his election, Liberal PM Tony Abbott announced a royal commission into the former Labor government’s home insulation scheme in which four installers died, and announced the Heydon royal commission into unions in February 2014. Kevin Rudd is the target of the first and Julia Gillard one of the key targets of the latter.
Even former Liberal PM John Howard publicly reprimanded Abbott over the blatantly political use, or misuse, of the royal commission as an instrument of government in a September 2014 Channel 7 TV interview, pointing out there had already been a coronial investigation into the home insulation scheme.
“I’m uneasy about the idea of having royal commissions or inquiries into essentially a political decision on which the public has already delivered a verdict… I don’t think you should ever begin to go down the American path of using the law for narrow targeted political purposes,” Howard said.
Admittedly, this was a bit rich coming from the man who had established the Cole Royal Commission into the building unions that cost taxpayers $60 million and did not result in a single prosecution of a union official. As the Australian Congress of Trade Unions (ACTU) has repeatedly pointed out, every Liberal government in power since 1972 has held a royal commission into trade unions.
There are several areas of Australian corporate and political life that are plagued by systemic failures and which the public would benefit from an inquiry with coercive investigative powers being held. Two examples here will suffice.
The Abbott government’s political mantra since coming to power has been that there is a need to drastically cut public spending in the healthcare, education, welfare and community sectors in order to repair the federal budget deficit. But a report released in September 2014 by the United Voice union and Tax Justice Network Australia revealed that of the ASX 200 companies, almost one-third pay less than 10% tax when the statutory rate is 30%, and 57% have subsidiaries in tax haven jurisdictions. This systemic tax avoidance by major companies results in the loss to the public purse of $8.4 billion in revenue each year, the report estimates.
This report was followed in November 2014 by the revelation that dozens of Australian corporations including Lend Lease, AMP and the Macquarie Group were among the 343 companies who struck deals with Luxembourg to shift profits through tax havens and used accounting giant PriceWaterhouse Coopers to drastically cut the amount of tax they paid – in some cases reducing it to almost nothing.
But not only has the Abbott government avoided ordering a royal commission, or any kind of inquiry, into what is clearly a systemic problem that has massive implications for the Australian public – it has dropped its pledge to take any action on tax avoidance whatsoever.
In November 2013, Treasurer Joe Hockey declared that the government would not legislate the former Gillard government’s plan to reduce tax minimisation by abolishing the loophole of generous deductions being available under sections 25-90 of the Tax Assessment Act 1997. Its abolition would have boosted public revenue by around $600 million. Hockey said in the 2013-2014 Mid-Year Economic and Fiscal Outlook (MYEFO) report that this would place “unreasonable compliance costs” on such companies, and pledged to “introduce a targeted anti‑avoidance provision after detailed consultation with stakeholders” instead. But in the 2014-2015 MYEFO report announced in November, the Treasurer quietly dropped even this watered-down pledge to tackle tax avoidance and minimisation.
Of course, the most glaring double standard of all when it comes to the use of a royal commission is the Abbott government’s failure to establish one into the systemic failures of corporate regulator the Australian Securities and Investments Commission (ASIC), particularly in relation to its investigation of the actions of the Commonwealth Bank’s financial planning subsidiary CBFL during 2006-2010.
More than a thousand CBFL customers lost millions of dollars during the global financial crisis after their bonus-seeking advisers invested their money in high-risk products without their clients’ permission. The Commonwealth Bank’s attempted cover-up and the ASIC’s incompetence on all fronts was the subject of a five-month inquiry by a Senate Committee that reported in June 2014 – specifically recommending that a royal commission be held into the ASIC’s failures. The Abbott government rejected the recommendation.
“Still, it’s only shareholders’ wealth at stake in corporate regulation — wealth that, while worth $1.5 trillion in market capitalisation, is obviously a lower priority for the government than union membership fees and assets, which perhaps total a couple of hundred million dollars,” Crikey journalist Bernard Keane commented on February 10 last year. “If unions were indeed regulated just like businesses, as many in the Coalition (and the Institute of Public Affairs) want, crooked union officials would be over the moon at the prospect of getting to keep their bribes and avoid jail.”
The fact that Howard’s hated Work Choices reforms remained so politically toxic six years after he was booted from office meant that Abbott – under pressure from business groups to impose restrictions on collective bargaining and union power, cut penalty rates and much more – made an election promise that the Productivity Commission would review the Labor government’s Fair Work Act that replaced Work Choices within the Coalition’s first six months of government. Any proposals for change arising from the review, he said, would be brought to the electorate in the 2016 elections before being implemented.
The draft terms of reference of the Productivity Commission’s ‘Workplace Relations Framework Review’ were leaked in March last year, and it was initially due to report in April 2015. But the government delayed the announcement of the very same terms of reference for nine months, making a weak excuse about having a lot on its plate, and conveniently waiting until four state elections were over.
The claim that Coalition politicians have been repeating for years – that labour productivity has been consistently declining as a result of the Fair Work Act, while at the same time Australia is experiencing a “wages explosion” – don’t stand up to a moment’s scrutiny. Australian Bureau of Statistics data shows that labour productivity has increased by 8% from March 2011 to March 2014. But wage growth was at 2.6% in the year to September 2014, barely passing the inflation rate of 2.3%.
The facts are undermining the conservatives’ traditional economic justification for their ideological agenda. Something more is needed. Just as the so-called Commission of Audit (October 2013 – March 2014) was used by the Abbott Government as an attempt to provide political cover for its first budget, which provoked still-lingering outrage among the Australian people last May, the government lives in hope that the union royal commission will provide justification for its main game – the implementation of the anti-worker reforms that will inevitably come from the Productivity Commission review. The more mud that is slung at the union movement, the weaker the potential resistance to these reforms will be.
If anyone had any doubt that this was the government’s strategy, it has surely been dispelled by now. Abetz announced the publication of the interim report by the Heydon royal commission on the morning of 19 December 2014. The same afternoon, Hockey finally announced the terms of reference for the Productivity Commission’s review, ensuring that if it was covered by the media at all it would inevitably be reported in the same breath as the term “union corruption”.