The particular content and style of political boot-licking that is a feature of today’s Australian corporate environment can be understood in terms of the history of Australia’s political-corporate deal-making and how that has changed over the last few years.

That is, the comparatively recent trend by big corporates to endorse and promote hard-core political issues – particularly contentious, politicised social issues – has an explanation. It’s all about attempts to cut deals.

The reality for every business of decent size is an eventual need to seek out deals with government. Whether they want to start a new project or expand existing operations, government approval is invariably required. This deal-making may include zoning, building, power use, export licenses and so on, where formal government approval is essential.

Such approval is normally handled at arm’s length from the political process through rules administered by bureaucracies. Beyond this, there is often a grey area where the line between politics and rule-based bureaucracy gets fuzzy. It’s this fuzzy area where the corporate ‘art’ of ‘government relations’ becomes ‘boot-licking’ – sometimes subtle, sometimes overt.

Many would perhaps be surprised by, and probably reject, the proposition that industrial relations has actually been at the core of this deal-making for a long time. History gives us some context for understanding this in Australia.

We can start with Australia’s immediate post-second world war political–corporate relationship, which was dominated by one big issue: the fear of communism. To some today this might sound simplistic, but this was the reality for several decades.

Overwhelmingly, the leaders and managers of corporate Australia were seared by the horrors of the second world war. The rise of Stalinism and Maoism after the war created a genuine fear that communism posed a real and immediate threat to the security of Australia. To scoff at this today would be trite, given that surely few, if any, Australians today could comprehend the psychological trauma of having lived through a world war.

And further, in the lead-up to the second world war in 1939, Nazism enjoyed a level of political currency, even respectability, amongst discrete groups in the USA and Britain. For example, there were known Nazi sympathisers amongst the British aristocracy even extending to concerns about the probable Nazi sympathies of the abdicated King, Edward VIII. Edward was known to be close to Hitler’s foreign minister Ribbentrop! This solidified the view that ‘dangerous’ ideas can lead to war.

Consequently, after the war, a major Australian political obsession was the containment of domestic communism. What is not really understood today is that the battle against domestic communism had a strong cross-party political element to it.

The Menzies government attempted to outlaw communism but failed in the referendum of 1951. Brewing largely outside the public eye, however, was a massive power struggle within the Australian union movement and the Australian Labor Party between communist and anti-communist forces. This exploded in the split within the ALP in 1955.

Out of the split the fiercely anti-communist Democratic Labor Party (DLP) was formed. The DLP attracted sufficient electoral support that it played a major part in preventing the ALP from attaining Federal government for close to 20 years. Plus, the DLP had big backing and support from key anti-communist unions that remained affiliated with the ALP. The complexity of the Labor movement interplays that resulted were only ever understood by internal players.

In this environment, corporate Australia was strongly anti-communist for the reasons described above. They had good grounds to be. The declared communist intent was (and remains) to destroy capitalism. That meant the takeover of corporate businesses by the state, as was the situation in the USSR and China. What happened as a consequence was the corporate funding of the anti-communist forces. This occurred overtly with corporations directly funding the conservative/liberal political parties and movements.

What occurred covertly was corporate funding of the anti-communist unions. Here’s the link to the real history of Australian industrial relations. Almost done secretly, this corporate funding of anti-communist unions is a key to understanding what has become of today’s union-corporate relationship.

The corporate funding took place through corporations ‘encouraging’ staff to be members of anti-communist unions. This was particularly the case in the retail sector. Few union members knew or understood the politics at play. But this union membership – which was endorsed and often paid for by the corporates – meant that the anti-communist unions were very well-funded and politically powerful.

This anti-communist effort established a bonded, symbiotic working relationship between corporations and anti-communist unions. These unions delivered workable industrial relations arrangements for the corporates which enabled their businesses to function, and even thrive.

This workable corporate-union relationship was not always productive, of course. That depended on the particular industry and the extent to which an industry union was communist or anti-communist. But what this situation did do was inculcate beliefs and management structures within Australian corporations that they could and needed to have ‘relationships’ with unions.

Operating parallel to this was close coordination in Australian parliaments between the Conservative/Liberal political parties and the Labor members of parliaments who were aligned with, and funded and dependent on, the anti-communist unions. In effect, there was a subterranean political coalition of anti-communist Liberal, National and Labor parliamentary representatives who, through coordinated action, sought to deny power to the communist forces within the Labor Party and the unions.

This business/political structure delivered strong economic growth to a point. But this growth was limited by the protectionist policies of the time. The opening up of the Australian economy to international competition in the early 1980s by the Hawke-Keating government changed all this.

Hawke’s major political brilliance was to manage the communist (Left) and anti-communist forces within the Labor Party and the unions. It was the management of this internal split that gave the Hawke Labor Party its pathway to government. However, Hawke did this principally by keeping the Labor Left under the thumb of the Labor Right. Hawke was pro-business in this respect.

Once in power, a key trick to Prime Minister Hawke’s opening of the economy was to pull big unions, big business and big government together. The first element of this was Hawke’s prices and incomes Accord with Australian unions. Further, Hawke arguably engineered the formation of the Business Council of Australia which ran parallel with the unions’ Accord. In doing so, Hawke institutionalised within corporate Australia the belief that they could, indeed had to, work with unions if they, the corporates, wanted to operate and succeed in the economy.

In effect what Hawke did was to institutionalise a process of corporate–union–government deal-making.

The account above is, of course, a broad sweep not meant to convey specific accuracy to the huge span of history covered. But the point for present purposes is that a culture of union–big corporate ‘working’ relationships was built into the very fabric and structures of Australian corporate behaviour. It was derisively called the Industrial Relations Club by some.

This ‘relationship’ survived right through the Howard government’s attempt to reform industrial relations laws. To the public eye, the Howard government’s attempted reforms represented a full-blown workers–bosses war. In fact, Howard faced intense, behind-the-scenes opposition to his reforms from many corporations wedded to their established union relationships. This was never really openly discussed.

This industrial relations battle seemed to be potentially resolved with the Rudd/Gillard Labor governments’ Workplace Relations Act in 2009. The Act appears to promise enterprise agreement relationships where businesses could improve productivity and unions could secure membership. But it failed on the union side. The number of businesses in Australia entering enterprise agreements collapsed over time. Simultaneously, union private-sector membership continued to ‘fall off a cliff’, landing at just 8 per cent today.

This ‘failure’ of the Rudd/Gillard law induced panic in the union movement. For the hard Left in the Labor Party and the unions the Rudd/Gillard laws have ‘proven’ that if unions seek to work with corporations, the corporations will simply screw over the unions.

This has resulted in a massive shift in the balance of power between hard Left and ‘middle Right’ unions. It’s fair to say that the Right within Labor is a shadow of its former self. The old, staunchly anti-communist forces within the ALP have pretty much dissolved. The Left’s unions and ideologues are in a position of dominant power never before seen in Australia. The consequence is a crashing of the union-corporate ‘working relationships’.

Several specific major triggers advanced this power shift.

Penny Vickers was a shelf-filler at supermarket giant Coles. In 2017, Penny challenged and broke the back of the then-union/Coles deal. The Coles Enterprise Agreement was with the right-wing Shop Distributive Allied union, traditionally the most important right-wing union in the Labor movement. The agreement reduced workers’ weekend pay rates and had been signed off by the Fair Work Commission. Penny proved that the Agreement was illegal.

After the illegal agreement with Coles was exposed, large numbers of other union-corporate enterprise agreements were found to be similarly illegal. What followed (and continues today) is the seemingly perpetual discovery of businesses, including the largest corporates, underpaying workers according to their award or their enterprise agreement/s. Sometimes the underpayments appear to be deliberate. Other times the underpayments seem to be the consequence of misinterpreting highly complex agreements.

Penny Vickers effectively ‘blew up’ the entire pretence of the ‘workers vs bosses war’, proving that, instead, big corporates and unions had been enjoying a cosy relationship. Even though this is the ‘fact’, it has never entered the political narrative. It seems that each side of politics is wedded to maintaining the ‘workers vs bosses war’ myth.

Even so this ‘explosion’ further accelerated the demise of the Labor Right in both the union movement and the ALP and ushered in the ascendancy of the hard Left.

This shift in the ALP power balance to the Left accelerated following Labor’s failure to win the 2019 Federal election. Corporate Australia detected this shift to a point, but it would appear didn’t understand the extent of the shift.

What really occurred was that the ‘out-of-the-public-eye’ corporate-union deal-making that had been the primary hidden feature of Australia’s industrial relations system had washed out. But the extent to which this had happened did not become apparent until the Albanese Labor government introduced its first phase of industrial relations laws in late 2022.

Further, however, Covid interfered. What Covid did was demonstrate that, in Australia, when push comes to shove, the old colonial-style powers of the ruling institutions politically reasserted themselves over the people and the plain wording of the Constitution.

This was demonstrated most starkly in the defeated Palmer application to the High Court where Clive Palmer had sought to prove that it was unconstitutional to close the borders between the states. The High Court was asked to rule that because section 92 of the constitution required that ‘trade, commerce and intercourse’ between the states shall be ‘absolutely free’ that the Covid border closures were unconstitutional. The High Court ruled against the Palmer application, effectively saying that the words ‘absolutely free’ do not mean ‘absolutely free’.

What could be argued is that, from the layperson’s perspective, the High Court preferred to run with the Covid politics of the day rather than support the plain wording of the Constitution. In this respect it’s well worth reading the paper of Kings Counsel Allan Myers on the High Court ruling (presented to the Samuel Griffith Society 2023 Conference).

If there was a message for Australia’s corporates from Covid and the High Court it is this. The law does not really matter. Politics is everything!

This accumulation of historical events has now brought corporate Australia to the point where the old (secret) industrial relations deal-making that has served them well has collapsed. In the past, corporate Australia had been able to strike deals with unions to achieve workable outcomes. The deals have frequently been grossly imperfect, but they were still deals. That deal-making under the cover of the legalities or pseudo-legalities of the industrial relations system has seemingly stopped. What to do?

It certainly looks as though corporations have, in desperation, jumped on to overtly political bandwagons where those bandwagons seem to be in the ascendancy. They are searching for the new deal-making rules. It’s not just industrial relations that is causing a problem for corporations. The Green Agenda and others have corporates in a spin. But industrial relations is and arguably remains the biggest elephant stomping around the room.

It’s only an observation, but probably a reasonable observation, that the corporate hope was that, in courting political favour on non-industrial relations issues, industrial relations deals as part of broader deal-making could still be secured. This hope, however, has been thoroughly blown apart.

Corporate Australia has surely misread the power shift in the Australian union movement, the Labor Party and the Labor movement. The anti-communist forces are defeated. The Left is strongly in the ascendant. And corporate Australia has been caught flat-footed! The proof is in the new industrial relations legislation.

The Albanese government’s first wave of industrial relations changes in December 2022 shocked corporate Australia. That first wave entirely reflects the ascendancy of the Left inside Labor. It reflects an Australian home-grown Marxist agenda. There’s no deal-making with corporations. It’s now a ‘do as we command’ legislative, structural and political environment.

There’s now a second wave of industrial relations changes mooted by the Albanese government. The Bill presented to parliament on 4 September is a corporation’s nightmare. In the lead-up to the Bill, corporate Australia had been in intense discussions with the Albanese government. They had held some hope of legislation with which they might be able to work. Instead, they are in further shock. The legislation is a Leftist’s dream.

We should remember that old-style Marxism called for the dismantling of the private sector and that the means of production should be owned by the state. Australian, home-grown, ‘modern’ Marxism (or whatever Left ‘ism’ applies) is smarter. It’s not necessary for the institution of the state to own the means of production. What they can do instead is micro-manage the corporate managers. That’s what the Albanese government’s first and now second wave of industrial relations changes seeks to do and will do. It’s the effective neutering of the capacity of managers to manage.

With the collapse of some six decades-plus of comfortable corporate–union deal-making, Australian corporations have turned in desperation to supporting social and related political issues to secure deals. Qantas, of course, is the most visible example of this. That has blown up in spectacular fashion. What do Australian corporations do now? They must be worried!

Ken Phillips is Executive Director of Self Employed Australia and is on Substack

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