View from The Hill

New union corruption scandal poses a political challenge for Bill Shorten

Bill Shorten is facing tough decisions as a union-connected opposition leader. AAP/Stefan Postles

Before the election, there was speculation in business circles that an Abbott government would launch a far-reaching royal commission into the unions.

But the Coalition’s public focus was an inquiry that would probe the old AWU slush fund that had come back to haunt Julia Gillard. This looked like a political exercise.

Now, with the Fairfax/ABC dramatic allegations of corruption in the construction industry – involving companies with criminal and bikie gang connections and officials from the Construction, Forestry, Mining and Energy Union - the government has a convincing trigger for a much wider investigation that would have extensive implications for the union movement and potentially the Labor party.

Prime Minister Tony Abbott pointed in this direction today. Asked whether there was now scope to broaden the promised slush fund inquiry, he said: “I obviously have read the papers today. I have been following this issue … over the last few weeks and months. I notice there have been various calls including from people inside the union movement, inside the Labor movement more generally, for a fuller inquiry and the government will be making appropriate announcements in due course.”

For the ALP a royal commission with sweeping terms of reference would present multiple political difficulties, in an area where it has already paid a high price, through the HSU Craig Thomson affair (now in court, with salacious evidence) and the attacks on Gillard over her connection through a one-time boyfriend with the AWU fund.

It will be hard for Labor to maintain its current argument that a wide inquiry is not justified, given the extent and seriousness of the construction industry allegations.

These include union officials being bribed in the quest for contracts and, tonight, claims by former long-time CFMEU official Brian Fitzpatrick that he received a death threat from a senior official in the union.

Fitzpatrick told 7.30: “A fellow official called me and threatened to kill me. Twice. I knew I had to report it in case there was something in it.” The official (whom Fitzpatrick named) had said “you’re dead … bang”, with colourful expletives. Fitzpatrick said he had identified the official’s number on his phone. The threat followed Fitzpatrick’s objections to the help given by union officials to Sydney crime figure George Alex to win work on construction sites.

The official has denied making a death threat, according to Dave Noonan, secretary of the CFMEU’s construction division.

The revelations and allegations are all bad news for opposition leader Bill Shorten (currently overseas), not least because they come just before the byelection for Kevin Rudd’s former seat of Griffith.

If it were Rudd leading Labor, the situation would be different. He didn’t care too much what the unions thought (which got him into trouble with them).

Shorten must and will take a hard rhetorical line against bad union behaviour but he’s also constrained.

He’s from the heart of the union movement (moreover from the AWU, which is to be inquired into).

To make matters more awkward, his workplace spokesman Brendan O'Connor is the brother of Michael O'Connor, national secretary of the CFMEU.

Brendan O'Connor argued today that allegations should be taken to the police, rather than having a judicial inquiry.

Labor and the union note the Cole royal commission into the building and construction industry, which Abbott set up when he was minister in the Howard government, cost $66 million and produced only one prosecution, for perjury (although it gave authorities material for many possible actions).

Noonan today wrote to the NSW and Victorian police commissioners calling for the investigation of any allegations.

He told The Conversation: “We are very confident the overwhelming majority of the officials, delegates and members are honest.” But if there was credible evidence against any individual, they would be dealt with and the union would co-operate with any police investigation, he said. One official has already had to resign in light of the current allegations.

Given the strength and nature of the claims, ordinary people are likely to think they warrant a general inquiry. In resisting this, Labor runs the risk of reinforcing the image that it is beholden to the union movement.

The allegations also damage its case for opposing legislation now before parliament to restore the Australian Building and Construction Commission. In response to union pressure Labor scrapped the ABCC, replacing it with a weaker new entity, Fair Work Building and Construction.

There is a Senate inquiry underway into the legislation for the proposed revival of the ABCC.

Any royal commission into union corruption is obviously going shine a light on employers too, a point Workplace Relations Minister Eric Abetz made today. This is a two-sided affair.

Indeed, one never knows where royal commissions lead and precisely who will end up feeling some of the pain. The Fraser government’s Costigan royal commission into the Painters and Dockers became a dramatic expose of “bottom of the harbour” tax evasion, which brought that government, and especially its treasurer John Howard, great political grief.

Listen to the latest episode of Politics with Michelle Grattan with Tanya Hosch, deputy campaign director for Recognise.