Menu lock

Federal

Aug 30, 2012

Why Shorten must win the Grocon battle

The CFMEU tactics are a bald play for power ahead of a potential Abbott government. If they win, it's back to the "rust belt" 1980s. Rob Burgess of Business Spectator looks at the state of play.

The muscle flexing going on at Grocon building sites is a reminder of how good we had it during what Tony Abbott calls the “golden age” of the Howard government.

In those days we could afford as many of these title fights as we wanted, and the economy would grow nonetheless. The mother of them all, the Patrick’s waterfront dispute, even made pretty decent TV.

But we can’t afford it now. Look at the competing forces in the economy, and it quickly becomes clear that a major escalation in building costs — Grocon says it’s losing $370,000 a day just at the site in Melbourne’s Lonsdale Street — is a golden-age-luxury we can’t afford.

Australian Mines and Metals Association director Minna Knight yesterday warned that this kind of dispute would deter inward investment, including $260 billion in resources projects.

That claim is a bit overblown, but when Knight’s comments are put alongside falling commodity prices, it’s easy to see how much damage the CFMEU can inflict on Australian growth. Overseas investors, including our biggest miners, must revise their forecasts not only for iron ore prices nearly 40% off their peak, but for the risk of rolling industrial action.

The abolition of the Australian Building and Construction Commission has clearly emboldened the CFMEU, whatever its leaders say, and industrial relations minister Bill Shorten has the urgent problem of breaking up this dispute to keep some kind of fig leaf over Labor’s embarrassment.

But his is not the biggest problem. While Tony Abbott is happy to say the ABCC “cop” must be put back on the beat, there is no ducking the fact that industrial action under an Abbott government would return to something like the “golden age” disputes John Howard and Peter Reith fought.

Why? Because at heart these battles are not about workers’ rights — other than workers’ right to be part of a potent power bloc in Australian politics. While the Gillard government hangs on, the bald power plays of the CFMEU leadership will at least be heard in Labor boardrooms. Under Tony Abbott they will not.

The risk is that in just over a year’s time, a perfect storm will blight the economy — tumbling commodity prices, ravaged public finances, increased labour costs putting an extra brake on infrastructure projects, and industrial anarchy. If that combination arrives, the Australian economy would look more like the early-1990s than the full employment growth story of today.

The big difference is that in the early 1990s, the “golden age” lay ahead of us. For some time I have argued that only the opposite looms for us now: a top heavy demographic profile with burgeoning health-care bills, the golden goose of the resources sector rapidly being replaced by overseas geese or just being hit by softening demand (hence the dropping prices), and in particular, a public debt position that we simply will not be able to address in years ahead.

The Keating public debt that John Howard heroically paid off during mining-boom mark-one, was smaller than the 10% of GDP our federal government now owes. When the state debts are factored in, we’re well above 20% of GDP, and that’s before our private debt bubble in the housing market is considered.

Whether or not Knight’s predictions are correct for the resources sector, an incoming Abbott government will be slashing public spending, and public service jobs, to try to balance the budget just as unemployment is naturally rising anyway. The vicious circle of slowing business activity, slowing tax revenues, and rising unemployment will do its work, and we won’t be back in the golden age of the late-noughties — more the “rust belt” blight that characterised the Victorian economy in the late 1980s.

The CFMEU leadership won’t be worrying it’s pretty tattoo’d head over that kind of scenario — union leaders, if not the workers, prosper during times of mass unemployment.

The onus is now on Bill Shorten to prove that Labor can smooth over the Grocon dispute without the ABCC. If he does, Abbott will take the blame for the coming industrial shocks. If he doesn’t … what does it matter? The unions will get the power they crave, and their members, along with the rest of the country, will suffer the consequences.

*This article was first published at Business Spectator

We recommend

From around the web

Powered by Taboola

42 comments

Leave a comment

42 thoughts on “Why Shorten must win the Grocon battle

  1. fredex

    When did Rupert buy Crikey?

  2. Suzanne Blake

    If the workers at the site don’t want to be part of a Union, why is that an issue?

    They will have seen what happens at the HSU, AWU, ETS and said, we don’t want to be part of that.

    Its a free choice.

    Shorten is concerned as Union members makes up 15% of the workforce and it shrinking fast. Their power base is eroding and the troughs are being removed.

  3. Frank Campbell

    Yes, Fredex, Crikey is looking increasingly schizophrenic since its Kohler associates were bought by Murdoch.

    But the ideological fault lines were there all along.

    Crikey is an incoherent gaggle of ex-bureaucrats, corporates, castrated Marxists and climate zealots. Bewildered Old Labour stalwarts flounder in the wake.

    Crikey has never had the slightest comprehension of corporatism.

    Peter Martin’s piece reflects Murdoch corporatism, in which unions are tolerated only as a device to ensure a domesticated labour force. Martin never says what the Grocon dispute is about. Martin never mentions the fact that Australia (especially Victoria) was in the early 90s in the grip of a severe recession. All Martin does is to raise the spectre of tattooed union thugs smashing the economy. In fact the occasional eruptions of ritual violence in the building industry tell us more about the corrupt building industry than unionism or the economy as a whole. Martin knows that unionism is a shadow of its former self, but cynically inflates the rubber bogeyman.

    The Grocon dispute is neither a cause nor a consequence of Australia’s past economic malaise, and is irrelevant to the next crisis of local capitalism.

    Look at Martin’s nightmare: “a perfect storm will blight the economy — tumbling commodity prices, ravaged public finances, increased labour costs putting an extra brake on infrastructure projects, and industrial anarchy”

    Nothing remotely original or new there. Except for the odd one out. Yup, “industrial anarchy”.
    Who needs Rottweiler Reith to scare the horses when you’ve got Peter Martin?

  4. Ashar

    Can anyone tell me of a wealthy Australian that became wealthy completely independent of anyone else? They didn’t need workers to make their pretty shiny bundle of wealth and power, they didn’t need political help, they didn’t need inheritance, etc? I gather that is zero?

    Now tell me how many of those wealthy Australians shared equitably the wealth they received with the people that actually made it for them? It’s the same as movie companies complaining about piracy – when you pay all the townsfolk for the shoot locations, pay all the people who inspired the idea, and actually share the wealth with those who actually made it for you, then I’ll start to listen to you a bit more seriously.

    The building & construction corporations in Australia say they care about their workers, but if it weren’t for the CFMEU’s “hard-line”, more Australians would leave work at the end of the day in a body-bag. I don’t call that something I should suffer as the author of this article does, I call that something I want to support. Go the CFMEU!

  5. fractious

    @ Frank, it’s Rob Burgess’ name on this, but otherwise I pretty much agree. There is absolutely no substance in this piece and while you kind of expect flaky, fatuous free-market dreck like this at Limited News or Failfax, it puzzles me why Crikey gives it house room. Slow day perhaps and thus a need for a bit of padding? Fine but why polish yet another “we’re rooned and we’re all going to die” turd and park it on the mantelpiece?

  6. Frank Campbell

    stupid of me…Burgess it is. Apologies to P. Martin.

  7. fractious

    When the state debts are factored in, we’re well above 20% of GDP

    ZOMG!! 23% according to IMF figures. We’re all on the way to hell in a handbasket. Meanwhile, the Chinese economy at 26% is obviously in dire straits, the US at 102% is in Purgatory and Japan at 230% is even now being swallowed up by the fires of Eternal Damnation.

    Disclosure: I am not An Economist, but then Rob Burgess isn’t a journalist.

  8. gautillard dellron

    “The Keating public debt that John Howard paid off by selling telstra leading to a private monopoly leading to some of the highest cost per performance communications network anywhere”

    fixed.

  9. Suzanne Blake

    @ gautillard dellron

    There are much cheaper options now, Dodo, iinet, and lots of mobile cheaper options as well.

  10. Mr Tank

    Crikey!

    Ashar, movie companies paying ” all the people who inspired the idea…” ha ha.
    otherwise mate loved it.
    Also loved Burgesses, “The CFMEU leadership won’t be worrying it’s pretty tattoo’d head over that kind of scenario — union leaders, if not the workers, prosper during times of mass unemployment.”
    Tattoo’d head’s no less!
    The same thing could be said about the Job Network Providers but that story is a pox on both sides of the house. Crikey!
    So our man says it’s Bill Shortens job to sort this street fight out?
    Yeah Bill get down there on the Picket Line and front some A**Hole’s riding horse’s down Main St. And while you’re at it ban those Ugly yellow and orange Shirts, Safety Gear? Nah they’re Gang Patches! You should be able to walk both sides of the street then.

Leave a comment