Forced reform may backfire on Liberals
This op-ed was originally posted in today's Sydney Morning Herald and coincides with the ALP national conference.
Fifty per cent of the delegates at this year's ALP national conference will be representatives of affiliated unions. It used to be higher. But this arrangement, which has ensured the Labor Party's financial security, could soon end.
Unfortunately, the reason for this change is unlikely to be the result of any political epiphany by those who control the Labor Party. Rather, it will be a piece of legislation recently introduced into the NSW Parliament by the Premier, Barry O'Farrell.
The bill forbids unions from paying affiliation fees to the ALP and seeks to ban unions from donating to a political party. If similar laws are adopted by incoming Liberal governments around the country then it will only be a matter of time before unions are effectively forced to disaffiliate.
The bill is dressed up to look like an anti-corruption measure but is aimed at severing financial links between the union movement and the ALP. While it bans donations from corporations as well as unions, it specifically prevents affiliation fees being paid to any party where the affiliated organisation (read union) has a role in the decision-making of the party (read ALP).
Currently, the strongest argument for giving affiliated unions 50 per cent of the votes at the ALP's state and national conferences is the millions of dollars they donate for administrative and political purposes. If the ALP is no longer able to raise from unions the money it needs to survive, it will be forced to cast its net wider to encourage far greater rank and file membership and individual donations. This is because donations by individuals who reside in NSW will still be allowed.
So, to make up the shortfall from the ban on union financial support, the party will be forced to encourage individuals to join and donate to it. This will invariably mean giving individuals a far greater say in the decision-making forums of the ALP. Otherwise, why would anyone be prepared to make the donations the unions make?
If all this seems a little far-fetched, we need only look to the experience in Canada, where a conservative government introduced similar laws about a decade ago. In response to these laws the then-marginal New Democratic Party made huge changes to its structures and processes.
The NDP, which is the Canadian equivalent of the ALP, reduced the voting rights of affiliated unions from 50 per cent to 25 per cent and introduced the direct election of its parliamentary leader. At the time it had just nine members of Parliament. These simple changes had a dramatic effect on the NDP. The empowerment of the rank and file, the accompanying reduction in union influence and the election of a popular leader led to renewed interest in the party.
In the intervening years it has grown to have 103 MPs and a party membership which is now approaching 100,000. The NDP is financially secure as a result of its big membership and donation drives. For the first time in its history it has supplanted the once mighty Liberal Party as the centre-left party of choice and this year became the official opposition.
The O'Farrell amendments have yet to be approved by the upper house and Labor is banking on aspects of the proposed law being unconstitutional. This is because the High Court has previously ruled that laws which limit political donations might be regarded as impinging on the implied freedom of political communication. However, this is by no means certain - especially since such an implied right is unlikely to be found in NSW's constitution.
If the laws survive legal challenge I have no doubt they will be adopted by incoming Coalition governments across the country. As a side bar, it's worth noting the prohibition on donations would not prevent high net worth individuals from spending up to $1.05 million campaigning on issues, provided they do not donate the money but spend it themselves. There are no prizes for guessing which party will benefit most from that provision.
I have been advocating for some time the need for dramatic structural change within the ALP. Direct election of the party leader and reducing the power of the unions are long overdue but contentious and complex issues. However, I also believe these changes should be managed by the Labor Party itself, not its political enemies whose motivation is clearly to inflict as much damage as possible on the ALP.
If, however, these laws have the same effect as the Canadian legislation they will actually force positive changes from outside the party. It would be ironic if legislation intended to irreparably damage the Labor Party ended up being its salvation.