Prime Minister, you say it's routine. We say it's rotten

IF anyone, apart from Julia Gillard, thinks an inquiry into union maladministration is unnecessary, we would refer them to the transcript of the Prime Minister's press conference eight days ago. Ms Gillard sees nothing particularly odd, apparently, about union officials running slush funds. "This did not strike me as a non-standard transaction," she said. After all, it was better than keeping money in a shoebox. It was "a matter that at the time struck me as pretty routine, pretty low-level. Indeed, so low-level that I didn't even charge for it."

What does it say about trade unions that people such as Ms Gillard, who have spent their adult lives in the labour movement, describe these sort of shenanigans as "pretty routine"? There is no suggestion Ms Gillard was aware of the large-scale embezzlement that later occurred. Her only role was to provide legal advice to her then boyfriend Bruce Wilson and his bagman Ralph Blewitt, that enabled them to incorporate an association with the WA Corporate Affairs Commission. As Ms Gillard understood it, Mr Blewitt and Mr Wilson were operating what she describes as a low-level slush fund, the kind that organised fundraising dinners and made payroll deductions. It seemed to her to be unremarkable; apparently it is commonplace behaviour for union officials .

To those outside the union movement, however, even this kind of slush fund is evidence that something is deeply amiss. The investigation of the AWU affair has shone a light on a side of the labour movement most citizens assumed would be illegal. If corporate executives parked other people's money in sham accounts for their own benefit, they would be breaching their fiduciary duty to shareholders and could expect to find themselves in serious trouble. It is not clear to us why a lesser standard should apply to union officials who have a fiduciary duty to their members. Most modern unions have large turnovers and operate superannuation funds managing hundreds of millions of dollars. Yet their tax-free status allows unions to be run with far less transparency than a business of a similar size. Nor is this an isolated case; the full extent of corruption in the Health Services Union is yet to be revealed.

Even uglier, however, is the evidence of standover tactics to extort a ransom from construction companies in return for industrial peace. A former AWU administrator, Wayne Hem, tells how industrial disputes would inexplicably "go away". This mobster behaviour would be called blackmail in any other walk of life, yet the union culture has become so morally corrupt that some officials are prepared to go to any lengths to line their pockets. How did it come to this? How did the once-noble institutions that protected workers' rights turn into private fiefdoms for the exercise of private gain? The very concept of an election slush fund is anti-democratic, favouring incumbent against challenger. It seems utterly incongruous that a movement that exists to serve democracy should run as an oligarchy. Now that the lid has been lifted on this murky world, a judicial inquiry is inevitable, and it is within the Prime Minister's power to set its terms. Alternatively, she can stonewall and risk the election of a Coalition government that would almost certainly call an inquiry itself.