Premier's power play-Socialist Alliance

It's not going to be pretty at the Labor Party's state conference when Morris Iemma lines up to show who's in charge, reports Andrew Clennell.Morris Iemma has been battered from pillar to post in the past few months: described as weak, indecisive, obsessed with detail and unwilling to take action on a Government that has been called corrupt.

One senior Labor source recently described him as the "bloke doing a bad impersonation of the bloke who is supposed to be Premier".But all that could change in two weeks when Iemma gets a chance to prove he has guts at state Labor's annual conference on May 3. It is being billed as the biggest moment in NSW Labor-union politics for 10 years.

It is an opportunity for Iemma to prove how "tough" a leader he is. Barring a miracle last-minute compromise, which no one in Labor and union circles thinks is on the cards, the Premier will have to stare down a conference vote that is likely to defeat the Government's $15 billion proposal to sell off the power industry, by a margin of up to 500 votes.Party insiders predict the vote of the conference (which is half filled with union members and half by rank-and-file ALP members) will be about 650 to 150.Iemma has indicated he will then stand before the media and say he is going ahead with the power sale anyway - a slap in the face to the unions, led by the secretary of Unions NSW, John Robertson, local branch members and the party in general.

Many believe Iemma is trying to define his leadership by the fight, as Bob Carr did when he introduced WorkCover changes in 2001 despite a union blockade of Parliament House.The stakes are summed up by the NSW secretary of the Rail, Tram and Bus Union, Nick Lewocki, who believes Iemma has come under the spell of his Treasurer, Michael Costa, the strongest Government driver of the sale. It is partly about proving the unions do not have a vice-like grip on the Government.

"If the Treasurer can get away with convincing the Premier you can ... [do] these things ... [without conference support] ... they'll privatise ferries, they'll privatise Sydney Buses, they'll privatise the railways," Lewocki says."When you look at the privatisation of Qantas, the Commonwealth Bank, I think about the changed policy of uranium mining, all that was done through ALP conferences."If the conference can't hold the party accountable, who can?"All the apparatus is in place to make the party work ... surely [they are not going to tell us] using Costa's own words in the Weekend Australian we can all 'get f---ed'. What does that do for the party? You may as well not have a party."

One senior Labor source this week described the conference outcome as a "lose-lose situation": Iemma would be made to look a fool on the conference floor, booed and jeered during his speech, and the unions would be made to look as if they had no influence once he overrode them.Another senior party source said this conference was "uncharted waters". "No NSW premier has ever got up and openly defied conference. We're talking big stakes here.

"A Labor official pointed to former prime minister Billy Hughes's expulsion from the party in 1917 after he defied it on conscription as the last example of such an event.But this time there will be no expulsions.Selling the electricity industry - as much as it might arouse emotions in the Labor movement - is not up there with sending men off to their deaths. There is little appetite, apart from the odd Left delegate, to expel Costa or Iemma.

One minister reflected this week that it was a question of whether 800 people could override the needs of 7 million (this toeing the Government line that the retail and generation arms of the electricity industry must be sold to encourage private investment to build a new power station).But it is about more than that.

Iemma claims to be slowly, quietly, stealthily chipping away at the influence of the unions across the public sector, and in doing so, eroding their influence in a way that his predecessor, Bob Carr, did not have the bottle for.In the rail system, that means breaking down some of the demarcation practices in the maintenance yards that Iemma calls "intolerable" - practices that mean an electrician cannot work on wires behind a panel until another tradesman has opened that panel.With rail station staff, that means ensuring station managers, who are senior staff, do not take advantage of an overtime rort by working too many weekends, effectively manning stations at less busy times, when the system would function much better if they worked in busier periods.

In ferries, this means privatising operations to hack into the Maritime Union of Australia's dominance, where ticket sellers earn more than $60,000 a year and engineers earn $92,000 a year plus allowances.In future public transport infrastructure, it means going with a metro to the north-west rather than a heavy above-ground rail line - which will be privately run in part to ensure RailCorp union practices do not take over the new line.

Across the public service, it is about ensuring pay rises do not rise above the target of 2.5 per cent a year.Iemma drew a few laughs in 2006 when he said he wanted to be the public transport premier, but perhaps his goal would be better rephrased as being the Labor premier who broke the union influence over the state's public sector.

"An absolute fundamental Labor core value is those kinds of public services, and to have them working as efficiently as possible for families that rely on them and for businesses," Iemma argues.So it is not the union movement singing the Labor Party's praises but the business community. You could be forgiven for thinking Iemma was a Liberal premier.

The chief executive of the NSW Business Chamber, Kevin MacDonald, says: "I think he [Iemma] has come to the same conclusion as business and the public that the cosy relationship between the Government and the unions is not working in the state's interests."I know it's become a sport to kick the Premier, but in my view, Morris Iemma is starting to respond by doing what good premiers do - and that is drive change and reform. He is starting to pick his own fights, such as securing electricity supply and privatising the ferries, rather than simply being a reactive premier.

"If the Premier gets a bloody nose from the state conference he should consider it a badge of honour."MacDonald says that "for too long public sector productivity and performance has been allowed to lag".

"Imagine", he says, if Carr had sold the electricity industry 10 years ago and put the then $25 billion proceeds into infrastructure.Iemma maintains that breaking union domination does not have to be crash or crash through. But does he see as a theme of his premiership trying to change things that Bob Carr didn't tackle because they were too hard? Taking on the unions and forcing change in work practices?"It has been [a theme] and it continues to be and it just has to be," he says. "It has to be to drive improvement and also change the way of management."IT WAS in 1999, after Bob Carr's resounding second election victory - ironically won after the Coalition promised it would privatise the electricity industry - that a former transport minister, Carl Scully, decided to take a knife to union practices on the railways.

Scully wanted to cut station staff jobs and move staff to where they were needed, rather than stay with a decades-old system of certain staff working at certain stations.
The story in senior Government circles goes that Scully told Carr he was going to take on the union and there would be a strike involving drivers too.Carr backed him. But then, former insiders say, on the night before the strike, Carr went to water, negotiating with Lewocki and, ironically, Costa, who was then head of the Labor Council, to avert the strike.Scully, who would not comment this week, was frustrated, and realised that if Carr was not prepared to have the fight so early into a four-year term, it was never going to happen.

A separate version of events from the Carr camp has both men nowhere near a strike and both deciding not to go ahead, because not only would it cause an unholy row but cutting station staff would be unpopular.Iemma won't criticise his predecessor, simply saying: "I can spend all my life looking back and saying, 'Well, what happened, what didn't happen'. I'm the Premier now. I'm interested in the here and now."And what we're on about, you look at any of the things we do [with] services ... that's the job of State Government - flexibility, efficiency, multi-skilling, redesign ... As I outlined last year, that's one way to achieve reform ... and that's the way we've been working to achieve it - in ferries, in areas of rail, in health. It is fundamental redesign, workplace redesign."There are other signs that the Government is willing to cut union domination.

Police management are slowly cutting into the number of officers who work four days on and up to six days off to compensate for 12-hour shifts under a controversial block rostering scheme.But progress seems slow.

The Government appointed an economist, Tony Owen, to review the electricity industry before
it came up with the idea to sell retail and have a long-term lease of generators. It asked the Auditor-General to look at police block rostering. It appointed Bret Walker, QC, to review Sydney Ferries.

A review of rail services has been undertaken by Boston Consulting Group.It seems the Premier wants an independent expert in each case to hit the unions with an outside justification for change.But the acting Opposition Leader, Andrew Stoner, says tough talk is not enough. He says it is clear that Iemma is close to the unions and cites donations they give, "the failure to amend the Occupational Health and Safety Act", and "the number of Labor mates on union boards".

"The unions donated millions of dollars towards the Iemma Government's re-election and Morris returns the favour through favourable legislation, taxpayer-funded grants and cushy jobs," Stoner says.

Iemma maintains he is not about "shafting" the unions and the conference on May 3 will be different to the 1997 state conference, which killed a proposal by Carr and his treasurer, Michael Egan, to sell electricity.Back then it was simply about the sale, says Iemma. This time it is about encouraging private investment in a new $8 billion baseload power station.

And, he says, cabinet and caucus have already approved the power sale - in contrast to 1997.Ironically, Carr said after the 1997 vote that the electricity sale would still proceed. "The issue won't fade because of the emergence of a national electricity market," Carr said at the time. "It won't fade because there's a lot we could do with infrastructure and there is increasing pressure on state budgets."Iemma says: "I haven't shafted anyone, because as you know, I don't go looking for a fight with anyone. But my No.1 fight for NSW is to ensure that it has a secure economic future.

"That's what the unions have got to see, that's what the critics have got to see, because their criticisms can't just be on the basis of 'I just don't like it' or 'it's the ideology'."I understand the emotion - it's going to be hard for everybody in the labour movement."But the compelling case here is the state's economic future. That wasn't around in '97 because we didn't have a supply issue. We do now. None of them have brought forward an alternative that stacks up.

"The unions have tried to develop a "joint venture" proposal similar to a public-private partnership where the power sector could be run with private and public ownership.Iemma says this is not feasible.Puzzlingly, one recent meeting that involved treasury officials, Costa, the secretary of the Electrical Trades Union, Bernie Riordan, and the head of Unions NSW, John Robertson, also featured the powerbroker Eddie Obeid, showing that the backbencher still has influence.On May 3, the Government will be lucky if one union votes for the sale; the entire Left faction and most of the Right will vote against the Premier and Costa.But Iemma is determined to go ahead. He says "the easiest thing to do politically" both "externally and internally" would have been to stand up last May, when he announced the Owen review, and say that the Government was selling the $4 billion retail industry, EnergyAustralia, Country Energy and Integral Energy.

It is true that the unions have worked hard to stop a fight at conference, but without success. They know it is their influence that can easily be eroded by having a conference resolution overruled by Iemma.

As one former senior Government staffer puts it: "If they vote him down and he walks out the next day and says 'we're doing it anyway', they look stupid."They [the unions] have totally overplayed their hand. It's high stakes, this stuff, and the unions need to be really careful; they have got more to lose here and they know it."Others on the union side see Iemma as unable to sell the reason why the electricity sale is necessary, as building a straw man of a fight with the unions because he chose not to follow a diplomatic course.Robertson would not comment on the matter, preferring, it seems, to spare Iemma the war of words that the union movement believes the Government craves.

Also keeping his comments to himself is Costa, who is believed to have antagonised the union movement and many in the party at Sussex Street headquarters with the way he has handled the issue.

In February Costa raised the ire of many when, asked at a press conference if he feared expulsion after the conference vote, he said: "It's happened in the past - I don't care."In a Herald interview the same month, Costa said he would "not hang around in politics if we're not doing reform", which suggested he would quit if the electricity sale was not passed.

Many saw those comments as an invitation for rank-and-file members to vote against the proposal, so keen would they be to see the back of Costa.Iemma is careful not to criticise any union leaders to inflame tensions further. But he cannot help himself when asked about the secretary of the National Union of Workers, Derek Belan, one of the right-wing leaders opposing privatisation and the man who almost pressured Iemma to put controversial Blacktown MP Paul Gibson in cabinet before Gibson was nobbled by old domestic violence allegations."I don't want to say anything about Derek Belan," Iemma says. "I can't say I have a relationship with Mr Belan. We'll leave it at that."Iemma seems to believe there will be no retaliation once he defies the conference and goes ahead with the power sale."I don't fear expulsion. I don't believe it will get anywhere near that," he says.Asked if leaders are defined by their fights, as Bob Carr was over WorkCover, he says: "My view is leaders are defined by the decisions they take ... When I got elected, I got elected to do what was right and to do what was necessary to secure the state's future."

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