The Gillard Union Government

It was 2007 and the union movement was dying. Its membership had continued to fall, it was ignored by the Howard Government and it faced a real existential threat. The people of Australia could imagine a future without unions.

The Howard Government, however, made two strategic errors. First (and most importantly) was to allow unions to keep their principal funding source: the superannuation guarantee and industry superannuation funds. Second was the development and implementation of Work Choices, at that time a bridge too far for the Australian people.

Poised with a stake over the heart of the union movement, the Howard Government blinked. It should have (and could have) severed that vital funding source, and set superannuation policy on a path of transparency and acting in the interests of members.  The building and construction industry is the proper way in which to examine the industry superannuation fund. Heavily overweight in illiquid and untraded property trusts, this is the tool in which money is siphoned into the union movement. Unions are nothing but fiefdoms, so putting favoured union leaders as trustees on superannuation funds provided a high and reliable additional source of income which is not disclosed.

Unfortunately the Howard Government did not act against that; it also did not act to promote competition in the market for retail superannuation funds which consistently gouged members with exorbitant fees, well above equivalent fees overseas. Usually when one observes excessive fees, it is due to an insufficiently competitive environment.

The union movement found their champion in an unlikely person, Kevin Michael Rudd.

Rudd ostensibly hated the union movement – indeed he acted to expel some of the worst thugs. What genius to have the seemingly mild Rudd as Labor leader, knowing that he could be pushed out of the way when convenient.

So victory was achieved in November 2007 and the union movement never looked back.

Today, the Gillard Government is embedding the union movement in the Government. Still with few members, the union movement has had a resurgence because of the re-regulation of the labour market, and now the additional proposed anti-discrimination laws.

Who needs members when (a) there is a reliable funding source from the superannuation industry and (b) the unions have become an integral part of government through legislation?

Effectively key union officials are permanent members of Cabinet, dictating the course of government policy and government spending.

This relationship between union leaders and governments is much closer than under Curtin and Chifley, when the union movement had significant numbers of members. It has also occurred when the stench of corruption from the HSU and AWU suggests that it is rife throughout the union movement.

We have mortgaged our future on a number of unelected and grasping men (yes, they are mainly men) in key union positions. They are forcing through policies that will inflict significant damage on the Australian economy. Our economy may have significant advantages, but no economy can resist the damage that these bad policies are inflicting.

The Gilliard Union Government is acting in the interests of the few and against the interests of the many. In that sense, it is merely a small version of the Mugabe kleptocracy. It is damaging the standards of living of the Australian people.

In the 2007 election campaign, the Coalition warned of the risks of the union movement running Australia. This has now come to pass.

Hopefully Tony Abbott has picked up that stake, and stands ready to drive it through the heart.

I have a dream that one day the union movement will be no more. That workers will be unshackled and able to enjoy the fruits of their labour without some union official extorting a share.

About J

J has an economics background and is a part-time consultant
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34 Responses to The Gillard Union Government

  1. Andrew

    I always find it amusing and yet at the same time annoying that people continually harp on about WorkChoices and the laws. Let’s look at job number growth over recent times with an without WorkChoices. An impressive 1.69 million jobs were added to the workforce between December 1995 and December 2005. During the 18 months that WorkChoices was in operation, an extra 499,000 jobs were added to the workforce. The dismissal laws were perhaps a little too stringent against workers although the hysteria that arose from WorkChoices was very much disproportionate to the negative effect it had. In reality, the IR laws during the Howard era, especially during WorkChoices had many positive effects for the economy.

  2. Chris

    I’m not opposed to more transparency in industry super funds, but look at the returns (1996-2011):

    corporate funds – 5.84% pa
    industry funds – 5.35% pa
    public sector funds – 6.30% pa
    retail funds – 3.66% pa.

    Where would you rather have your money? SMSFs may be an option for some who have the time and skill, but for many its simply not practical.

    Also I understand that industry funds provide cushy jobs for union leaders and employer representatives, but how do they fund unions directly?

    As for Workchoices related legislation – as long as Abbott is in charge I doubt we’ll go back there – it appears he was opposed to the legislation in the first place.

  3. Scapula

    Marx’s idea that ‘the executive committee of the bourgeoisie’ has now been inverted into ‘the state is the executive committee of the union movement’.

  4. SteveC

    First (and most importantly) was to allow unions to keep their principal funding source: the superannuation guarantee and industry superannuation funds.

    Really? You have some kind of evidence of that do you?

  5. Samuel J

    SteveC – yes, if you’re willing to testify. It is difficult to gather evidence because the whole area is murky and non transparent. But I point to three things. First, it is not transparent. Second, the union movement is involved and keen to be involved. Third, it is not difficult to skew investments into favoured connections which have paybacks. The building and construction industry is rife with those types of kick back rorts. Do I have a smoking gun? No, but there is a bad smell and I know how it can be done.

  6. Samuel J

    Chris – risk and return. The unlisted property trusts favoured by industry super funds are overloaded with industrial property that is rarely traded and is has too high a book value. The mark to market used by the types of investments in retail funds is not able to be compared on a like for like basis with the industry super funds.

  7. SteveC

    Have you reported your evidence to the police SamuelJ? It sounds like a very serious offence

  8. Chris

    SamuelJ – Corporate funds have similar returns to Industry funds (and often work on a similar non-profit basis) – are you claiming that they do similar fudging of the books?

  9. SteveC

    If you don’t have any actual evidence SamuelJ, then you should be careful of using such specific language as
    money is siphoned
    a high and reliable additional source of income which is not disclosed.
    which makes it appear you do have evidence. It makes it hard for me to take the rest of your post seriously.

  10. JC

    Chris unabridged moron

    Sam specifically mentioned that the noon funds have very illiquid investments on their books which basically means its both mover difficult to mark t market and leaves a great deal of room for messaging the result.

    I never knew that was the case until now and on that basis I’m calling their published results bullshit.

    Fuck you’re a tribal poodle.

    Between you the steves twins and bob there isn’t three brain cells you cold share.

  11. JC

    Why should he be careful, SteveC you dickweed. He didn’t mention any particular name, you plastic sex doll owning degenerate.

    It would be le anyone claiming the banking industry is populated by crooks.

    That couldn’t trigger a lawsuit.

    Fuck off.

  12. JC

    Damn iPad

    Not noon funds… Industry funds.

  13. Samuel J

    Chris- no I’m not saying corporate funds are fudging. They just have very high fees. There is a lot of money sloshing around, and Unions only need to take a small cut to make a large amount of money.

    I have an SMSF. From my analysis, it has outperformed both industry and retail funds. I don’t take high risks – the investments of my fund are in a broad mix of index funds (well diversified). My edge: much lower fees and lower (and later) taxes since I don’t trade much and therefore don’t realise capital gains very frequently. I think that active funds management underperforms straight index funds.

    When you consider that investments are about compounding over many years, fees can greatly erode returns especially over a 10 – 20 year time period.

    I don’t like retail and industry funds. The former because the fees are too high and they engage in a lot of active funds management.
    The latter because they are overweight in property which I consider overvalued and I think while the returns and fees look pretty good from a short-term perspective, they are very risky over the medium to long term.

  14. Samuel J

    SMSFs may be an option for some who have the time and skill, but for many its simply not practical.

    Actually it isn’t very difficult to run an SMSF.

  15. Chris

    Chris- no I’m not saying corporate funds are fudging. They just have very high fees. There is a lot of money sloshing around, and Unions only need to take a small cut to make a large amount of money.

    Is that in general true? I know the corporate fund that I’m in has very low fees and has outperformed the retail funds (which isn’t saying a lot).

    And where do the Unions take a cut of industry funds? Other than board fees that is which employers also get a cut of.

    Actually it isn’t very difficult to run an SMSF.

    How many hours a year do you think you spend on research of what to invest in and administration? I’m pretty much a single father and work full time so spare time is a real premium. I used to trade stocks directly, but ended up going to a financial advisor who manages them for me now (and the long term financial planning is definitely worth it). There are significant fees, but the time saved and better returns due to me not reviewing investments more than compensates.

  16. Chris

    Chris- no I’m not saying corporate funds are fudging. They just have very high fees.

    btw those returns I quoted are after fees. Corporate and Industry funds may have their flaws, but retail ones suck even more.

  17. 2dogs

    “Actually it isn’t very difficult to run an SMSF.”

    Chris’ assertion was not practical, and I am inclined to agree with him:

    (a) unless you have over $1-200,000 in super, the cost savings may not be worth it; and,

    (b) there can still be quite an administrative workload, which is problematic for those whose jobs require travel or frequent relocation.

    Personally, I think almost all public superannuation trustees are corrupt. Many privately exchange their voting rights (or at least abstain) in return for personal favours from the executives of investees. None give their members the voting rights they beneficially own.

  18. Poida

    So my “industry” fund is managed by a board of leftists chief of whom is Bracks (ex premier) who have heavily invested in the white elephant that is the desal plant.

    You could not find a more politically exposed project that is designed to fleece the taxpayers and the project management team.

    The cost overruns are already well known. The unions are lining their pockets with cost structures that demand well over the going rate for labour and materials. If the unions aren’t directly benefiting from that project at the expense of the super funds and ultimately the taxpayers they really are clueless (Still up for debate, but I strongly doubt it).

  19. H B Bear

    The IR terms and conditions for the Victorian Desal Plant have taken Victoria right back to the days of John Cain and Mother Russia.

  20. Tel

    Sam: Actually it isn’t very difficult to run an SMSF.

    2dogs: there can still be quite an administrative workload,

    I for one hate admin work with a passion, but I’m willing to pay someone else to do the headbanging stuff if their fees are reasonable and I am in control of the fund. Are there any outsource services for running an SMSF making it work like Internet banking but they automatically do the necessary reporting requirements? Since it is only handle-crank kind of work I would expect it can be done cheaply, but I’ve not seen to many companies adverstising.

  21. NoFixedAddress

    @SamuelJ

    It is very scary when you start to realise that a select cadre has taken over your country.

    Merely as a suggestion, but I think it would be edifying if, someone, would start identifying the backers/supporters of every single labor politician in every parliament in Australia.

    Most people would be astounded to see the networks that deliver power and money to the elite.

    And the absolute fact is that they have an agenda that does not include us.

  22. 2dogs

    Only thing that comes close is Asgard, which is a public fund but lets you pick your own shares.

    Note: not even they give you the voting rights to your shares. Someone there is earning a lot of favours at other people’s expense.

  23. JC

    Samuel

    A friend of mine runs an infrastructure fund. One of the reasons pension funds like it is because the fund is able to show steady returns as a result that marking to market is not like taking the closing BHP price on June 30th.

  24. Rococo Liberal

    As soon as the Libs get in, the union movement fades away. They did last time and they will again. However, this time it will be permament.

  25. NoFixedAddress

    Does anyone on Catallaxy know if I, a male, can join Emily’s List and where do I go to apply?

    Or is it so exclusive that no one knows this information?

    Don’t you hate it when you hit your head up against these barriers?

  26. Jeremiah

    Sam specifically mentioned that the noon funds have very illiquid investments on their books which basically means its both mover difficult to mark t market and leaves a great deal of room for messaging the result.

    I never knew that was the case until now and on that basis I’m calling their published results bullshit.

    If this is true then surely its only a matter of time before the whole scam is exposed and members realise their investment is worth a whole lot less than they thought? If the whole thing does cave in on itself then surely that would be worth a serious investigation, probably the last straw for the Union movement.

  27. Jannie

    I make private contributions to AGEST, an industry fund. It’s been ok in terms of fees and service. It is amalgamating with australian Superannuation, so I had a look at their websites, management and board.

    They are stacked to the eyeballs with actu nominees, including heather ridout and Paul howes. Their investment advisors include Goldman Sachs and Macquarie pvt equity. never ask how sausages are made.

    I suppose it’s ok to have the foxes guarding the henhouse, but the hens might get a bit nervous.

  28. The only problem I have with your analysis, Samuel, is that the Australian Labor Party was openly formed of, by, and for the unions in the first place.

    The difference between then and now, of course, is that back then there were workers’ rights that all of us today would agree needed to be championed, that the people in charge of the Labor Party understood what the National Interest was (and that it must come first), and that they were willing to compromise when what they wanted clashed with what the nation needed.

    The second and third thing were understood at a gut level by the ALP right through to the Hawke years, even if Whitlam’s practice in the matter was misguided at best and horrifically flawed at worst. But it, and the union movement which now drives it, has lost sight of them now, to the point of adopting almost a diametrically opposed position, and its annihilation at the next election has become something of a national duty.

  29. cohenite

    Most industry funds have invested heavily in renewables; in fact it could be argued that source of funding is the only thing keeping the useless renewable scam breathing; when some sense bursts the bubble of AGW and therein the total waste of renewables a big brick wall is going to smash a lot of workers’ futures.

    The link between unions and super money doesn’t have to be as direct as the article suggests; just look for unionists who have renewable interests.

  30. NoFixedAddress

    @cohenite

    that is the saddest fact that union workers super money has been thrown at the green wall.

    and there is a direct case to be made between the government ‘policy’ supporting those union super investments.

  31. NoFixedAddress

    @Perturbed 11:07

    There is a dirty little secret wrapped up in the formation of the labor party…and notice how that word ‘labor’ is spelled….because that ‘aint’ the way Australians spell it.

    The fact is that the shearers were manipulated by viscous totalitarian scum from the very start.

    Bit like the same scum that made sure that Northern stock men and their families were rounded up and penned by the ‘do gooders’.

    The same vile scum that moved into Broken Hill.

    The same vile scum that turned up at Beaconsfield.

    And it is the same vile scum that are now destroying Australia as fast as they can.

  32. Scapula

    And who is this scum?

    I was told they dropped the ‘u’ because of the influence of an American born grandee of the party, so not much sinister there.

  33. SteveC

    NoFixedAddress, I’m not sure why you posted about Emily’s list on this topic, but here you go:
    https://www.emilyslist.org.au/membership-form
    Not really very secret, is it?

  34. SteveC

    NoFixedAddress, there’s a handy website called wikipedia that can answer a lot of your questions:
    http://en.wikipedia.org/wiki/Australian_Labor_Party

    changed the spelling to “Labor” in 1912

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