The Australian, October 28, 2017 – Grace Collier
The game is up for the union money-go-round, so spare a thought for a gaggle of keen lobbyists, recently spotted in Parliament House. Mates in Construction is a registered charity and they sent some people to our nation’s capital to lobby the Senate. They want the Senate to block an amendment to the Fair Work Act, put up last week, called the Proper Use of Worker Benefits Bill.
This charity is part of a vast network of cashed-up bodies we refer to as union-affiliated entities. As you may be aware, these entities are the reason we see a condition peculiar to the Australian union movement, which could be labelled “No members? No worries!”
This phenomenon describes a common scenario in which a union has a shrinking membership, offset by a rapidly rising income and giant asset pool. All of this is untaxed, which for the unions must be gloriously worry-free.
Although many union types say they despise capitalism, some of them are our nation’s most successful capitalists. Granted, our union capitalists don’t operate in a free and open market like the rest of us. Instead, union capitalism is crony capitalism, monopoly capitalism and kickback capitalism.
This type of capitalism relies on willing accomplices: employer groups. Employer groups, in exchange for 30 pieces of silver, use their position to corral businesses into enterprise agreements that mandate income flows into union entities called worker entitlement funds. About 30 per cent of enterprise bargaining agreements, and 60 per cent in the construction sector, contain clauses that compel business owners to pay as much as $100 a worker, per week, into these funds. The funds use a vast network of trusts to move money around and distribute it.
The public may perceive union leaders as socialists, and many union leaders prefer it that way. However, in reality the modern union leader is more a rich and privileged trustafarian; with no money worries, they can spend their time playing politics instead of looking out for workers’ interests.
The final report of the Heydon Royal Commission into Trade Union Governance and Corruption said: “Evidence given before the commission has shown that large unions, such as those named in the commission’s terms of reference, receive significant revenue from commercial agreements concerning insurance schemes, redundancy funds and training funds. They operate complex commercial structures. They have large numbers of staff. They operate across multiple jurisdictions. The funds that certain unions have established, and which they and their officials administer, are even more complex in structure: incorporated associations, unincorporated associations, trusts and various corporate entities.”
These funds make up a multi-billion-dollar industry and are subject to barely any regulation. Currently, $2 billion is held in these funds, allegedly for workers’ redundancy pay, sick leave and other benefits. However, at least $25 million each year, and about $130m in the past five years, has been channelled from these funds to unions and employer groups.
Although the funds are run by unions, employer organisation nominees appear on their boards. This is because unions must throw them a bone in exchange for their work, but employer group representatives also provide to the world a respectable facade.
The Proper Use of Worker Benefits Bill promises to bring transparency and regulation to this grand scheme by ensuring the money allegedly held for workers is actually held for workers.
Let’s hope the Senate allows the bill to pass. In the meantime, here are examples drawn from investigations conducted in recent years and two royal commissions:
• Protect Scheme: This is a redundancy and income protection scheme that holds more than $245m in assets. It is sustained by regular payments from employers under enterprise agreements with the Victorian Electrical Trades Union and National Electrical and Communication Association, an employer group. Through a complex flow of funds, run through a trust, the ETU Victoria receives $4.55m a year and NECA about $330,000 through the scheme.
• Building Employees Redundancy Trust: BERT is a Queensland construction industry redundancy fund and holds more than $130m in assets. It is controlled by the Construction Forestry Mining and Energy Union, the Communications, Electrical and Plumbing Union and the Queensland Major Contractors Association, an employer group. The fund has been found to pay workers who are not actually redundant, channelled millions of dollars annually to the entities controlling it rather than workers, and made illegal payments to striking workers. The Queensland secretary of the CFMEU and a director of Mates in Construction, Michael Ravbar, is in court facing allegations of boycotting Universal Cranes because their employees accepted a different fund that they feel offered better value for money.
• Incolink: This is a redundancy, income protection and portable sick leave scheme for Victoria and Tasmania that holds about $730m in assets. It is a joint enterprise between the Master Builders Association in Victoria, an employer group, and the CFMEU, CEPU, Australian Workers Union and Australian Manufacturing Workers Union. The Heydon royal commission said “the flow of funds between the various Incolink entities is extremely complex and convoluted” and “Fund 1 and Fund 2 also make substantial ‘grants’ of many millions of dollars each year to various unions and industry parties. The two largest recipients of funds are the MBAV and the CFMEU Vic.”
Incolink also receives payments from employers for a training fund, and the royal commission concluded on that fund that “it appears in practice to operate as little more than a bank account”. Every year, MBAV and CFMEU Vic make applications for “grants” from the training fund, and received a combined $54m from the fund from 2011 to 2015.
• U-Plus: This is an income protection insurance provider that is a joint venture between CFMEU NSW and insurance broker Coverforce. The Heydon royal commission final report found that, in 2014, enterprise agreements required employers to make a payment of $97.50 an employee per month for U-Plus, to be increased by no more than the CPI each year. From 2013 to 2015 the benefit to the CFMEU NSW was about $810,000 a year.