The Ensuring Integrity Bill and the chimera of ‘regulating unions just like companies’

This post is based on my presentation to the NTEU Symposium on the Ensuring Integrity Bill held at RMIT University, Melbourne, on 17 September 2019.

 An edited version was published in The Conversation on 10 October 2019: Louts, thugs, bullies: the myth that’s driving Morrison’s anti-union push

What does Scott Morrison have in mind for unions?

The answer is clear: more of the same. More use of the coercive power of the state to make it harder for unions to fulfil their democratic function – protecting the interests of workers and fighting inequality.

The Ensuring Integrity Bill hasn’t appeared out of nowhere. This is the latest in a series of laws from the Coalition, clamping down on unions, their officials and members.

Let’s be frank: the misconduct and corruption in some unions gifted the Coalition an opportunity to set up a Royal Commission, which became an inquiry into union power.

Dyson Heydon claimed in his report that the malfeasance he found in the HSU and other unions was just ‘the small tip of an enormous iceberg’. He also said:

[I]t is clear that in many parts of the world constituted by Australian trade union officials, there is room for louts, thugs, bullies, thieves, perjurers, those who threaten violence, errant fiduciaries and organisers of boycotts.

Of course, he was dead wrong! But I cite these words because this is the narrative he laid out to justify a slew of new regulatory measures attacking unions.

It’s also what the Government wants people to believe about trade unions. That they’re ugly, violent, law-breaking and self-interested.

I have undertaken research on union corruption in Australia (see: http://www.unswlawjournal.unsw.edu.au/article/law-politics-and-ideology-the-regulatory-response-to-trade-union-corruption-in-australia-2/).

There was a problem, but unions have cleaned up their act.

The level of enforcement activity of the Registered Organisations Commission is small in both number and scale, compared with the number of unions and officials operating out there.

I told a Senate Committee last month that a proportionate regulatory response to the Royal Commission’s findings was warranted. Those laws have already been implemented.

So what are we to make of the Ensuring Integrity Bill?

In short, it’s an opportunistic attempt to take down Australian unions.

The Government didn’t expect to be re-elected. Its business mates want IR reform.

They want to shut down powerful unions like the CFMEU. They tried to stop it merging with the MUA. The Bill didn’t get through Parliament in time.

With that objective frustrated, they want new weapons in their armoury to make life more difficult for unions.

Hence the provisions in the Bill enabling employers, the Minister and the Registered Organisation Commission to seek the disqualification of union officials and the deregistration of unions.

Provisions that could prove very handy in an industrial dispute, adding to the already extensive range of legal avenues employers have access to.

The Bill is a massive over-reach. The Government claims that it’s simply applying to unions the same regulatory standards that apply to corporations. That is just not true, as I pointed out in my second submission to the Senate Committee.

First, we need to understand that it’s a flawed assumption to proceed from – that registered employee organisations and companies should be subject to the same forms of regulation.

• There are some similarities between corporations and trade unions – many are large, powerful organisations with substantial assets.
• But unions and companies have very different purposes.
• Companies are primarily formed to generate profit for return to shareholders – who therefore have a proprietary interest which the law seeks to protect.
• In contrast, unions aim to improve the working conditions of their members (and workers in general). Union members have a democratic interest in seeing that the union fulfils that objective – the law ensures they can participate in the union’s activities, and that it’s run fairly.
• Under the Registered Organisations Act, unions have a form of corporate personality.
• But they’ve long been regulated differently to corporations – recognising that the regulatory controls placed on unions formed part of a compact under the conciliation and arbitration system from 1904.
• Unions also obtained benefits through that compact including access to the making of awards, and rights of entry for enforcement purposes.
• But the benefits of registered organisation status have declined significantly since then, and the levels of control over unions have grown exponentially.
• Given the major differences between unions and companies: corporate law should be used only as a guide to determining the appropriate forms of regulation for unions and their officials – not as an automatic blueprint.

Secondly, and more importantly, the Government’s application of the corporate model to regulating unions is highly selective. I focus on 2 areas of the Bill in my submission to illustrate this point.

Schedule 1:

• … expands the grounds for disqualification from office in a registered organisation, and the parties with standing to seek disqualification.
• Court-ordered disqualification could be sought against a union official on much wider grounds than are available for company directors. This is proposed through:
  • (i) the very broad ground of ‘designated findings’ against an official under ‘designated laws’ – an employer could apply for disqualification of a union official because they’ve breached a Fair Work Commission bargaining order, or been involved in a technical breach of the protected industrial action rules (e.g. the complex protected action ballot process);
  • and (ii) a ‘fit and proper person’ test.
• In contrast, the grounds for disqualification of company directors relate mostly to breaches of the Corporations Act itself. There’s no fit and proper test for directors. It’s a concept commonly found in business licensing schemes. I recommended the fit and proper person test now found in Victoria’s labour hire licensing legislation. Its purpose is to impose barriers to entry to rogue operators. That’s because there was widespread exploitation going on, in breach of workplace and other laws. There’s no such rationale for a fit and proper test for union officials.
• If the Government genuinely wants equivalence here, then Fair Work Act breaches as a ground of disqualification for union officials should also be available against directors like George Calombaris for their involvement in systemic underpayment of workers.

Schedule 2:

• The proposed new grounds for union deregistration partly mirror some of the grounds for court-ordered winding-up of a company under the Corporations Act.
• However, the addition in the Bill of new grounds for deregistration relating to a union’s (or members’) non-compliance with a wide range of laws (e.g. Fair Work Act, health and safety legislation) has no equivalent in the Corporations Act.
• Among the proposed grounds is where a union engages in ‘obstructive industrial action’ – unprotected action that hinders of interferes with the activities of an employer or a public service, or that has a substantial adverse effect on community safety, health or welfare. A one-off instance of unprotected industrial action could trigger this ground.
• We know that the real target of Schedule 2 of the Bill is the CFMEU.
• But not even Commissioner Heydon recommended deregistration of the CFMEU. Nor did he propose any change to the current deregistration provisions.
• The Government already has the ability under the Registered Organisations Act to seek deregistration of the CFMEU. Some of the existing grounds, including repeated breaches of court orders, would be satisfied in my view.
• Instead of testing the existing law, the Government has chosen to pursue the enactment of wider grounds of deregistration – giving more parties, including employers, access to that mechanism. This will potentially impact all unions, not just the CFMEU.

The Coalition and employers can’t make up their minds about unions.

Unions are (at the same time) a relic of the past, facing imminent demise, representing only 15% of the workforce – and yet unions are also a threat to the economy, the merged CFMEU & MUA would lead to industrial Armageddon, so too the NUW/United Voice amalgamation will cause havoc across retail supply chains.

Make no mistake: the Ensuring Integrity Bill tells us, it’s this second view that drives the anti-union agenda of the conservative forces.

They’re worried that unions like the nurses will keep growing and exercising their industrial rights.

They’re worried that the NTEU will keep doing its great job of representing the interests of all of us here in the universities and vocational education sector.

And they’re worried that new and innovative forms of unionism like Hospo Voice will have too much impact – that it will keep highlighting the wage theft and other corporate abuses of power that have happened on their watch.

So they have to put new barriers and roadblocks in the way of unions – new incarnations of the hostile state, the 2020s version of the tired old free-market trope from Thatcher’s Britain in the 1980s and John Howard’s Work Choices.

That’s what Scott Morrison and Christian Porter have in store for unions.

It’s up to all of us to stop them:

• To remind the public of the incredibly valuable role unions play in protecting workers from the excesses of managerial power.
• The bulwark against safety breaches, against exploitation of migrant workers, against the gig economy’s sham contracting model.
• And the constructive role of unions as legitimate actors in a democracy.