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The new ACTU leadership finds the Turnbull government more ideologically anti-union than John Howard’s. By Karen Middleton.

New ACTU secretary Sally McManus on the new IR battlegrounds

As the federal election campaign swung into gear in May last year, ALP strategists braced themselves for a Coalition advertising blitz, targeting Labor leader Bill Shorten and his union background.

The royal commission into trade unions had highlighted examples of what it said were suspect private agreements between employers and unions – cosy deals, the commission alleged, to advance both of their interests at the expense of the workers and without their knowledge.

While some alleged examples had faded from public debate, others were still prompting questions.

Shorten had been national secretary of the Australian Workers’ Union when it struck a deal with a mushroom producer that saw $24,000 paid to the union, allegedly to avoid union agitation while the company laid off staff and moved its workforce into casual employment, saving millions of dollars.

His successor as Victorian AWU secretary and close political ally Cesar Melhem was heading the union when another deal was struck with a cleaning company, Clean Event, allegedly to roll over an existing WorkChoices-era agreement beyond its expiry date and not fight for better terms, in return for $75,000 over three years. The payment was not disclosed to the workers.

The commission found the payments may have been “corrupt”.

It made no finding against Bill Shorten. Nevertheless, Labor was worried about the potential for electoral damage.

But the anticipated election campaign attack ads featuring the packers of Chiquita Mushrooms never came.

The Liberals did run some advertising, but a lack of pre-election groundwork connecting Shorten to the royal commission’s findings – when there was no specific finding against him – meant the message did not resonate strongly. Money was short and the Liberals had their own problems, needing to shore up their sagging primary vote in crucial marginal seats.

This week, however, the Coalition blast against Shorten and the unions – particularly the new national secretary of the Australian Council of Trade Unions, Sally McManus – came in earnest, backed by legislation.

Turnbull introduced a new government bill to prevent “corrupting benefits” – any payments or other incentives involving employers and unions designed to smooth the way for industrial agreements without the knowledge of the workers.

“What we are going to do is stop the corruption, stop the secret payments and let the members know what the union bosses are really up to,” he told parliament.

It was intended to embarrass Shorten. Turnbull also took aim at McManus, who sparked controversy last week in her first television interview as secretary when she defended breaking laws if they were unfair.

“She has said that you only have to obey the law if you like it,” Turnbull told parliament. “That is the law for unions. Imagine where we would be if that were the law for everyone. People would only pay tax if they liked it; they would only obey the speed limit if they liked.”

He went on to rail against Shorten and Labor for rejecting the Fair Work Commission’s recent decision to cut back weekend penalty rates for low-paid workers – and proposing their own legislative amendment to overturn it – suggesting Labor, too, did not respect the rule of law.

Shadow employment minister Brendan O’Connor says the “better off overall” test that is applied to all employer–union agreements should prevent such deals anyway.

“If you think that we need to look at the way the test applies so it applies in every instance to every individual of a thousand employees, where there might be 10 affected that may not benefit overall, then I am happy to examine that,” O’Connor said. “I just don’t think the government is really interested in doing that.”

Sally McManus is quick to dismiss both allegations of widespread union corruption and Turnbull’s new legislation.

“We’ll support a law like that the day it applies to every single politician, every single person in a boardroom,” McManus told The Saturday Paper.

She says she supports transparency but that it should apply universally. She cites bonuses paid to executives who make changes that hurt the workforce. “There are plenty of circumstances in the corporate world where we think that should apply as well.”

On ABC TV’s 7.30, McManus had responded to questions about the rule of law and the behaviour of the Construction, Forestry, Mining and Energy Union by suggesting some laws had to be broken.

Previously with the Australian Services Union, 45-year-old McManus is an experienced campaigner who was instrumental in the “Destroy the Joint” protests against broadcaster Alan Jones’s treatment of then prime minister Julia Gillard.

But while in a broader context her comments last week could be said to have simply stated the obvious – that defying the law is often how change has, historically, been achieved – they were widely seen as a political misstep. Bill Shorten immediately distanced himself from them.

“If you don’t like a law, if you think a law is unjust, use the democratic process to get it changed,” he said last week. “… We believe in changing bad laws, not breaking them.”

Asked if, on reflection, she would have changed her response, McManus said: “I think I would have qualified it more if I’d had the time but, otherwise, I wouldn’t have [changed it].”

Some in the labour movement murmur that perhaps it wasn’t the wisest decision to subject herself to such a long and notoriously tough interview on her first day. But the new ACTU secretary, the first woman elected to the position, proudly of working-class parentage and from the movement’s left, is not resiling from her decisions.

“I don’t apologise for who I am,” she says. “…I’m not afraid of what other people in power do. You can’t stand up to corporate power and expect to have an easy ride. I’m going to stand up for the interests of working people.”

She declines to endorse any criticisms of the CFMEU. She also declines to answer questions about the royal commission’s findings verbally, requesting them in writing so she can be briefed first.

But she mounts a stronger defence of Shorten than he did of her. “In the cases of Clean Event and Chiquita Mushrooms, it is important to note that Bill Shorten, the target of the Turnbull government’s attacks, was cleared of all wrongdoing,” McManus responded soon after written questions were sent. “Those who were involved in receiving payments faced the full consequences of their actions, as they should. There is no place for any form of corruption or bribery in the union movement.”

Cesar Melhem, who denies any wrongdoing, is facing investigation by the Fair Work Commission.

McManus attributes the government’s new legislative move against the unions to Turnbull being insecure about his own leadership.

“It’s like they’re obsessed,” McManus says. “It’s like they cannot let go of attacking unions. It’s the one thing Malcolm Turnbull can unite his party around.”

In response to criticisms of her as a radical left-winger, McManus acknowledges she was – and is – a proud member of the democratic socialist Search Foundation that supports “radical and progressive movements”. She likens her politics to those of United States Democratic presidential contender Bernie Sanders.

The other member of the ACTU’s now all-female leadership team, president Ged Kearney, describes McManus as “refreshingly straightforward and honest”. It’s the answer she has given whenever she has been asked to respond to McManus’s TV appearance.

Kearney also believes the Turnbull government is at least as determined as its conservative predecessors to weaken union power – something she says she did not expect from Malcolm Turnbull.

“We’ve never really been under such prolonged, concerted attack,” Kearney told The Saturday Paper. Both she and McManus point to what they say is an increasing tendency by big employers to seek to have enterprise agreements terminated so they can renegotiate them and push workers onto lower pay rates if they refuse.

“I think corporations are emboldened under a Liberal government that is clearly anti-union, even more than under John Howard,” Kearney says.

McManus points to the case of dairy producer Parmalat, which locked workers out of its plant in Echuca in country Victoria during enterprise negotiations. After a two-month standoff, Parmalat workers won assurance this week of an annual pay rise for the next three years.

McManus nominates job security and underpayment of workers – employers simply ignoring the law – along with what she says are unreasonable restrictions on unions as her top priorities for reform.

Kearney emphasises the restrictive right-to-strike laws – which childcare workers defied last week to underline their pay claim – and what she says is employer exploitation of union right-of-entry restrictions. She tells the story of being allowed in to see night-shift workers at a mine in the Pilbara, then being told there was no transport to take her the four kilometres to their dining room – until she started out on foot, in the dark.

While McManus was in Echuca this week to witness the Parmalat resolution, Kearney undertook a lobbying trip to Canberra, seeking to persuade crossbench MPs to back Shorten’s bid to restore penalty rates.

The union movement believes the government’s “corrupting benefits” legislation is designed to help it avoid talking about the penalty rates decision, which Turnbull supports but has declined to actively defend.

Research by The Australia Institute think tank suggests voters are concerned about the decision. Under the legislation, “payments with the intent to corrupt” will attract a penalty of 10 years’ jail and $900,000 for an individual and $4.5 million for a company, with other “illegitimate” payments attracting a lesser punishment still involving both jail and a fine. It targets employers and unions alike.

“We are committed to ending the dodgy arrangements which ensure millions of dollars in financial benefits flow into union coffers from insurance, training and superannuation schemes, with employees none the wiser,” Turnbull said. He said the bill would allow “certain legitimate categories of payments” such as those at fair market value for genuine services that are actually provided by a union, or genuine payment of membership fees.

Behind closed doors, some Liberals and Nationals continue to question Turnbull’s priorities, asking why he is expending so much political capital on issues that don’t rate highly among public concerns, such as amending section 18C of the Racial Discrimination Act, and failing to address issues more people are concerned about, such as the proposed penalty rates cut.

Along with using its new legislation to attack Shorten’s past union role, the government is trying to cut off a potential source of income for unions, income that can be used to fund damaging advertising campaigns against government policy.

Union-backed campaigns on Medicare were instrumental in boosting Labor’s stocks during last year’s election campaign, after the government cited two pieces of blocked industrial legislation – the move to reinstate the construction industry watchdog the Australian Building and Construction Commission and a separate move to impose tougher regulations on registered organisations including unions – as the reason for dissolving both houses of parliament.

The two measures barely rated a mention during the campaign itself and were passed with the help of the senate crossbench afterwards without needing the joint sitting that the double-dissolution allowed.

The government’s own campaign against the CFMEU has suffered a setback in the Federal Court this week, when it threw out the ABCC’s legal action against the union because it had relied on the evidence of a confessed blackmailer, ex-CFMEU organiser and former ALP sub-branch president Halafihi Kivalu.

Kivalu’s guilty plea and subsequent conviction for blackmailing a Canberra contractor to pay him $70,000 is the only successful prosecution to emerge from the royal commission’s findings.

Sally McManus is a strong defender of the CFMEU.

“I feel as if we’re in a situation where the government’s had a deliberate strategy to try to damage one union,” she says. “…If my brothers were builders, I would want them working on a CFMEU site because they put health and safety first.”

She dismisses the royal commission into trade unions as “a political exercise”, which she says spent millions of dollars to demonise the CFMEU, the union movement and Bill Shorten.

She says phones “were tapped across the country” in order to unearth what she dismisses as “a couple of people who were found to be corrupt”.

“Imagine if you applied those same resources to the boardrooms of Australia or the big banks. Imagine that.”

This article was first published in the print edition of The Saturday Paper on Mar 25, 2017 as "Lines drawn in new IR fight". Subscribe here.

Karen Middleton
is The Saturday Paper’s chief political correspondent.