31/08/2011 - 11:21

Public in the dark over union activities

31/08/2011 - 11:21

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The union movement has a problem with transparency and accountability.

IT would be easy for me to spend 1,000 words going on about Labor’s federal member for Dobell, Craig Thomson, and his loose controls with regard to the financial management of the union he ran. 

You’ve got to wonder where he might have ended up in the private sector? Can anyone recall the drama over an Electrolux manager who organised a somewhat risqué boat trip to Rottnest more than a decade ago? He’s not alone in discovering the consequences of such behaviour.

It is hard to believe any organisation that discovered its staff using credit cards to pay for things like prostitution would not sack whoever was involved.  

At this stage, though, much is unclear about this scandal and the point of this week’s column is not to be moralistic.

My view is that transparency fixes many of the problems associated with this kind of issue and it is time that the powerful union sector followed the public company sector in disclosing its financial affairs and other details of its management.

The Health Services Union, which Mr Thomson led as its national secretary, like all these immensely powerful monopoly bodies that have become entwined in our lives due to the Labor Party’s debt of gratitude for funding their elections, could do with a big dose of bright light shone upon its internal workings.

I have mentioned the need to do the same thing previously with superannuation funds and their administrators, many of which have laughable efforts to provide members with the sort of detail anyone accustomed to owning shares would have.

This is particularly true of industry funds, many of which are union linked, which appear to have few rules regarding reporting details of their own business operations.

I find that most surprising. Those who appear to demand the most accountability from business are less enamoured with the idea of operating that way themselves.

This situation is the same for unions.

They are constantly complaining about employers, most notably the big profits they enjoy. The only way unions know about business profitability is because it is spelled out in the stock market announcements regularly.

But what about unions? How much money do they make? How much do they pay their leaders? Where is the money spent? 

Some of this we know because the law forces big donors to political parties to disclose that activity. From this we are aware of how much the union movement funds Labor. Perhaps this isn’t unwanted exposure; unions may well be happy for all to see how important they are in this respect.

The amount unions spend on public advertising is also well known because that is a well-analysed commercial field.

But inside the union world is less clear. Unlike most listed companies, which have their annual reports on their websites, it is hard to find that kind of material from unions. Even cooperatives, which more resemble the membership-based mutual organisation unions are meant to represent, have higher levels of public disclosure; and they rarely can make or break a government. 

It would be a great practice in self-discipline for all unions to be required to lodge an annual report with the Australian Securities and Investments Commission, or another appropriate body, and be required to meet standards of disclosure they expect from others. I might add, industry associations should do the same.

Mr Thomson’s lack of control over the use of his union credit card, and telephone, is not the only incident of this nature making life difficult for politicians. 

The former Labor government in NSW was involved in some murky dealings during its caretaker role prior to the recent election it lost. In one case, a union-owned holiday property was the subject of scandal. You can bet the way that property was sold will not be the centrepiece of any public annual report.

Clearly these documents exist, given the nature of unions, but they are unlikely to be accessible to anyone outside the membership, unless the union wanted that to be the case.

I expect, in many cases, they would be little more informative than what you would get from your local tennis club. I would be happy to be corrected in this. Perhaps someone could send me some recent examples, especially of powerful unions in this state.

Unions are big businesses whose role is literally mandated by government in many sectors, especially since they funded the Labor Party to victory. They have considerable influence and rarely face competition from other unions on their turf.

Yet we know so little about them and their operations. 

Knowledge is power, and in this respect the odds at the moment are stacked in the unions’ favour. 

I suspect the member for Dobell’s carelessness with regard to what his union’s money was being spent on may unwittingly be helping to change this situation.

On the map

LAST month, it came as a major surprise that Squire Sanders & Dempsey, a US-based law firm that was virtually unknown here, had made a deal to poach almost the entire partnership representing Minter Ellison in Western Australia.

It is not the first time a major overseas law firm has chosen to establish a base in Perth while overlooking other, more mature Australian markets.

However, a chance to catch up with Squire Sanders CEO James Maiwurm recently helped me understand that this move was a little different from what we have seen with Allen & Overy and Clifford Chance, two magic circle law firms from the UK that recently set up shop here and in Sydney.

The point Mr Maiwurm made was that Perth was a priority market in the region because things were happening here. While that may sound opportunistic rather than strategic, Squire Sanders has an interesting pitch that ought to be news to the ears of anyone who likes to think the business world of the eastern states ignores the needs of WA.

The firm is aimed squarely at the business players rather than the service providers, such as banks and insurers. If you were a major player in banking or insurance, Perth is not the place to be. Those businesses generally have branch offices in outposts like WA; even Bankwest is now just a subsidiary of the Commonwealth. 

Perth is, instead, a place where businesses on the customer end of financial services dominate the scene; and in greater numbers than ever before. Squire Sanders says it has been attracted by the big businesses locating headquarters here and making decisions in this place.

Of course that might be just a feel-good marketing message, but the important point for me is that WA business is increasingly getting to a scale that puts it on the radar internationally.

This is an important change from just a decade ago when most business headquarters were packing up to head east.

• mark.pownall@wabn.com.au

 

STANDING BY BUSINESS. TRUSTED BY BUSINESS.

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