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It is often said that good policy and good politics reinforce each other but in Australia it is a long time since we have seen either. Take, for example, the fundamental contradiction at the heart of the Coalition's war with the union movement. On the one hand conservatives work tirelessly to diminish the significance of the union movement by focusing on the small proportion of the private sector which is unionised. But at the same time they place industrial relations reform and union governance at the heart of their "economic agenda". So are unions a big deal or a small issue? Which is it? Unemployment has risen substantially since the Coalition's "great economic managers" took the helm in 2013. And despite the budget-blowing decisions to scrap the mining tax and the carbon tax the global mining boom ended anyway. So what is the Coalition going to do to kick-start a flagging economy undergoing rapid structural change? Crack down on union governance and pay retail workers lower wages? That should fix it, said no macroeconomist ever. While a-grade politicians who want to drive major change put enormous effort into building new constituencies around new ideas, b-graders focus instead on making mountains out of mole hills. The Coalition has spent years telling the public that the unions were a dwindling irrelevance in the modern workplace but now they are trying to convince those same voters that slaying the union dragon will kick-start the economy. Poor Tony Abbott was so out of his depth that his political agenda actually undermined the significance of his own policy agenda. And now Malcolm Turnbull now has to choose whether to press on with Abbott's folly or publicly abandon the conservative wing of his party's favourite vendetta. As is so often the case with politically motivated royal commissions it now looks like Dyson Heydon's recommendations might bite the hand that fed him. While his report makes narrow recommendations about the need for a new "watchdog" for trade unions, it is not Mr Heydon, or even Mr Turnbull, who will determine the final shape, or target, of any new watchdog. It is the Senate. A number of crossbench senators have already suggested that what is needed is a body with a much wider brief than the unions. It won't be long before one of them goes the whole hog and demands a federal version of the NSW Independent Commission Against Corruption. There is plenty of evidence that one is needed. If Mr Heydon and the Prime Minister are concerned about what the final report of the royal commission described as "widespread" and "deep seated" misconduct in the union movement then they must be appalled at the fact that after a NSW ICAC investigation 12 NSW Coalition MPs were forced to step down for activities as diverse as hiding donations, failing to disclose gifts from lobbyists, granting favours and lying under oath. Surely its only safe to create a federal body to ensure the same patten of misconduct never emerges among federal members of parliament? And then there is the definition of a "trade union". Will the Senate pass legislation that limits the remit of any new watchdog to unions affiliated with the Australian Council of Trade Unions or will it ensure that the Pharmacy Guild of Australia, the Australian Medical Association and the state Bar Associations are included as well? Of course, it is not polite to call the organisations that negotiate and lobby on behalf of highly paid professionals a "union", but legislative drafting is about clarity, not manners. Drafting a bill that ensures that the College of Surgeons, for example, were excluded from any new oversight of their governance would be almost as excruciating as listening to the Minster for Employment, Michaela Cash, explain why such an exemption was necessary. So far both Minister Cash and Mr Turnbull have been at pains to stress that they simply want to "strengthen the unions" by improving their governance. Minister Cash has framed her focus as simply wanting to protect "hard-working union members"' from unions that she feels "have not been effective in dealing with and stamping out the blatant misconduct and alleged criminal behaviour". Let's take her at her word. in September this year we learned that bullying, discrimination and sexual harassment are rife in the surgical profession and that half of the surgeons and trainees who responded to a survey said they had been victimised. One senior surgeon publicly advised her junior colleagues that complying with requests for sexual favours from superiors was better for their career than complaining. No doubt Minister Cash is keen for her new watchdog to get to the bottom of that. The Pharmacy "Guild", on the other hand, raises another interesting question for a new watchdog to look into. While the (typically older) pharmacists who own existing pharmacies are strongly supportive of the current ban on opening a new pharmacy within 1.5km of an existing pharmacy, new pharmacy graduates and customers, not surprisingly, have their doubts. Cynics go so far as to call it blatant protectionism for the owners of existing pharmacies. At the same time, the last thing the drug companies want is strong competition between pharmacists who might have to resort to that most crude of business practices known as "price competition". Wouldn't it be great to get to the bottom of the flow of money between the drug companies, the pharmacies and the doctors and reassure ourselves that the "hard working young pharmacists" and the taxpayers' interests are at the top of the agenda for the pharmacists union. A well designed "watchdog" would be a great vehicle for running such an investigation. If the Coalition wants to run on "corruption" at the next election then it will need to go a lot further than a new watchdog to focus on its old enemies. And if the Coalition wants to run on "jobs" then it will need to go a lot further than reforms that, at best, would make a small difference to a small percentage of workplaces. Australia needs an agenda to crack down on the rent seekers and their corrupt cronies. And it needs an agenda to create jobs now that our fair weather friends in the mining industry are once again skipping town. A new watchdog with a narrow focus and politicised agenda might help magnify some molehills, but it will also serve to remind the public that, yet again, our political class are ignoring the mountains in our path. If Bill Shorten calls for a strong federal version of ICAC he could elevate not just the issue of corruption, but himself and his party. The Coalition wants a platform to look further into Shorten's past. Why not give them one that opens Pandora's box. The public would love it, and only those Federal MPs with something to hide should fear it. Richard Denniss is chief economist of the Australia Institute. Twitter: @RDNS_TAI

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