The Australian, October 19, 2017 – Michaelia Cash
Union bosses frequently rail against the “big end of town”. In truth, they are the big end of town.
Last year, 47 unions received revenues of over $900 million, all of which is tax exempt. They’re now sitting on assets worth over $1.5 billion.
Today’s unions are no longer simple grassroots organisations focused on workers.
Indeed just one in seven workers, and just 10 per cent of private sector workers, belong to a union – a huge drop from 30 years ago, when half of the workforce belonged to a union.
Paradoxically, while union membership has plummeted, their wealth and power has grown substantially.
Through cosy deals with big businesses, today’s unions have become major businesses themselves, focused on accumulating massive profits, and then using this money to buy political power.
Union members are entitled to ask: where does all their money come from and where does it go?
Given their privileged tax exempt status and ability to impact the economy, it is especially important for powerful unions be held to high standards of transparency and accountability.
Recent analysis by The Australian shines a light on a growing, but opaque source of union wealth – payments of about $130 million in the last five years skimmed from funds established to pay worker benefits.
How does this work? First, unions enter into enterprise agreements with big companies, with clauses requiring payments into funds intended to cover training, redundancies, sickness or other worker benefits, but with highly inflated profit margins.
Unions and employer associations control these funds and direct generous payments back to themselves – more than $25 million a year to unions alone. The funds themselves are basically unregulated so neither they – nor the people that run them – are subject to the same kinds of rules that govern companies or their directors.
The recent Royal Commission into Trade Union Governance and Corruption concluded the problem has been growing for years: “A cause for increasing concern over the last two decades is the growth of other forms of more sophisticated, and less transparent, fund raising activities by some trade union officials … The moneys may be raised for the personal advancement of the officials, and not for the union.”
The former National Secretary of the Australian Workers Union, Bill Shorten, was one such official to use this sort of “fundraising” for “personal advancement”.
For example, under his leadership Mr Shorten’s union signed dozens of agreements with employers that signed workers up to an income protection fund, IUS Holdings. During the same period, IUS Holdings made 21 separate payments worth $566,000 back to Mr Shorten’s union.
This money could then, in turn, be used on political activities by the AWU for the benefit of Mr Shorten.
Workers were never told about these kickback arrangements. They had no idea about the financial motivation of their union when negotiating their enterprise agreements.
With tens of millions of dollars being skimmed each year, unions have gotten rich while keeping workers in the dark. It’s time to shed light on these payments.
Today, the Turnbull Government will introduce the Proper Use of Worker Benefits Bill into Parliament. This will require proper governance of worker benefit funds and proper disclosure of financial benefits that flow to unions from these types of arrangements.
Australian unions are now multi-billion dollar enterprises. They make huge annual profits and they use these profits to bankroll their subsidiary business – the Australian Labor Party. Last year alone, unions donated over $10 million to Labor and spent $16 million more on political campaigns to get Labor elected.
It’s time for Mr Shorten and Labor to stop turning a blind eye to where this money comes from.
Parliament has a responsibility to protect honest workers, by ensuring transparency and proper governance of funds established to pay their entitlements.
Union bosses should be focused on honest workers, not dubious deals.
Our legislation will help ensure worker benefit funds are for workers, not piggy banks for politics.
Michaelia Cash is the Minister for Employment.