VZCZCXRO1062
PP RUEHPT
DE RUEHBY #0474/01 1330030
ZNR UUUUU ZZH
P 120030Z MAY 08
FM AMEMBASSY CANBERRA
TO RUEHC/SECSTATE WASHDC PRIORITY 9538
INFO RUEHBN/AMCONSUL MELBOURNE PRIORITY 5235
RUEHPT/AMCONSUL PERTH PRIORITY 3517
RUEHDN/AMCONSUL SYDNEY PRIORITY 3427
RHEHNSC/NSC WASHINGTON DC PRIORITY

UNCLAS SECTION 01 OF 02 CANBERRA 000474 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: PGOV ECON ILAB AS
SUBJECT: UNIONS THREATEN RUDD'S INFLATION FIGHT 
 
REF: CANBERRA 246 
 
¶1. (SBU) SUMMARY: There are signs that labor unions in 
Australia are becoming impatient with the wall-to-wall 
Federal and state Australian Labor Party (ALP) governments. 
While the Australian Council of Trade Unions (ACTU) and some 
of the larger unions have tried to work with the Rudd 
Government as it embarks on its battle against inflation 
(reftel), individual unions appear increasingly less prepared 
to let the Rudd Government fight inflation at their expense. 
The teachers union in the state of Victoria last week won a 
17.8 percent pay rise over four years and many other public 
and private sector unions are demanding large wage increases. 
 Union demands for big wage increases are exactly what the 
Rudd Government hopes to avoid as it prepares to release its 
inflation-fighting budget on May 13.  To make matters worse, 
a coalition of Australia's most powerful unions has launched 
a campaign for the Rudd government to immediately abolish a 
Howard government watchdog body set up to crack down on 
unlawful union activity in the construction industry.  Adding 
to the tension between the ALP and the union movement, the 
New South Wales (NSW) government is proceeding with a program 
of electricity privatization despite the vehement opposition 
of the state's unions (see Sydney septel).  END SUMMARY. 
 
"WE WANT OUR MONEY" 
 
¶2. (U) The teachers union in the state of Victoria last week 
announced a 17.8 percent pay rise over four years, with the 
most experienced teachers receiving an immediate 15.2 percent 
increase.  The Victorian Trades Hall Council secretary told 
the press May 7 that the teachers' agreement exemplified the 
type of "catch-up increases" the unions now want under Prime 
Minister Rudd.  He explained that he backed wage claims that 
go beyond inflation because it is "not only to compensate for 
inflation but also to compensate for the restriction on the 
ability you had for decent wages under the previous 
government." 
 
¶3. (SBU) The Rudd government, like the Howard government 
before it, has reaffirmed that pay claims should be based 
only on productivity and bargaining at the enterprise level. 
The unions, however, appear emboldened by the election of a 
Federal ALP government.  In addition to the Victorian 
teachers, public sector workers in Tasmania, Western 
Australia, and Queensland are also pushing for substantial 
pay rises.  The teachers' contract in NSW expires in January. 
 The union that represents construction workers, the 
Construction Forestry Energy and Mining Union (CFMEU), has 
said it will push for wage increases above inflation when its 
contracts expire and the waterfront union in Western 
Australia, the MUA, is asking for pay parity with its east 
coast counterparts. 
 
UNION PROBLEMS IN NSW 
 
¶4. (SBU) The union movement in NSW is incensed that the NSW 
government is pursuing privatization of the state's 
electricity sector.  At the NSW ALP conference on May 3-4, 
delegates (50 percent of whom are chosen by affiliated 
unions) voted 7:1 against the move, but the Premier stood 
firm, and received the backing of state Labor MPs in his 
cause.  The story is not over, however, because defying the 
will of the rank-and-file of the party is deemed heresy by 
ALP traditionalists. (See Sydney septel) 
 
UNIONS WANT RUDD TO BREAK ELECTION PROMISE 
 
¶5. (SBU) On May 6, a coalition of unions including three of 
the most powerful - the Australian Workers Union (AWU), the 
CFMEU, and the Australian Manufacturing Workers Union - 
QCFMEU, and the Australian Manufacturing Workers Union - 
launched a campaign to abolish the Australian Building and 
Construction Commission (ABCC).  The ABCC is a watchdog body 
set up by the Howard government to stamp out illegal union 
practices in the construction industry.  The unions believe 
it is unfair that that only one sector of workers has been 
targeted and they maintain that "as long as these laws are in 
place, the era of WorkChoices will continue."  Rudd, however, 
went to the election promising to retain the ABCC until 2010, 
and he has made it clear he intends to keep his election 
promises. 
 
WILL CARBON EMISSIONS CUTS COST JOBS? 
 
¶6. (SBU) Organized labor, and particularly the coal mining 
unions, supported the ALP's policy on cutting greenhouse gas 
emissions during the election, and maintain that they still 
back the Government's plan to significantly reduce emissions. 
 Until now, the unions have accepted without argument the ALP 
 
CANBERRA 00000474  002 OF 002 
 
 
claim that clean coal technology will allow Australian 
utilities to still burn coal to generate power.  But union 
acquiescence on carbon emission cuts may be ending.  On May 
7, the AWU warned that 20,000 jobs in the aluminum industry 
alone could be lost to China if the Rudd government does not 
take a "balanced" approach to reducing greenhouse gas 
emissions. 
 
THERE IS NO ACCORD NOW 
 
¶7. COMMENT: (SBU) Ironically, although union representation 
in the Australian workforce is now below 20 percent, it will 
be harder for the Rudd Government to control wage increases. 
Under the previous ALP government (1983-1996), when unions 
were a much bigger part of the workforce, the ALP and the 
ACTU had an "accord" on wages, which limited increases. 
There is no national accord now.  Given the unions' pent up 
demands, and the rising discord with the ALP on issues such 
as privatization and climate change, organized labor may be 
in no mood to help the Rudd Government on inflation.  And 
despite their smaller share of the workforce, the very tight 
labor market with very low unemployment rates and record-high 
levels of participation in the labor force is making the 
unions more bold in a sellers' market for labor. 
 
CLUNE