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Employment and safety partner Persephone Stuckey-Clarke recently unpacked the CFMEU scandal and its far-reaching impacts across the construction sector, as well as in many Australians lives.
Persephone Stuckey-Clarke is an employment and safety partner at global law firm Dentons. Speaking on a recent episode of the HR Leader Podcast, produced in partnership with Dentons, Stuckey-Clarke delved into the allegations of corruption, bullying and lawlessness at the Construction, Forestry and Maritime Employees Union (CFMEU) and why business leaders should be across the far-reaching impacts of this saga.
The CFMEU scandal kicked off in July, said Stuckey-Clarke, after allegations of corruption, illegal conduct, misuse of position, misappropriation of funds, intimidation, coercion and more within the CFMEU came to the surface, primarily around the CFMEU and its dealings with businesses in Victoria.
“As the story broke, we saw more allegations arise in New South Wales. Queensland has had some as well, and in addition to that, we're now starting to see that those allegations are bringing in other unions, not just the CFMEU,” she said.
“So, most recently, I've seen some allegations that there's in fact been allegations of misuse of union funds to the tune of about $3 million, potentially, by those leading the HSU, an organisation that's previously been the subject of inquiry.”
Anecdotally, these allegations have not come as a surprise to anyone, added Stuckey-Clarke.
“I've heard it described as an open secret in the industry. And that is consistent anecdotally with what's been reported to me by clients and colleagues over the years,” she said.
“It's hard to keep up. APRA [the Australian Prudential Regulation Authority] has directed Cbus to conduct its own investigation and make that investigation report public into whether its directors who are associated with the CFMEU, are fit and proper to hold office as trustees of a $92 billion superannuation fund. That's significant because some of the allegations are that union officials have boasted of being able to influence where that trust that funds the Cbus members money is invested in Australian construction projects.”
As these allegations potentially impact the superannuation of Australians across the country, the ongoing investigations will have far-reaching impacts.
“It really does unfortunately extend so far as to potentially impact and be impacting the cost of living in Australia, because particularly where it has the ability to increase construction costs, and I think there is some anecdotal evidence that it's doing that, then it's driving up costs everywhere. And corruption breeds that inefficiency, which unfortunately hits the taxpayer,” Stuckey-Clarke explained.
“Often to work on these sites, anecdotally, businesses are essentially required to have a CFMEU-endorsed enterprise agreement. Those enterprise agreements can have casual loading rates, for example, at 35 per cent when the standard across Australia is 25 per cent. And if you were to use a casual over a period of six weeks regularly, then that casual loading increases to up to 80 per cent.
“So, that's just one example of where you see a very considerable increase in labour costs. And if you can imagine that being replicated across other terms and conditions, then that's really a significant driver of increased infrastructure costs.”
As the saga continues to unfold, there are numerous lessons and key takeaways for other Australian businesses to take note of, added Stuckey-Clarke.
“This is really another example of corporate misconduct, really. Unions are legal people, like other corporations.
“So really, the high-level response is where there are allegations that are serious, or which may be serious, then leaders and those in position to do something about it, HR practitioners, industrial relations managers, project managers, anyone with a leadership responsibility in a business is advised to act promptly, appropriately, proportionately, so that they're not criticised personally later, and there's a real incentive there to act prudently for someone's own sake, but [also] to protect the business and to protect their people,” she explained.
“Having in place policies and procedures is a 101 fundamental. Then having a culture and fostering a culture where the reporting of these matters is received without retribution and where whistleblowers aren't fearful of repercussions is critical to actually smoking out and dealing with wrongdoing. One of the critical issues here is that people are genuinely fearful. I've seen on a number of websites where the regulators are calling for people to come forward and make disclosures about misconduct. I think there is a genuine fear that that won't be kept confidential.”
While this is a “developing saga”, Stuckey-Clarke said that even businesses in other sectors should be taking notes.
“Unions are here to stay and we have a proud history of employee representation and I don't think that will be done away with, nor should it. So, everyone has an interest in making sure that the people that they, who are representing them and who are representing their workforce and the majority of workforces do have some level of union representation, are being governed fairly and in the interests of their members,” she added.
“Watch this space because change will come, but more immediately, managing inappropriate workplace behaviour is critical. And this is another example of where it's gone awry.”
