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Crony unionism, coming soon to a tunnel near you

By Stephen Cable - posted Wednesday, 17 January 2018


I had a shock recently when I read an article in the New York Times that wasn't critical of Donald Trump. Not only was it on a subject other than Trump but it was a great piece of investigative journalism of the calibre that was once the mainstay of western journalism. The article was about the enormously extravagant cost of a new subway tunnel named the East Side Access project, which currently sits at $3.5 billion (USD) per track mile, compared to a global average of $500 million (USD) per track mile. A similar project currently underway in Paris for example, is being constructed for one sixth the cost. And this isn't the only New York tunnel project that has overflowed its financial banks in recent years. Two other recent projects were also way over the global average.

The reason for the extraordinarily high cost is Crony Unionism. A problem as much to be feared by you and your tax burden as Crony Capitalism. To quote from the story:

The Times found that a host of factors have contributed to the transit authority's exorbitant costs.

For years, The Times found, public officials have stood by as a small group of politically connected labour unions, construction companies and consulting firms have amassed large profits.

Trade unions, which have closely aligned themselves with Gov. Andrew M. Cuomo and other politicians, have secured deals requiring underground construction work to be staffed by as many as four times more labourers than elsewhere in the world, documents show.

Construction companies, which have given millions of dollars in campaign donations in recent years, have increased their projected costs by up to 50 per cent when bidding for work from the M.T.A., contractors say.

Consulting firms, which have hired away scores of M.T.A. employees, have persuaded the authority to spend an unusual amount on design and management, statistics indicate.

Public officials, mired in bureaucracy, have not acted to curb the costs. The M.T.A. has not adopted best practices nor worked to increase competition in contracting, and it almost never punishes vendors for spending too much or taking too long, according to the inspector general reports.

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This should be of interest to anyone in Queensland who is concerned about the state's financial position and likes to see the public receive value for taxpayer's dollars. The track record of Australian Governments generally in regards to these types of projects has not been stellar. Only last month the PM, who you'd think would have access to top notch advice, told us that the Snowy 2.0 project would now cost up to $4.5 billion rather than the original $2 billion stated just a few months earlier.

This is of great importance, because Labor has just won government for four more years and they are committed to the Cross River Rail project that will build 10.2 km's of rail line (of which 5.9km's is a twin tunnel under the Brisbane River and CBD) for a current budget of $5.4 billion. The similarities between New York and Queensland are scary for any half-awake taxpayer.

Both have a construction union exercising high levels of control over the government. Both have a very high value infrastructure project that will heavily involve the very same union in its construction. Both have unions donating very large amounts of money to the governments making decisions that benefit them. Also, there is a constrained pool of competitive tenders, and the methods of wage and conditions negotiations is opaque.

The notorious Construction, Forestry, Mining and Energy Union (CFMEU), which seems to spend as much time in courtrooms as it does on construction sites, is a massive financial supporter of the Palaszczuk Government.

No matter which company builds Cross River Rail, they will be dealing with the CFMEU and the CFMEU calls the shots in Queensland Labor. I predict that the costs for Cross River Rail will exceed current forecasts by at least 50 per cent and possibly double and that's even with as many client costs as possible being hidden in a myriad of government departments (a famously useful trick used to hide government cost overruns).

According to reports from the Courier Mail, during the 2017 state election, the unions bankrolled the Labor campaign to the tune of $15k per day. All up, the unions handed Labor $1.49 million since 2015 and no one hands over that kind of money unless they expect a return on investment. On top of the direct funding, there is all the personal action unions can take to promote their cause through their own campaigning, none of which needs to be officially declared.

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All of this is an astonishing amount of influence for organisations which only represent a fraction of the labour force. According to ABS statistics, only one in nine private sector workers are part of a union. In 1992, almost 40 per cent of workers belonged to a trade union, now it's 15 per cent. Less than 10 per cent of construction workers actually belong to the CFMEU and would probably be less if they weren't able to coerce membership, so it doesn't even represent the industry as it claims.

In fact, the only union that actually seems to represents a significant portion of its members is the Public Sector Union at 39 per cent of the workforce, which is a huge concern as observed by Jordan J Ballor of the Acton Institute:

This adds an additional layer of concern to the larger problem of crony unionism. We in effect get government employees using government funds to campaign for the expansion of government.

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About the Author

Stephen Cable writes for Liberty Works and lives in Brisbane. He has an intense interest in the ideological contest between freedom and control that dominates our social and political discourse. Stephen strongly believes in free market systems, freedom of speech and smaller government.

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