The trade union royal commission (Turc) has restarted hearings this week. It is clear it has union links with Labor in its sights.
Turc counsel assisting, Jeremy Stoljar SC, began a preliminary hearing on 23 April by noting that unions affiliated to the ALP have “wide-ranging powers” in the party – including over preselection of candidates and promotion of policies. This power was in effect “concentrated in the hands of the secretary”.
While Stoljar said it was “no part of this commission’s terms of reference to look into the structure or policies of the ALP,” he promised to investigate union leaders’ political power and whether they exercised it in a way that conflicted with members’ interests.
This raises a question: is it possible for Turc to make a judgement about union members’ interests, without also judging the probity and effectiveness of the ALP?
Stoljar said examples of conflicts already revealed by 2014 hearings included unionists using slush funds as “platforms to pursue their political interests” and exaggeration of union membership numbers to exert greater power in the ALP.
In his opening address, Stoljar acknowledged that the ALP was established to give working people political, and not just industrial, power. It’s fair to say, given that inextricable link, even if the royal commission says it is not aiming for the ALP the party will nonetheless be dragged into the spotlight.
The first matter heard by Turc this week confirmed as much. The commission investigated a $500,000 loan given in December 2010 from the Electrical Trades Union (ETU) NSW to NSW Labor. At that time, At that time, Bernie Riordan was ETU NSW secretary and had until November 2010 also been NSW Labor president, before being appointed in 2012 by then-workplace relations minister Bill Shorten to the federal industrial umpire, the Fair Work Commission.
Stoljar foreshadowed the evidence Riordan will give next week: that the ETU NSW executive approved the loan before it was paid in December 2010. That version of the story has already been backed up by several ETU executive members – including the current secretary, Steve Butler.
But current ETU NSW assistant secretary Paul Sinclair, who took the minutes at the the 13 and 20 December 2010 meetings in question, gave evidence the loan was not discussed, and at least one other state councillor said he thought it was “floated” at the meeting but not approved.
ETU witnesses have said the NSW state council also approved the loan in February 2011. But it had already been executed on 23 December, 2010. After several restructures of the payment schedule, the ALP repaid the loan in full by July 2013, with a total of just over $103,000 interest paid, or 8.5% a year.
The timing is key: one state councillor told Turc the loan was executed in December 2010 to beat the introduction of NSW electoral laws which took effect in 2011, banning union and corporate donations to political parties. The laws were later ruled invalid by the high court.
In September 2012, then ALP NSW general secretary Sam Dastyari wrote to Butler explaining the loan was sought “to assist us in overcoming a cash flow shortfall for the 2011 NSW election, as we moved towards a new legislative environment”. He thanked the ETU for the loan, saying it had “helped Labor provide a spirited defence of our principles and values in a tough electoral environment”.
The ALP also borrowed $1m from the Transport Workers Union and $1.5m from Unions NSW, Stoljar said in his opening address.
ETU witnesses have portrayed this as nothing out of the ordinary: a union affiliated with the ALP helped the party out with a loan; the loan benefited members because it was repaid with interest. One ETU witness even suggested it was like loaning money to a family member.
Stoljar has said the matter raises a number of issues, including whether the loan was properly approved – certainly a proper subject for a royal commission into union corruption.
But to judge whether the loan was in ETU members’ best interests is taking the royal commission into murky philosophical and political territory: whether union members are well served by ALP affiliation and favours to the party, like a quickie loan.
The ETU whistleblower who drew the whole matter to the ETU and Turc’s attention said he did so, in part, because he had “always had a concern [the union] didn’t get much bang for our buck”.
Whether it did or not, the royal commission has to make sure it aims squarely at union corruption, lest politics, and the commission’s own credibility with it, get caught in the crossfire.
- A change was made to this article to clarify roles held by Bernie Riordan.
