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One does not have to believe everything that Grollo says in the article below to see what is wrong with existing regulatory arrangements and the need for fundamental changes. This is not simply a case of “morally bankrupt” action by the CFMEU: it is a case of failure by government to provide a legal system which  protects businesses from disruptive activity.

First, CFMEU was able to breach “various workplace laws” without Fair Work Australia taking action to deal with it.

Second, Grollo had to go to the Victorian Supreme Court for help. This is similar to what was tried during the waterfront dispute (my recollection is that the Supreme Ct “lost” because of a judge on the Federal Ct who sympathised with unions). Although Grollo does not mention it, I think the CFMEU has not yet paid the quite large fine for contempt of court.

Third, as on other occasions, the Victorian police were ineffective except in allowing access to the site for workers prepared to risk CFMEU revenge.

Fourth, while Grollo did defy the CFMEU, the current “system” of regulation clearly exposes other smaller companies and contractors to forced compliance with union bullying.

Other aspects of the debate in the media on possible reforms of workplace relations include an attempt by Qantas to obtain government guarantees on its debt in return for reforms to its workplace relations (but that would only open the door to government assistance generally) and, separately from the Royal Cn, more moves by Victorian police on investigating slush funds separately (which may have implications for Shorten)

Des Moore

Grollo: why the CFMEU is morally bankrupt

Article by Daniel Grollo published in the Australian Financial Review, February 13, 2014

CFMEU members rallying outside the Grocon construction site in Melbourne in August 2012. Photo: Luis Enrique Ascui
CFMEU members rallying outside the Grocon construction site in Melbourne in August 2012. Photo: Luis Enrique Ascui

Twelve years ago, Grocon took a public stand against the sort of ugly, lawless behaviour we’ve been reading about these past weeks.

Our challenge back then to everyone in the building industry was simple enough: to do what the rest of the community is required to do and just obey the law, employer and union alike.

It may sound innocuous idea but given the culture that’s been allowed to fester in the Australian construction industry, it was seen by some as a declaration of war against a very powerful enemy.

What has unfolded for Grocon since is a story too complex and unsavoury to do justice to here – a relentless campaign of intimidation and fabricated “industrial” issues from the Victorian CFMEU to try to bring us to our knees. Or as the union’s secretary so brazenly put it, “We’ll just smash ’em.”

Our industry colleagues saw what happens when you confront this and, with the exception of a handful of our suppliers and subcontractors, most weighed the cost and felt unable to take the stand we did.

Thankfully, a royal commissioner will now put the construction industry under the microscope in a much broader inquiry into graft and corruption. No one must be immune from his scrutiny.

In the meantime, I would like to give you a taste of the behaviour at the heart of the CFMEU’s “business model” they have been so determined to maintain.

It is so bold and morally bankrupt, that it is hard to convince anyone who hasn’t witnessed it first-hand that it really goes on. And surely, from the union’s point of view, that is its strength and beauty.

It goes something like this. The CFMEU demands a construction company employ a union colleague it nominates, then insists the employer install that person as their employees’ designated shop steward or safety representative (in clear breach of various workplace laws).

If, as has become the normal practice, the employer caves in, the union has a foothold to take control of operations on the site and shut it down industrially if ever that power is challenged.

However, if a company refuses to employ the union’s nominee – as Grocon has – then prepare for a torrent of abuse, threats and false claims about safety to rain down until the union prevails. Only the strongest can survive that attack.

Fortunately, in the case I’m about to share, the facts have been clearly laid out by the Victorian Supreme Court in a damning contempt of court finding against the CFMEU. It is available online and well worth a read.

Of course I am talking about the extraordinary events of August 2012 when for days the CFMEU marshalled thousands of workers onto Melbourne’s streets, blockading Grocon’s Myer Emporium site and violently clashing with police.

Oldest trick in the book

As expected, the union claimed this was an industrial dispute over Grocon being “anti-union” and having “shocking” safety standards – the oldest trick in the union playbook.

The problems for the CFMEU this time though were many.

Not only had the federal safety watchdog just recognised Grocon as having the best safety systems across all industry, our employees didn’t support the union’s claims – even though many are CFMEU members. The violent and costly battle that played out in the streets was a giant CFMEU charade. So here’s what really happened.

The masses gathered on the streets had nothing to do with Grocon – the CFMEU had herded them together from other construction sites across the city.

There was no industrial dispute.

There were no genuine safety issues.

Grocon workers, many of them CFMEU members, took no part in the union’s blockades.

The very people working each day on the site did not support the union’s safety claims. Instead, in an extraordinary show of bravery, they stood up and spoke out.

They had no issue with Grocon and just wanted to be allowed to go to their jobs.

For their trouble, Grocon’s employees were abused, called “scabs”, were the subject of “scab hunter” union posters depicting them in the cross hairs of a shotgun, and physically blocked from entering their workplace. One employee on another site was hit by a car driven at him by a union official. Police on horseback tried to clear a path through the mob only to have their horses punched. This was violence against law-abiding workers and honest union members organised by their own union leadership.

Unbelievable as that seems, most of it happened in plain sight and on our TV screens. Protecting their “business model” was evidently more important than the rights and safety of honest workers.

An atmosphere of fear had been created. It coincided with sabotage of equipment on our sites, executives cars being damaged, and employees being followed home – all by persons unknown.

Of course, before the court findings and current front page coverage of union activities, you can imagine the difficulty in convincing anyone not directly involved what was really going on – not least when many senior figures from the broader labour movement were backing the union.

Eventually, in an unprecedented move, our employees wrote an open letter which was published in major daily newspapers. A copy remains on our website. In it, they asked their union to leave them alone and allow them to go to work safely and without intimidation. Its contents are as powerful and courageous today.

Now is an opportunity for others in our industry to show the same courage and speak out – as some of our subcontractors and suppliers have done.

The success of the royal commission depends on it. If they remain silent, nothing will change.

Daniel Grollo is chief executive of Grocon Group.

Police seize hundreds of AWU ‘slush fund’ documents

Article by Brad Norington published in The Australian, February 13, 2014

VICTORIAN police have seized hundreds of union documents locked in a Perth storage unit that could provide important evidence for their investigation into the involvement of Julia Gillard’s former boyfriend in an alleged fraud.

The Australian Workers Union confirmed yesterday that Victorian police had executed search warrants for archives kept in the storage unit, and removed 12 boxes that could assist an investigation into former union official Bruce Wilson and the AWU Workplace Reform Association “slush fund”.

The revelation that potentially key evidence is in police hands comes in the same week that Tony Abbott announced the terms of reference for a wide-ranging royal commission into union corruption, including financial deals and bribes going back decades. It confirms how seriously Victorian police — who also travelled to Perth to interview former union boss Tim Daly about the contents of the boxes — are treating the Wilson case. The Wilson investigation is likely to continue as a parallel police operation separate from the royal commission.

Ms Gillard was a partner with Melbourne-based law firm Slater & Gordon in the early 1990s when she provided legal advice to hep set up the association for Mr Wilson, then her boyfriend. The former Labor prime minister later described the association as a “slush fund” for the re-election of union officials.

She has repeatedly denied wrongdoing, and said she knew nothing about the workings of the fund until serious allegations were raised in 1995 that Mr Wilson and a union sidekick, Ralph Blewitt, had siphoned off money that had been paid to the fund by construction company Theiss into secret West Australian bank accounts.

While insisting she had no involvement in the fund’s workings, Ms Gillard did not disclose her legal work on the fund to other partners of her firm. Nor did she inform her client, the AWU, that she was doing the work for Mr Wilson and Mr Blewitt.

Her relationship with fellow partners “fractured” and she left Slater & Gordon after her role in setting up the fund came to their attention.

Ms Gillard was involved in conveyancing work related to the purchase of a house in the Melbourne suburb of Fitzroy, bought at auction by Mr Wilson in 1993 — in part with money from the slush fund — in Mr Blewitt’s name. Ms Gillard attended the 1993 auction with Mr Wilson, who subsequently lived in the house.

A spokesman for the AWU confirmed to The Australian yesterday that the union’s national secretary, Paul Howes, had instructed officials to co-operate with Victorian police last year when warrants were served to search the archives.

Mr Daly, the AWU’s West Australian branch secretary for almost a decade until 2007, told The Australian he had placed boxes of archives related to the slush fund involving Mr Wilson and Mr Blewitt in a storage unit in the Perth suburb of Maylands in the hope that they would be fully investigated by police one day.

He said he had last seen the contents in 2002, recalling that two boxes in particular contained photocopies of cheques made out to cash and copies of documents related to the purchase of the Fitzroy property. “There were photocopies of cash cheques -- $50,000, $25,000 and $15,000 — a lot in cash cheques,” Mr Daly said. “Also receipts for the house in Fitzroy — lots of documents.”

AWU minutes are among other papers believed to have been seized by Victorian police.

Mr Daly, who runs a cafe in Perth’s Swan Valley, said he left the documents in the storage unit rented by the AWU when he departed the union in 2008. He has repeatedly called for an inquiry into the slush fund since then.

A spokesman for the AWU said the documents had remained untouched since Mr Daly had left, and the union was not sure what Victorian police had seized. A separate batch of 363 documents relating to the Wilson case have been the subject of legal action and remained sealed since they were seized by Victorian police under warrant from Slater & Gordon in June.

In December, Victoria’s most senior magistrate negated Mr Wilson’s right to claim privilege over the documents previously held by Slater & Gordon, after finding reasonable grounds to conclude the documents had been prepared “in furtherance of the commission of a fraud or an offence”.

Mr Wilson is fighting in the courts to keep the documents sealed.

Chief Magistrate Peter Lauritsen found that evidence provided by Mr Blewitt, formerly Mr Wilson’s union mate, had established that the construction company Theiss was “deceived” when it believed it was providing funds to the AWU Workplace Reform Association for a particular service.

“Wilson bought a home with some of Theiss’s payments. Only he knows what happened (to) the rest,” Mr Lauritsen said.

Mr Daly told The Australian he did not know what had happened to the documents he stored after he left the union and he had taken nothing with him. After facing a union election in 2007, he failed in a bid to win a state Labor seat.

He briefly worked as an industrial officer before Mr Howes removed him in 2008 following internal complaints the union was losing membership. “I’ve felt the sharp end of the stick ... I wouldn’t expect that Paul Howes would give me the time of day,” Mr Daly said.

Taxpayers shouldn’t pay for union’s mistakes

Article by Andrew Bolt published in the Herald Sun, February 12, 2014

No developed country subsidises car makers more (than Australia) and, as the Productivity Commission says, it’s just money down the drain, writes Andrew Bolt. Source: News Limited

WHY should taxpayers spend a dollar more to save the jobs of Toyota workers who refuse to save themselves? And why does Labor leader Bill Shorten falsely claim our handouts are stingy, when they’re the world’s biggest?

Consider this timeline for Toyota Australia, which announced this week it would stop making cars here in 2017.

September 2011: More than 3000 workers strike, costing $40 million. Toyota warns: “These cars can be made in another Toyota plant.”

October 2011: Toyota gives in and offers a 13 per cent pay rise over 42 months.

January 2012: Toyota axes 10 per cent of its workforce.

February 2012: Toyota says up to 30 per cent of workers took a sickie on the Australia Day weekend.

December 2013: Toyota warns workers to give up generous conditions to save the Melbourne factory, including double time-and-a-half pay for Sundays. Unions instead persuade a judge to stop a vote on the Toyota reforms.

True, bloody-minded unions didn’t alone kill Toyota Australia. The company also complains of the high dollar, bad labour laws, the small local market, competition and high costs.

But there is a moral point: why should taxpayers have given Toyota $492 million over four years to save the jobs of the workers killing it? And why did Shorten falsely suggest we gave too little?

“Australia subsidises its car manufacturing in the order of about $17 (per Australian per year),” Shorten complained, “ whereas the Germans do it at about somewhere between $65 and $90 and the Americans, $250.”

False. For instance, Shorten’s US figures — taken from a highly atypical year in the global financial crisis — include an one-off $80 billion rescue package of which most was a loan, since repaid.

The Productivity Commission gave the real figures last month. In fact, every Australian must donate $US17.75 a year in budgetary assistance to their car industry, Germans $14.43 and Americans only $5.41. We aren’t the least generous but the most.

Here is another comparison. We give $US1885 per car in subsidies and the US only $166. Every Australian car worker is subsidised by more than $10,000 a year. No industry in Australia is subsidised so much. No developed country subsidises car makers more and, as the Productivity Commission says, it’s just money down the drain.

But do car unions sound grateful? Does Shorten?

Qantas vows more industrial relations reform

Article by David Crowe and Steve Creedy published in The Australian, February 13, 2014

QANTAS has vowed to tackle workplace change as part of its plea for emergency government help amid a political fight over whether union demands are putting companies at risk.

As Joe Hockey attacks “militant” union leaders, Qantas is making industrial reform a key part of its case for a standby debt facility to cut its borrowing costs.

Qantas chief executive Alan Joyce last night pledged to “accelerate” his changes to the airline and reminded Coalition MPs of the way he confronted unions in 2011 by shutting down flights for three days.

Industrial relations are now central to the government debate on industry policy as the Treasurer insists that inefficient union deals helped Toyota decide this week to shut down local manufacturing in 2017.

Bill Shorten accused Mr Hockey of misleading voters after Toyota said it had “never blamed the union” for its decision, but the Treasurer stood by his warnings that unions needed to give ground to help employers cut costs.

“We all have to do the heavy lifting here, and the militancy of some of the union reps, not all of them but some of them, needs to be addressed by the unions themselves,” Mr Hockey said. “They have got to understand that we have got to compete with the rest of the world.

“We are not an isolated economy that is just in a glass jar. We have to compete with the rest of the world.”

The dispute over Toyota has raised the stakes in a political brawl about union power after Tony Abbott blamed wages and conditions for adding to costs at food producer SPC Ardmona, prompting that company to challenge his claims.

The Qantas proposal is now the Abbott government’s next major decision on industry policy but is being set out on different terms to SPC, Toyota and General Motors Holden as the airline points to its record of tackling unions and cutting costs.

The government’s negotiations with Qantas have narrowed significantly in recent weeks to focus on the standby debt facility as a short-term intervention while keeping ownership reform as a long-term option.

The company’s proposal is for the government to agree to guarantee the airline’s new borrowing plans — for instance, to raise cash to buy new planes — but that this would earn a fee for Canberra for the use of the commonwealth’s sovereign debt rating.

The outcome would lower the airline’s borrowing costs at a time when its debt rating has been cut to junk status and generate revenue for the federal government, but it would also add billions of dollars to the contingent liabilities on the federal budget.

The Australian was told that ministers had given Mr Joyce a good hearing on the proposal yesterday before he spoke to Coalition MPs at a gathering at the National Gallery of Australia last night.

One source said there was a “great deal of scepticism” about using a commonwealth debt guarantee to help the airline but that nobody wanted the company to fail.

The government is bracing for a grim financial result when Qantas issues its half-year update later this month, making it very difficult to turn down the company’s request for assistance given its importance to transport and tourism.

Demonstrating his intention to act on costs, Mr Joyce cited the 2011 flight shutdown in a speech last night to Coalition MPs set up by Liberal MP Dan Tehan, chairman of the Coalition’s “friends of tourism” group.

“It was necessary to make sure that Qantas was not locked in to industrial arrangements that would prevent us from modernising,” Mr Joyce said. “These difficult decisions have been part of the biggest transformation since Qantas was privatised.

“We’ve reduced unit costs by 20 per cent over four years, renewed our fleet with 130 new, fuel-efficient aircraft (and) introduced new technology on a large scale.”

Mr Joyce made it clear last night he was ready to act just as aggressively in the future to keep costs down, answering Mr Abbott’s call last year for the company to put its “house in order” before seeking government help.

“Now Qantas is moving into a new, accelerated phase of transformation — targeting $2 billion in cost reductions over three years,” he told the gathering. “Much of Qantas’s cost base is a legacy of 48 years of government ownership, from 1947 until 1995.

“Over the next two years we will drive it down so that we close the gap between Qantas and its major competitors. I should point out ... that Jetstar already has the lowest cost base in the Australian market. There is no doubt there will be more hard decisions for Qantas over the months to come. We will look at all options and consider all steps to strengthen our business.”

Qantas believes Mr Hockey sees the need to help the company in some way, given his remarks last week that the airline was a different case to others because it was held back by government-ownership regulations.

Mr Joyce said he was “especially pleased” Mr Hockey drew a distinction between Qantas and companies such as Holden and SPC. He was expected to raise with senior ministers an Etihad bid to raise its stake in Virgin Australia to 22.9 per cent.

Etihad chief executive James Hogan confirmed this week that the airline had applied to the Foreign Investment Review Board to buy an extra 3 per cent stake under the creep provisions of corporations law.

Qantas urged the government to review the way the FIRB has been treating foreign airline ownership of Virgin after the airline’s controversial $350m capital raising last year.

It argued that allowing state-owned Etihad and government-backed Singapore Airlines and Air New Zealand to prop up Virgin had created an uneven playing field in Australian aviation. Qantas is particularly wary of Etihad, which has been on a global airline equity buying spree.

Etihad is not listed, does not make its complete accounts publicly available and has prompted even Qantas partner Emirates to observe it does not have the Abu Dhabi airline’s “bottomless pit of cash”.

Confusion should give alarmists pause for thought

Article by Andrew Bolt published in the Herald Sun, February 12, 2014

YOU would think scientists of the NSW Climate Change Research Centre had done enough damage to their warmist crusade.

A month ago, its Professor Chris Turney got his ship of researchers stuck in Antarctic sea ice he had claimed was melting away.

“Sea ice is disappearing due to climate change, but here ice is building up,” Turney’s expedition wailed.

In fact Turney’s team — planning to examine parts of the Antarctic “highly susceptible to melting and collapse from ocean warming” — apparently hadn’t realised sea ice there had grown over three decades to record levels.

How we laughed.

Turney’s climate centre, at the University of NSW, sponsored this disaster, which ended with two icebreakers rescuing the mortified professor and his warming crusaders.

It’s farce like that which helps explain why the CSIRO reported last week only 47 per cent of Australians buy its spin that the climate is changing and we’re to blame.

Australians now rate global warming of “low importance”, the CSIRO sighed, and warmists faced “the challenge of finding the right language” to gee them up. But up bobs another Climate Change Research Centre scientist to show the warmists’ problem isn’t the “right language” but the false hype.

Two years ago, Professor Matthew England appeared on the ABC’s Q&A to attack Nick Minchin, the former Howard government industry minister and a sceptic. Minchin had raised a puzzling fact: the planet had not warmed further since 1998.

“Basically we’ve had a plateauing of temperature rise,” he said. CO2 emissions had soared, but “we haven’t had the commensurate rise in temperature that the IPCC predicted”.

England’s response?

“What Nick just said is actually not true. The IPCC projections from 1990 have borne out very accurately.”

England later even accused sceptics of “lying that the IPCC projections are overstatements”.

So imagine my surprise when England admitted last week there had been a “hiatus” and “plateau in global average temperatures” after all. Startled readers asked England to explain how he could call sceptics liars two years ago for mentioning a “plateau” he now agreed was real.

England was defiant: “In terms of my comments on Q&A, I stand by them. Back then, the observations had not departed from the model projection range. In the past year or two, 2012 average and also 2013, that’s no longer the case.”

What bull. In fact, five years ago the pause was already so obvious that Family First senator Steve Fielding confronted Penny Wong, Labor’s climate change minister.

“Global warming quite clearly over the last decade hasn’t been actually occurring,” Fielding said, and showed Wong the temperature charts. Wong and her advisers — chief scientist Penny Sackett and climate scientist Will Steffen — said he was wrong. Journalists mocked him. Except, of course, the warming pause is now so obvious even England now admits it.

True, the warmists always have excuses and the ABC reports each without noting how the latest contradicts the last. Last week it reported England’s new paper explaining the warming pause: “Stronger than normal trade winds in the central Pacific are the main cause of a 13-year halt in global surface temperature increases ...”

England now claims those stronger winds somehow drove the missing warming into the deep ocean.

But only eight years ago the ABC reported the opposite: “The vast looping system of air currents that fuels Pacific trade winds ... has weakened by 3.5 per cent over the past 140 years and the culprit is probably human-induced climate change.”


Will the ABC at least apologise now to sceptics who warned of the warming pause it now reports? How about a sorry from chief science presenter Robyn Williams, who once likened sceptics to people who “told you paedophilia is good for children”.

The Climate Change Research Centre might apologise, too. Another of its scientists, Professor Andy Pitman, once complained “climate scientists are losing the fight” because sceptics are “so well funded”, “don’t have day jobs” and “can put all of their efforts into misinforming”.

But warmists are being tripped up by stubborn facts, not corrupt sceptics. Where’s my warming, dude?

Emeritus professor Garth Paltridge, a former CSIRO chief research scientist, warns climate scientists hungry for power, fame and funding could have utterly trashed the reputation of science. They may have “been drawn into the trap of seriously overstating the climate problem ... to promote the cause”.

“It risks destroying, perhaps for centuries to come, the unique and hard-won reputation for honesty which is the basis of society’s respect for scientific endeavour.”

What a tragedy. Or is it? At least we won’t all die of heat.

MPs give boost to power to detain

Article by Lauren Wilson published in The Australian, February 13, 2014

Greens leader Christine Milne and Deputy Adam Bandt, who described the legal changes as “Kafka on steroids”. Source: News Limited

THE government’s powers to indefinitely detain refugees determined by the domestic spy agency to be national security threats have been boosted, after Labor teamed with the Coalition to pass a series of changes to the Migration Act through the lower house.

The legal changes, drafted in response to

High Court decisions that cast doubt on the ability of the government to detain refugees on national security and public interest grounds, have been attacked by Greens MP Adam Bandt as being like “Kafka on steroids”.

“This legislation is an affront to the basic principles of the rule of law,” Mr Bandt said.

“It is inconsistent with Australia’s international obligations, it does not afford procedural fairness and it further entrenches the practices of indefinitely detaining men, women and children, found to be refugees but deemed a security risk.”

There are believed to be about 50 asylum-seekers in immigration detention found to have valid refugee claims but who ASIO has deemed as national security threats.

Immigration Minister Scott Morrison said the legal changes were necessary after a number of court decisions had come to “significantly affect the operation of my department”.

He said a High Court judgment in 2012 had created a “problematic” situation in which every case involving a negative ASIO security assessment required authorities to carry out individual assessments on character grounds.

“This bill inserts a new specific criteria for a protection visa, that the applicant is not assessed by ASIO to be directly or indirectly a risk to security,” Mr Morrison told the parliament.

“To meet community expectations, the government must have the ability to act decisively and effectively wherever necessary to protect the Australia community.

“The government must also have the legislative basis to refuse a protection visa or to cancel a protection visa for those non-citizens who are a security risk.”

The legal changes also explicitly state that the Migration, Refugee Review and Administrative Appeals tribunals do not have the power to review negative ASIO security decisions.

The hardline measures have been criticised by the UN’s High Commissioner for Refugees and human rights group Amnesty International.

But only Mr Bandt and fellow crossbenchers Andrew Wilkie and Cathy McGowan voted against the measures.

The amendments will now go to the Senate.

Mr Bandt said it was “shameful” that Labor had made the decision to support the bill.

He said that the opposition had failed “the first test in this new year to stand up to the brutality of the Abbott government and its willingness to use cruelty to gain votes”.

Hard for Abbott to govern in paralysed vetocracy

Article by Greg Sheridan published in The Australian, February 13, 2014

IN the light of the Toyota closure, how does Australia compare with other wealthy nations? In recent years our politics has moved in the wrong direction. Can Tony Abbott change that?

Political scientist Francis Fukuyama, in the latest issue of The American Interest, argues that US political institutions have become so dysfunctional that the US is now a “vetocracy”. He writes: “The decision system has become too porous - too democratic - for its own good, giving too many actors the means to stifle adjustments in public policy.” Fukuyama’s analysis applies to us: “I mean by vetocracy the process whereby the American system of checks and balances makes collective decision-making based on electoral majorities extremely difficult.”

That is a precise description of Australia. In September, Abbott won a near landslide election victory, within a whisker of John Howard’s performance in 1996, and a bigger margin than Kevin Rudd, Bob Hawke or Gough Whitlam got. Two of the factors hurting Australian manufacturing are high energy prices and our grotesque industrial relations system, among the world’s most centralised, inflexible and counter-productive. Yet the Prime Minister cannot abolish the carbon tax - though this was his central election policy - because he does not control the Senate. And he cannot move much on industrial relations because the union movement, much of whose vast resources flow from coercive and artificial arrangements sanctioned by government, have established, in Fukuyama’s terms, a veto position.

I am intensely distrustful of broad or sweeping constitutional reform. The broader and more ambitious the language, the more unpredictable and harmful any such reform would be. But occasionally specific technical adjustments are needed. Abbott was elected in September but the new Senate won’t come into being until next July. Nine months, nearly one-third of the government’s first term, is wasted in legislative gridlock, even though the electorate gave a resounding verdict.

The best constitutional reform here would be to make a Senate term twice whatever the House of Reps term is, so that half the Senate is elected whenever the Reps is elected, no matter how short or long that term turns out to be. Newly elected senators would therefore take office at the same time as members of the House of Representatives. I know it’s been tried before, but such a small, sensible, technical change could succeed. It would make parliament better reflect the results of a general election. It would re-empower normal politics.

Fukuyama argues that it is partly the sense that all conventional politics is worthless that leads to “adversarial legalism” in the US: “There is too much law and too much democracy, in the form of legislative intervention, relative to American state capacity.”

This is particularly so in our truly crazy industrial relations system. The US has greater remaining strengths than Fukuyama acknowledges. When manufacturing seemed in full flight from the US, companies were able to negotiate more realistic wage levels and industrial practices and survive. For some industries it did mean lower wages but in Australia, as Toyota found, even having such a conversation with the workforce can be literally illegal. The result is that companies flee that might otherwise have stayed.

Similarly, because federalism is still an animating principle in the US, companies could flee highly regulated states to more realistic states. This is a straight decision about whether a state wants jobs. In Australia it was a tremendous mistake for the states to give up their industrial relations powers to Canberra.

Similarly, the ethos of valuing wealth generation means that the US has been effectively the only nation to make such a go of the new technology of fracking, which allows it to exploit new cheap reserves of gas and oil. Even Australia, with our wide open empty spaces, cannot replicate this.

Some other international comparisons illuminate our situation. A few months ago I sat opposite one of the most senior and respected economic administrators in India. He told me how India’s notoriously restrictive labour laws and general regulation are preventing its development and stifling poverty reduction.

Employment in the formal sector in India offers a far better life than working in the informal sector. But it’s almost impossible to fire anybody. So what happens? Two types of firms flourish: small family firms that rely on family members and largely ignore state regulation; and huge firms, often benefiting from some quasi-monopoly regulatory advantage, that can afford all the costs of regulation. What India misses out on is the medium-size firm that ought to be the engine of employment growth and innovation.

European social democracy provides an end point of this approach. This results in a society of insiders and outsiders. If you have a full-time job with the government, you’re in clover, with a safe job and guaranteed pension. Similar benefits accrue in huge companies, the safest of which are natural monopolies or in some ways protected by government. But a vast and increasing number of people never get to be insiders. Competitive companies move to short-term contracts, casualisation or just flee overseas. This is reflected in staggering youth unemployment rates throughout Europe. The insiders passionately resist change, their numbers vastly swelled by people living on welfare payments. All this leads people to have contempt for tax and industrial relations laws that they dodge wherever possible.

In Australia, you can see this dynamic too. Can all those cafes that do open at weekends really be paying award wages? To walk through much of central Sydney on a public holiday now, except for a few tourist areas, is to see a dead city, as the insanity of weekend penalty rates keeps shops and restaurants closed and people unemployed.

Similarly, we are a nation of dedicated tax avoiders. This is all a consequence of normal politics being discredited. Fukuyama points to the consequent increasing role of the judiciary in arbitrating disputes that should be settled by politics. The relentless interference by the courts in government actions on people-smuggling is the classic example here. These may seem disparate examples but they all add up to a growing inability of Australian political institutions to deal effectively with public policy.

I think Abbott understands all this. Whether he can change the underlying trend of recent years is the critical question.

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