CANBERRA OBSERVED: News Weekly
Kevin Rudd attack on Howard comes unstuck
, June 9, 2007
The controversy over Kevin Rudd's wife's company could seriously damage the Labor Opposition leader's reputation.While the Howard Government appears stuck dangerously low in the polls, the controversy over Kevin Rudd's wife's company is emerging as a possible threat to his hopes of becoming Prime Minister later in the year.
At a minimum, the affair will blunt planned attacks by the Labor Party and the ACTU on the Howard Government's WorkChoices laws in the lead-up to the federal election.
But if initial allegations reported in newspapers are proved to be correct, there are potential serious problems for the Labor Party and a headache for Mr Rudd's own industrial-relations policy formulation.
News Limited papers originally reported that Thérèse Rein's company, WorkDirections, put workers on individual contracts that stripped them of key award conditions, including penalty rates, overtime and allowances for an extra 45¢ an hour.
It reported also that workers had been asked to do unpaid overtime, leaving them hundreds of dollars worse off than they would have been if they had stayed on the award.Launched investigation
The Federal Government's Office of Workplace Services has launched an investigation into the newspapers' claims.
Ms Rein's company has done very well out of the Howard Government's Job Network agency, which replaced the old Commonwealth Employment Service.
Her company is the largest "for profit" provider for the Job Network and the third largest overall and has revenues of $175 million, which include its overseas operations.
Ms Rein's company's response to the initial reports was to blame the previous owners and to claim that, while "honest mistakes" had been made, they were rectified once they were known.
She also voluntarily disclosed that 50-odd workers had been compensated for being underpaid after being "misclassified" by the previous owner.
As the furore developed, Ms Rein also moved to sell the Australian arm of her successful job-placement business which could realise her as much as $80 million, according to some reports.
Labor had hoped that would be the end of the matter, banking on a degree of public sympathy for Ms Rein's plight and confusion about the nature of the "mistakes" admitted by her company to avoid further media scrutiny.
The problem was the original story was not about misclassification of people's jobs; it was about an individual contract which appeared, on face value, to have left a worker worse off than they would have been under an award.
Unlike the Howard Government's controversial Australian Workplace Agreements (AWAs), Ms Rein's company preferred to use common law contracts.
In fact, none of Ms Rein's 800 Australian employees were on Labor's preferred collective agreements; they were all on individual contracts.
This in itself is an embarrassment for Mr Rudd because his wife's company shuns the very policy with which Labor is going to the election.
Labor says common law contracts are preferable to AWAs because they are underpinned by the award.
But if a common law contract can also be used to exploit a worker, Labor has a tough case to explain to voters that its system is better than the Government's, particularly after the introduction of the new fairness test.
Mr Rudd, the ACTU and Labor have also been quick to attack businesses which have exploited workers in the past - sometimes attacking firms which have later been found to have done nothing wrong.
This will be much more difficult from now on.
The problem now for Mr Rudd is how he can promote an alternative industrial-relations policy which promotes common law contracts for sectors such as the mining, which may prove to be just as "bad" for workers as AWAs.
And if the Labor leader's wife's company is found by investigators to have exploited some of her workers by putting them on inferior contracts and forcing them to do unpaid overtime, it will be a very bad look for Labor after months of a similar line of attack on the Government.
The controversy has the potential to seriously damage Mr Rudd's squeaky-clean reputation, and cast doubt in the minds of voters about the real motives for throwing out WorkChoices "lock, stock and barrel".