Australia would never be as egalitarian as it is without trade unions

A defining feature of Australia is its claim that it is a country which has an egalitarian society; that is a claim that Australia has always made, throughout its history, with some substantial justification. It is a feature in Australian society that every responsible Australian should strive to ensure is preserved. It most strikingly differentiates Australia from other countries with a Western heritage; for instance, the UK or the USA can never make a claim, as Australia can, that a defining feature of their countries is that their societies are egalitarian.

If one seeks to find out honestly (that is, without any ideological predisposition) why egalitarianism has been a defining feature of Australian society, the answer inescapably is that egalitarianism in Australian society is the outcome of Australia having had a strong trade union movement almost from the inception of European settlement of Australia. The Australian trade union movement led in the formation of the Australian Labor Party, so that, through parliamentary representation and consequent control of parliament, legislation can be enacted to confer on working people entitlements that those working people would otherwise never have succeeded to secure. All entitlements currently enjoyed by working people (now taken for granted) were secured for working people through sustained effort by the trade union movement: the high minimum wage; the entitlement to annual leave, sick leave, and long service leave; leave-loading; overtime pay; penalty rates for work during weekends and public holidays; the five-day working week; the eight-hour working day; the award system for wage fixation; superannuation were all, for instance, secured for Australian working people by sustained effort by the trade union movement.

Of course, like every other organisation composed of individuals, from time to time, Australian trade unions have transgressed the duty they owe their members and the public because some officeholders of those trade unions have breached the standards of conduct expected of them. In the recent past, there have been highly-publicised instances of such breaches by officeholders of trade unions. The public has rightly taken umbrage. Many Australians therefore question why trade unions should exist and why they should have influence in of the Australian Labor Party, so as to confer on themselves so much power.

The truth is that anyone who possesses power is vulnerable to abuse that power, and trade unions are no exception. Therefore, there must be controls (external and internal) to ensure that trade unions do not abuse their power: that is a proper policy response. But trade unions should not be altogether divested of the power that they have historically possessed as, if there were to be such a divestment of power, trade unions in Australia will become ineffectual (as they have become in countries like the USA and the UK) with the consequence that Australian society will then rapidly become a society that cannot claim to be egalitarian.

A pure libertarian response of allowing free markets to operate without organised intervention on behalf of working people is a response espoused by most Australian businesses, and it is a response which has also alarmingly received wide support from some influential quarters in Australian politics. It is a response which is articulated thus: the untrammelled operation of free markets will maximise economic output, will therefore maximise employment of labour, will accordingly result in more Australians being in employment than there are now, and there will consequently be greater happiness in Australian society. Even if economic output is likely to be increased, and more Australians are therefore likely to be in employment, it would not follow.

For instance, the minimum wage in Australia is roughly double of that in the USA. The minimum wage in the United States is effectively below the living wage of that country. Many Americans who receive the minimum wage live a life of poverty, unless their minimum wage is supplemented by gratuitous payments, such as tips paid by customers. There has been some serious discussion by policy analysts in Australia that the minimum wage in Australia has been fixed too high, which is demonstrative of a preference by some that, for the untrammelled operation of free markets, the Australian minimum wage (which for them is a “market rigidity”) must be lowered. It is inconceivable how a lowering of the Australian minimum wage would, for the most part, result in greater happiness in Australian society.

It is completely wrong to conclude that the beneficiaries of Australian trade unions are only those who are members of those trade unions. Almost all entitlements currently enjoyed by Australian working people as a whole were secured for them due to the sustained efforts of the Australian trade union movement. The beneficiaries of the Australian trade unions are all Australian working people, not only those employed now but also those who will become employees in the future. If Australian working people are to secure for themselves a rightful share of Australia’s economic output, it is pivotal that the Australian trade union movement must not be divested of the power that it has historically possessed.

It is vital that the Australian trade union movement is made to properly discharge the public duty it owes, and therefore the external and internal controls over the governance of Australian trade unions must be strengthened, which must necessarily include greater transparency (that is, timely disclosure to the public) as to how trade unions conduct their affairs. One should most emphatically note that the focus of those reform initiatives should be not to curb the power of Australian trade unions, but to ensure that trade unions do not abuse their power. The Australian trade union movement must remain powerful (as it has in the past) if Australia is to endure as a country which can truthfully claim to be egalitarian.

About Maheswaran Sridaran

Maheswaran Sridaran

Dr Maheswaran Sridaran is a tax practitioner in Sydney. He is the author of “Are capital gains equitably taxed in Australia?”, published in 2012, his first book on Australian tax policy.

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