UNIONS KEY FUNDING SOURCE FOR ALP

C O N F I D E N T I A L CANBERRA 000104 SIPDIS NOFORN SIPDIS E.O. 12958: DECL: 02/05/2018 TAGS: PGOV ELAB AS SUBJECT: UNIONS KEY FUNDING SOURCE FOR ALP Classified By: Political Counselor James F. Cole, for reasons 1.4 (b) and (d). ¶1. (C/NF) SUMMARY: Unions provided the Australian Labor Party (ALP) with a significant financial advantage during last year's election campaign. In the year to June 30 2007, the ALP raised A$66 million (USD 60 million) - almost 20 percent more than the Liberal and National Coalition - with unions contributing A$5.2 million.(USD 4.6 million) This does not include the A$20.9 million (USD 18.7 million) the unions spent during this period on their campaign against "WorkChoices" - the Howard Government's workplace relations reforms and arguably the most significant issue of the Federal election campaign. Union leaders now want a return on this investment, and Prime Minister Kevin Rudd, while likely less willing than former ALP leaders to give organized labor what it wants, cannot ignore the role union money played in the election victory. Out of power in every jurisdiction in Australia and with its state operations in disarray, the Liberal Party is fearful the gap in resources will widen as business donors in particular like to back winners. Sensing the danger, Shadow Treasurer Malcolm Turnbull has called for a ban on corporations and unions donating to parties. END SUMMARY DONATIONS REVEALED ¶2. (U) On February 1, the Australian Electoral Commission(AEC) released its annual report for the 2006-2007 financial year. The ALP received A$66.5 million (USD 60 Million)in contributions, the Liberal Party A$45.2 million (USD 41 million)and the National Party A$9.9 million (USD 8.9 million),giving the ALP an A$ll.4 million (USD 10.2 million)advantage over the Coalition. Changes to the Electoral Act by the Howard Government in 2006 created a new category called "political expenditure." For the first time individuals and groups other than political parties and associated entities were required to disclose how much they had spent on anything related to politics. Subsequently, the Australian Council of Trade Unions (the national union body) disclosed that it had spent A$10.1 million on its "Your Rights at Work" anti-WorkChoices campaign. Additionally, the total spent by individual unions against WorkChoices was A$10.8 million (USD 9.7 million). Effectively, the ALP received a A$20.9 million (USD 18.7 million)advertising boost from the ACTU on one of the ALP's strongest issues. ¶3. (SBU) After the unions, the next biggest-spending interest group was the left-wing "GetUp!" (which has links to the ALP) with campaign expenditure of A$555,234 (USD 497,667). The ALP received almost A$15 million (USD 13.4 million)in donations while the Liberals received just over A$9 million (USD 8.1 million) and the National Party just under A$1 million. The rest was made up of investments, interest, and public funding support for voting received in the NSW, Queensland and Victorian state elections. LIBERALS CRYING POOR ¶4. (SBU) New South Wales (NSW) Opposition Leader Barry O'Farrell has called for a cap on the amount parties can spend during a campaign, while Shadow Treasurer Malcolm Turnbull called for a ban on donations from business and unions. Soon after the Federal election, the Federal Executive of the Liberal Party established a review into the party's fundraising. In a speech in December, Liberal Federal Director Brian Loughnane said that for the first time in Australian history, a third external force (the unions) had intervened in the political process with resources Qhad intervened in the political process with resources greater than either of the major political parties." (Note: The Liberals are at a fundraising disadvantage. Overall, corporate Australia donates roughly even amounts to the ALP and the Liberals, but the ALP has a cash cow the Liberals don't have - the unions. In addition, with the states making many of the key regulatory decisions that affect businesses, the ALP, which controls all state governments, has benefited substantially. Out of government in every jurisdiction and with its state divisions a mess, potential donors will think twice about contributing to the Liberal Party.) RUDD'S A$30 MILLION DEBT TO THE UNIONS ¶6. (C/NF) Comment: While the money amount raised from June 30 until the November 24 election will not be known until February 2009, the 2006-07 figures affirm the integral role unions played in the ALP's victory. ALP National Secretary Tim Gartrell described WorkChoices as "the most important issue of the campaign." Without the unions, it would have only been a minor issue. For over 18 months, unions ran advertisements in the media, targeted marginal seats, and brought to light every case in which a worker may have been exploited by WorkChoices. Union leaders, which imposed an extra levy on their members to fund "Your Rights at Work", are under pressure to deliver a return on their investment. Responding to the Government's call for wage restraint to combat inflation, the unions have asserted that they will not accept a reduction in real wages. With the Reserve Bank raising interest rates of February 5 to its highest level in 16 years, union leaders may be tempted to flex their muscles to maintain their members' purchasing power. ¶7. (C/NF) Comment continued: Liberal Party,s Federal Director Brian Loughnane conveniently "forgot" one key source of campaign spending not covered by the AEC report: official government funds that were used in "informational" spots for the Australian public. These TV advertisements and mass mailings, which totaled around A$200 million and controversially included some senior public servants (officially non-partisan),extolled the virtues of the Howard Government,s policies on everything from WorkChoices to keeping children safe from internet pornography. However, this inconvenient truth actually reinforces the reality of the Coalition,s financial plight: they won,t have access to hundreds of millions of dollars in free advertising in the next campaign. MCCALLUM