When the industrial umpire — universally considered timid, conservative and impotent — takes the unprecedented step of terminating a workplace agreement negotiated between one of the nation’s biggest employers and the largest union, alarm bells ring.

This week the full bench of the Fair Work Commission struck out an agreement between the Shop, Distributive and Allied Employees’ Association and Coles because it paid workers below the award safety net — the supposed legal minimum covering wages and conditions.

The decision threatens similar sweetheart deals covering hundreds of thousands of Australians at other major players in the retail and fast food industries, such as Woolworths and McDonald’s. These agreements have allowed some of the nation’s most profitable companies to pocket millions of dollars while their workers are, in the worst cases, paid less than the minimum wage.

For the management of 7-Eleven, who are still recovering from the media and public backlash over their systematic underpayment of workers, it must seem a cruel irony that their larger competitors have been able to legally do the same thing.

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While the public relations department at Coles is in overdrive this week, the consequences for the company are minor. They’ve already linked this wage deal to their commitment to lower prices for consumers. Meanwhile, shareholders are unlikely to be upset by an aggressive industrial relations policy designed to maximise profits, and therefore dividends.

The loser in this story — other than the low-paid workers who have been getting legally pick-pocketed — is Australia’s trade union movement. Despite the vast majority of unions being absolutely driven by their members’ best interest, mud being tossed up by the hypocrisy and self-interest of one union invariably sticks to them all.

The Shop, Distributive & Allied Employees’ Association, or “Shoppies” as they’re colloquially known, remains Australia’s largest trade union, with more than 200,000 predominantly young workers paying membership dues in any given fortnight. That size buys substantial influence within the Australian Council of Trade Unions, state peak bodies, and the Australian Labor Party. That influence is then used to fight for socially conservative causes, such as against same-sex marriage, as well as landing political allies in Parliament. It is a machine driven by political power and influence masquerading as a union.

In an era when corporations have been putting huge resources into trying to diminish the influence of unions, the SDA has bucked the trend. Major retailers such as Woolworths and Coles welcome union officials in. They are provided with access to new recruits, workplace agreements are negotiated, and union membership fees are directly processed by the payroll departments. In return, not only is there industrial peace, but the union pays millions in “administration fees” to the companies.

When the Abbott government announced a royal commission into trade union governance it was no coincidence that the SDA was not among the named unions. Exposing this cosy, and financially lucrative, arrangement was the last thing the Liberal Party’s corporate backers wanted.

It’s a disturbing business model. Effectively, the SDA pays employers for the right to represent their workers, using them as pawns in political power plays. Many are left financially worse off than if they had simply been covered by the award safety net.

But it is the broader labour movement that is paying the price. There is no coincidence that union membership, particularly in the private sector, is continuing to tumble when the first experience of unions most young workers have is the SDA.

Their practices also tarnish the broader union movement with the tag of hypocrisy. The defence of penalty rates — the extra money paid to compensate for nights, weekends and public holidays spent away from friends and family — is one of the central themes argued by the union movement. Yet the SDA has been willing to casually trade them away.

Politically, the ALP is also diminished. Voters compare the words of Bill Shorten, who asks who they trust to defend penalty rates, with the actions of the Labor-affiliated SDA.

While the ACTU has devoted huge resources to the challenge of curbing falling union membership, the leadership remains eerily silent on the cancer driving that loss. Fancy marketing, improved messaging, co-ordinated recruitment and a public relations war to win over the hearts and minds of workers is pointless if their first experience is a union that is willing to see their pay cut if it means political influence.

Terrifying as the thought of radical surgery may be, it is time the ACTU and Labor Party acted to cut out this cancer eating away at their credibility. For both organisations, their core values must be put ahead of financial benefit. The affiliation fees, donations and other contributions of the SDA can not be allowed to come ahead of the low-paid Australians who have had their wages and conditions systematically undermined.

Australia’s labour movement has a long, proud history of delivering improvements to the lives of working people. It’s time the SDA, and any other organisation that clearly doesn’t share that goal, is cut free.

*Tim Vollmer is a long-time union member, a former union official, and a rank-and-file member of the Australian Labor Party.

I subscribe to Crikey because I believe in a free, open and independent media where news and opinions can be published that I can both agree with and be challenged by.

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