Bill Shorten, the man who grew good at manipulating Labor’s machine

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Paul Keating, along with Bob Hawke, has been a political role model for Shorten. Photo: Andrew Meares Bill Shorten and (from left) Hakki Suleyman, George Seitz and Andrew Landeryou Photo: Jamie Brown

Former prime minister Bob Hawke and Bill Shorten at a trade hall rally in 2005. Photo: James Davies

Haaki Suleyman who spoke to Fairfax Media before his death early this month.

Bill Shorten, state secretary of the Australian Workers Union, speaks to Esso workers in 1999. Photo: Craig Sillitoe

Shorten has long aspired to become Prime Minister. Photo: Alex Ellinghausen

George Seitz spoke to Fairfax Media before his death early this month. Photo: Craig Abraham

Bill Shorten the shape-shifterCommission targets Shorten’s ex-wifeShorten tells Labor to prepare for early election

Oakleigh, south-east Melbourne, 1985. A particularly determined teen from the suburbs does something most boys of his age would never even consider: he approaches his local member to help him with a problem.

The young Bill Shorten wants desperately to join the Australian Labor Party, but, for whatever reason, the party is playing hard to get. His application is held up at head office, and he is determined to find a way through.

Thirty years later, the local member, Race Mathews, remembers his young petitioner. He was an intense teenager, politically mature for his age. “My impression of him was that he was in it because he was on about Labor values and policy,” Mathews says.

But values and policy were not all that motivated Shorten. Already he aspired to lead Labor, and the country, as prime minister. Like Bob Hawke, one of the Labor men he later sought out as mentor, Shorten had learned ambition at the knee of his strong-willed mother, Ann.

She was a “tough, tough woman” of freakish intelligence who had a “huge presence” in the lives of young Bill and his twin brother Robert, says university-era friend and now psychologist George Habib.

Ann gave young Bill both a private school education and a vaulting ambition: “Bill had an aspiration to one day govern the country. That was evident from very early,” Habib says.

In the 30 years since, Shorten has moved to within striking distance. To get this far he has had to endure and manipulate the complex and deadly party machine he first took on when he approached Mathews. He has proved adept at forming and breaking alliances, charming and knifing the right people, doing deals.

Like his role models Hawke and Paul Keating, Shorten is a factional brawler. But, unlike Shorten, by the time the others led the ALP they had put distance between themselves and their less savoury political activities. Shorten has either been unwilling or unable to do so.

The question now, with his first election as leader most likely next year and the spotlight of a royal commission focused on him, is whether the machine he has directed so skilfully over the years will turn and chew up its master.

Amassing numbers

Shorten is no Labor aristocrat. Unlike former leaders such as Kim Beazley and Simon Crean, who were to the party born, he has had to work at power. That means amassing numbers.

In Labor, voting power is shared between affiliated unions and party branch members. Clout is wielded by those who control one or both of those streams of votes at the annual state conferences. Shorten is good at collecting both.

His first taste came while he was still studying arts-law at Monash University in 1990. He and a group of young party right-wingers known as the Networkers launched a takeover bid for the left-wing theatricals union. They were bankrolled by friendly moderate unions and Labor parliamentary and ministerial offices.

At the time, the Victorian ALP was dominated by the Socialist Left faction. The ambitious young moderates hoped that the theatrical union’s resources and handful of votes would give them influence and a base for expansion.

Aaron Patrick, a friend and fellow Networker, now a journalist, acknowledges the takeover bid had little to do with workers’ welfare. It was all about power in the ALP.

But taking over unions is hard and, with little understanding of the membership, their bid failed. It taught Shorten an important lesson. For his next power play, he would be sure to be positioned inside the tent.

It’s 1994. The blue collar Australian Workers’ Union is in big trouble. It has a storied history as Australia’s oldest union, dating back to the great shearers and maritime strikes of the 1890s, and the bedrock of the ALP. But its membership, though still large, is falling, its Sydney-based national leadership moribund.

A bright young lawyer and rising Labor star surprises many by taking a job at what many see as a dying institution.

Within four years, the young talent with the schoolboy looks and the private school accent has overcome class suspicions, won over farm labourers and factory workers, and become the Victorian state secretary. He built a strong strategic alliance with an old stager, Queensland AWU boss “Big” Bill Ludwig, and his eyes were on a bigger prize.

In 2001 he took over as the union’s national secretary. As the head of what remains Australia’s second largest private sector union, Shorten nurtured its traditional non-confrontational model and forged close working and personal relationships with employers.

Despite Australia’s declining manufacturing base, AWU membership remained strong. The leader’s reputation within the party remained strong with it.

As early as 2002, speculation began that Shorten was circling the safe seat of Maribyrnong in Melbourne’s inner west, then held by sitting member Bob Sercombe. Shorten denied such ambitions, even as he and wife Deborah Beale were buying a house in the electorate.

In February 2006, Shorten finally declared. “We haven’t won a federal election since 1993,” he said. “When your footy team loses four consecutive grand finals, you renew the team.”

Under Labor rules in Victoria, preselection is decided by two bodies: a central party panel dominated by union and factional chieftains, and a separate vote of local branch members. Outside the AWU Shorten’s union support at the time was weak. Partly in reaction to Shorten’s aggressive factional tactics, another party elder, Greg Sword, had pulled his National Union of Workers out of the Labor Right faction.

So Shorten turned to his enemies in the hard left and others. He cut Sword out of the equation and struck an elaborate six-seat deal that would give him support from both factions in Maribyrnong, in return for his support in mustering votes in other seats. Among them was the seat of Scullin for Nathan Murphy, a scion of the plumbers’ union.

The plan was a work of political artistry – a vast scaffold of party support with Shorten-for-Maribyrnong at the top. The wheeling and dealing and drama around the deal consumed the party.

When the dust had cleared, and Shorten had secured his seat, he told the ABC: “I won the preselection by knocking on more doors.”

What he didn’t mention is that two doors were especially important.

First, a quick lesson in Labor realpolitik.

The days of rank-and-file party members turning out to suburban branch meetings to debate policy are long gone. These earnest participators have often been replaced by “stacks” – particularly in Melbourne’s west, with recent migrants corralled by a “warlord” from their own ethnic grouping. They never go to meetings; in fact, meetings may not even be held, except on paper. Their warlord pays their membership dues. In Labor party terms, they represent nothing more than numbers to be traded in factional and sub-factional deals.

Local government is at the heart of these stacking machines. Labor councillors dole out ratepayer patronage via sporting and social club facilities – soccer especially – in return for people consenting to free membership of the ALP. For internal Labor ballots, these people are either told how to vote, or have the ballots filled out for them. The membership fees to pay for all these people often comes from union money, raised through dubious slush funds and fund-raisers.

Shorten’s sub-faction, known in the party as the ShortCons – which he heads in partnership with fellow factional leader and federal front-bencher Stephen Conroy – is underpinned by such networks.

The two key doors in Maribyrnong that Shorten had to knock on in 2006 were Serbian-born George Seitz, Labor’s most prolifically successful “warlord”, and Turkish numbers man Hakki Suleyman.

Seitz, a member of the Victorian Parliament for 28 years, died early this month after a battle with cancer. From hospital just days before his death he told Fairfax Media that he and Suleyman controlled the votes of up to 90 per cent of the ALP members in the seat.

“He [Shorten] simply came … asking if I would support him,” Seitz said. “Knowing my history of supporting people, which I had done, he relied on that.”

Soon after Shorten was selected, the party’s powerful administrative committee, with Shorten as president, rewarded Seitz – then the veteran member for Keilor – by exempting him from a rule requiring MPs to retire at age 65.

The Suleymans had to wait for their reward. They were embroiled in 2009 in a major scandal centred on Brimbank Council. In 2013, Hakki Suleyman’s daughter, Natalie, was finally shoehorned into the safe seat of St Albans, with the backing of the ShortCon group. She is now a state MP.

Shorten’s wheeling and dealing won him the preselection for the safe Labor seat, but still he left nothing to chance. He bent massive resources towards the election proper – what became the Ruddslide of 2007.

His union, with Shorten at the helm, directed $25,000 of union members’ money, and a group of its employees’ time, to Bill Shorten’s election campaign. His campaign became known jokingly inside the party as the “black hole of Maribyrnong”.

It was a safe seat already, but Shorten won a big swing, with 65 per cent of the two-party vote.

As for those in his union alliance to whom he had promised seats elsewhere? His left-right union alliance won preselection in just three of the six seats it targeted.

Nathan Murphy, of the plumbers’ union and the alliance candidate for the seat of Scullin, now says Shorten’s preselection deal with the left unions was “100 per cent” about Maribyrnong. “He did nothing for us,” Murphy says. “It was all for Bill at the end of the day.”

Shorten’s watchdog

Shorten is renowned for editing friends and allies as politically required, but one key player has remained close throughout his ascendancy – old Melbourne university mate, notorious former blogger and sometime business consultant Andrew Landeryou.

With keen political instincts honed from childhood at the feet of his Labor Right stalwart father, Bill, Landeryou is Shorten’s unofficial adviser, wordsmith and watchdog.

“Bill’s muse” is how Stephen Conroy, Shorten’s joint Right faction chief, is known to describe him.

As Shorten worked towards a seat in Parliament and then the Labor leadership, Landeryou ran vicious blogs The Other Cheek and VEXNEWS, turning his ire on anyone who challenged his friend’s political interests: politicians, unionists, business figures and journalists were targeted. He was relentless in his attacks on Sercombe during Shorten’s move on Maribyrnong.

In July 2013 ahead of the September federal poll and Shorten’s elevation to Labor leader, Landeryou finally closed down VEXNEWS. His old friend had offended so many in the ALP he was now in danger of becoming a political liability

But the pair still talk often and socialise regularly. Landeryou spends time with Shorten at weekends; he helps with tactics and speeches, and plays the role of a backroom factional fixer.

HSU scandal

On entering Parliament, Shorten and his allies continued to consolidate and extend their factional strength. One organisation – long used and abused as a political plaything in the ALP –  became a focus of attention.

With financial support from Shorten’s core union base – the AWU and the plumbers’ union – Landeryou and factional numbers man David Asmar sought first in 2009 and again, successfully, in 2012 to seize control of the disgraced HSU No.1 branch in Victoria. In both cases their opponents were a team linked to one-time Shorten ally turned bitter enemy, the controversial Kathy Jackson.

More than $2 million in union and parliamentary resources were thrown at the two HSU elections.

It was a risky move. The HSU was a political quagmire and, now in government, Shorten needed to be seen to have risen above union dogfights lest they land him in scandal.

He was also the workplace relations minister and in 2012 launched Federal Court action that eventually ended with the HSU being put into administration. And later that same year, his allies were targeting its main Victorian branch.

The HSU elections, and the actions of Shorten’s anointed successor at the AWU, Cesar Melhem, are among a string of scandals that now threaten Shorten’s long-cherished dream to become PM. The Abbott government established a $60 million royal commission, in part, to do precisely this. A long career building, patching and rebuilding a Labor factional machine has left plenty of material.

In 2012, Fairfax Media revealed details of a secretive slush fund, Industry 2020, linked to the AWU, which was used to fund the HSU elections. Founded by Melhem in 2008, and actively supported by Shorten, it raised $500,000 from companies and unions, including from key AWU employers from Shorten’s union days, billionaire Richard Pratt’s Visy group, and major builder John Holland.

Melhem used the fund for his – and Shorten’s – factional chess game. Notable among recipients of Melhem’s largesse were the HSU challengers and the Cairnlea soccer club, the factional base of the Suleyman clan in Shorten’s seat of Maribyrnong.

Evidence would later be tabled in the trade unions royal commission of AWU emails that encouraged employers to attend the Industry 2020 fund-raisers as a means of ensuring harmonious relations with the AWU – apparent evidence of trading industrial peace for cash.

Melhem took a seat in the State Parliament in 2013, despite the controversy, but his political career has since been dashed by the royal commission’s allegations of phantom AWU members, employers paying union members’ dues, and deals with companies that allegedly short-changed workers.

Now Shorten is under direct pressure after Fairfax Media revealed details of deals he oversaw as AWU leader. In one case a Melbourne builder, Winslow Constructors, paid the union hundreds of thousands of dollars over a decade for its employees’ dues.

And this week Fairfax also revealed that one of Australia’s biggest builders, Thiess John Holland, paid the AWU almost $300,000 after Shorten struck a workplace deal that cut conditions and delivered the company savings of as much as $100 million.

Such deals boost union numbers, political resources and the AWU influence in the ALP. Yet even a long-time Shorten ally, AWU state secretary Ben Davis, conceded to the royal commission that Shorten’s agreement with Winslow had “profoundly” weakened the union’s industrial position. It was a nightmare moment for the leader of a 120-year-old movement.

Davis’ comments lend AWU credibility to Tony Abbott’s line that the union’s business model is “ripping off workers to advance its own political position”.

The AWU “scandal” has led to calls from political opponents for Shorten to resign as party leader. Inside the ALP the revelations have fuelled agitation for party reform and, in particular, a reduction in the influence of unions, the branch stacking “warlords” and factional bosses.

In April 2014, still reeling from his party’s electoral demolition by Abbott, Shorten promised reform and, in particular, to wind back union domination of candidate preselections. He’s yet to act on that promise.

For the moment, though, he is secure as party leader. One of the great ironies of recent Australian politics is that he is protected by rules introduced by former prime minister Kevin Rudd to spare future leaders the treatment he suffered at the hands of factional heavies, like Bill Shorten.

But within his own ranks, the concerns about Shorten’s distant past reinforce concerns many have about his more recent role in the knifing of prime ministers Rudd and Julia Gillard. Asked for this profile how Shorten was travelling as Opposition Leader, former treasurer Wayne Swan could only offer an “OK”.

As a teenager 30 years ago Shorten had to fight for the approval of the party he now leads. Some time soon he may need to do so again.

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