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Feb 10, 2014

The Coalition's poor record on political royal commissions

The government is poised to announce a royal commission into unions. But if there's a systemic problem in Australian commerce, it's not corrupt officials in our ever-shrinking trade unions -- look instead at ASIC and the AFP.


There are, formally, two types of royal commissions — investigative commissions and policy advice commissions. But in reality there are those you can’t avoid politically, and those you think will hurt your opponents.

A investigative royal commission, of the kind the government will announce today into trade unions, assumes some major systemic failure in a regulatory system, whether it’s police corruption, whether religious groups turned a blind eye to sex abuse, or the failure of financial regulation. In a well-ordered democracy with the rule of law, investigative royal commissions should be few and far between — normal regulatory systems should function with reasonable effectiveness. And in practice, because of their expense, length and unpredictability, governments are reluctant to instigate royal commissions, particularly if the systemic failure being investigated might be close to home. There’s never been a royal commission, for example, into how Australia joined the attack on Iraq on the basis of a falsehood, which cost taxpayers billions of dollars and served, as is now widely agreed, only to make Australians less safe.

But, naturally, none of that applies if you regard royal commissions as political tool with which to pursue your opponents, which is a Coalition speciality. It was the Howard government that went after the CFMEU via the construction industry royal commission, and insisted on a second royal commission into the Australian National Audit Office’s Centenary House lease in order to attack Labor.

As it turned out, both were damp squibs. The Cole Royal Commission into the Building and Construction Industry — an industry we all assume is rife with racketeering and organised crime — produced no prosecutions of unionists, building companies or property developers, and found no evidence of organised crime in the industry — a poor return for over $70 million of taxpayers’ money. Nonetheless, the Howard government insisted the outcome justified the extraordinary, Stasi-like powers of the Australian Building and Construction Commission. This time around, the Abbott government hasn’t bothered with having the royal commission first — it introduced the restoration of the ABCC, complete with its powers of secret interrogation and overriding the right to silence, the moment it was elected.

“As long as the royal commissions generate a stream of negative stories about your opponents, it’s not quite so bad if no matters get referred for prosecution …”

And nearly 20 years after the first royal commission found no problems with the propriety of how ANAO lease was negotiated, the Centenary House Royal Commission Mark II found no evidence of any impropriety by the ALP or its arms-length negotiators, Lend Lease — merely poor negotiation by bureaucrats charged with finding accommodations for the ANAO.

The Coalition already has one royal commission, which commenced in December, into the housing insulation program, already the subject of a detailed ANAO review and an independent review by Allan Hawke, both scathing and detailed in their analyses of what went wrong, as well as state coronial inquiries and prosecutions of employers.

Still, as long as the royal commissions generate a stream of negative stories about your opponents, it’s not quite so bad if no matters get referred for prosecution, or if those that do never make it to court. As the aftermath of the AWB royal commission showed, even clear evidence of wrongdoing can be hard to translate into criminal prosecutions or civil actions, especially when you have a toothless regulator like the Australian Securities and Investment Commission on the case and the AFP can’t be bothered resourcing a follow-up investigation.

Indeed, if there’s a systemic problem in Australian commerce, it lies less with unions, which now cover just 13% of private-sector workers, or crooked union officials, who can be dealt with via the criminal justice system — there didn’t seem to be any problems prosecuting former ALP president Michael Williamson, who faces sentencing soon for his HSU fraud. No, the problem lies more with Commonwealth regulatory and enforcement bodies — most especially ASIC, which currently faces a Senate inquiry into its singularly inept performance in relation to the Commonwealth Bank.

ASIC has lately further burnished its glittering reputation as a tough-as-nails cop-on-the-beat by waving through the share trading of David Jones directors after the Myer merger proposal. It was ASIC, combined with the Keystone Cops of the AFP, which declined to appeal former Gunns head John Gay’s sentence for insider trading — in which he was given a $50,000 fine instead of a jail sentence, while the AFP, astonishingly, decided to let Gay keep the proceeds of his crime, leaving him to enjoy the $800,000 he made from trading while he had price-sensitive information.

Still, it’s only shareholders’ wealth at stake in corporate regulation — wealth that, while worth $1.5 trillion in market capitalisation, is obviously a lower priority for the government than union membership fees and assets, which perhaps total a couple of hundred million dollars. If unions were indeed regulated just like businesses, as many in the Coalition (and the Institute of Public Affairs) want, crooked union officials would be over the moon at the prospect of getting to keep their bribes and avoid jail.

In the meantime, the government and its media supporters will be hoping it gets more value from the tens of millions of dollars it’ll spend on its new royal commission into unions than a few weeks’ worth of headlines. If the union movement is indeed as riddled with corruption as the government wants us to believe, there should be a steady stream of prosecutions in the wake of this inquiry.


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