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Fair Work (Registered Organisations) Amendment Bill 2014
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2013-2014

 

 

THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

 

 

 

THE HOUSE OF REPRESENTATIVES

 

 

 

 

 

 

 

FAIR WORK (REGISTERED ORGANISATIONS) AMENDMENT BILL »  2014

 

 

 

 

 

EXPLANATORY MEMORANDUM

 

 

 

 

 

 

 

 

 

 

(Circulated by authority of the Minister for Employment, Senator the Hon. Eric Abetz)



 

 





FAIR WORK (REGISTERED ORGANISATIONS) AMENDMENT « BILL » 2014

 

 

OUTLINE

 

 

The Fair Work (Registered Organisations) Amendment « Bill » 2014 (the « Bill » ) will amend the Fair Work (Registered Organisations) Act 2009 (RO Act) « and » the Fair Work Act 2009 to ensure better governance of registered organisations.  

Recent examples of financial misconduct within registered organisations have demonstrated that the existing regulatory framework is not sufficient to provide members of registered organisations with confidence that the management of registered organisations is accountable « and » transparent « and » that their membership contributions are being used for proper purposes.

In addressing these issues, the « amendments » will improve the governance « and » financial transparency of registered organisations « and » provide an appropriately empowered « and » independent regulator that will ensure compliance with the RO Act by registered organisations, branches of registered organisations « and » their officers.

Broadly, the « Bill » will:

·          establish an independent watchdog, the Registered Organisations Commission (the Commission), to monitor « and » regulate registered organisations with enhanced investigation « and » information gathering powers;

·          amend the requirements on officers’ disclosure of material « personal » interests ( « and » related voting « and » decision making rights) « and » change grounds for disqualification « and » ineligibility for office;

·          strengthen existing financial accounting, disclosure « and » transparency obligations under the RO Act by putting certain rule obligations on the face of the RO Act « and » making them enforceable as civil remedy provisions; « and »

·          increase civil penalties « and » introduce criminal offences for serious breaches of officers’ duties as well as new offences in relation to the conduct of investigations under the RO Act.

The Commission will be headed by the Registered Organisations Commissioner (the Commissioner), who will assume the investigations, enforcement advice « and » assistance responsibilities of the General Manager of the Fair Work Commission in relation to registered organisations. While the Commission will be established in the Office of the Fair Work Ombudsman, it will have a high degree of independence.  The Commissioner will have independence in the exercise of his or her functions « and » powers « and » in his or her ability to direct staff in relation to the performance of those functions.  

 

In order to ensure that the Commissioner has sufficient power to monitor compliance with the RO Act, the Commissioner’s investigation « and » information gathering powers have been modelled on those in the Australian « Securities » « and » Investments Commission Act 2001 . These powers will enable to Commissioner to efficiently « and » effectively undertake its compliance functions.

 

The « amendments » that provide for the disclosure of material « personal » interests, increased accounting « and » disclosure obligations, criminal offences for serious breaches of officers’ duties « and » increased civil penalties broadly mirror those that apply to companies « and » their directors under the « Corporations » Act 2001 « and » have been adapted to align with the RO Act framework.

 

·          Financial Impact Statement

Nil

 



Text Box: REGULATION IMPACT STATEMENT Contents

1.     Context iv

1.1       Current regulation of registered organisations . v

1.1.2        Registration « and » registered organisations’ rules . v

1.1.3        Role of the Fair Work Commission . vi

2.     Description « and » scope of the problem .. viii

2.1       Affected parties . ix

2.1.1        Registered organisations . ix

2.1.2        Officials of registered organisations . xi

2.1.3        Members of employee organisations . xi

2.1.4        Members of employer organisations . xi

2.1.5.       « Other » affected parties . xi

3.     Objectives of the regulation . xii

3.1       Options for addressing the problem .. xii

3.1.1        Option One . xii

3.1.2        Option Two . xiii

4.     Impact analysis . xv

4.1       Option One . xv

4.2       Option Two . xvi

5.     Compliance costs . xviii

5.1       New obligations incurring compliance costs . xviii

5.2       Standard costs applied . xix

5.3       Regulatory Burden Estimate . xx

6.     Stakeholder Consultation . xxi

6.1       Consultation with relevant stakeholders . xxi

6.2       Outcome of formal consultations . xxi

6.2.1        Committee on Industrial Legislation . xxi

6.2.2        High Level Officials meeting . xxii

6.2.3        Select Council on Workplace Relations . xxii

7.     Checklist for assessing an options-stage RIS . xxiii

8      Conclusion . xxiv

9      Implementation « and » Review .. xxv

9.1       Implementation . xxv

9.2       Review .. xxv

 



 



1.         Context

Employee associations « and » employer associations are formed to represent their members' broad interests « and » provide advice on workplace matters. Employee associations (including enterprise based associations) « and » employer associations can apply to the Fair Work Commission (FWC) for registration under the Fair Work (Registered Organisations) Act 2009 (RO Act). As at 17 October 2013, there were 112 registered organisations listed with the FWC of which 67 were employer organisations « and » 45 were employee organisations.

 

Section 5 of the RO Act sets out Parliament’s intention in enacting the RO Act, which is:

·          to enhance relations within workplaces between federal system employers « and » federal system employees « and » to reduce the adverse effects of industrial disputation, « and »

·          to assist employers « and » employees to promote « and » protect their economic « and » social interests through the formation of employer « and » employee organisations, by providing for the registration of those associations « and » according rights « and » privileges to them once registered.

Section 5 of the RO Act also states that the Parliament “…recognises « and » respects the role of employer « and » employee organisations in facilitating the operation of the workplace relations system”. Associations that become registered organisations can access privileges « and » rights under the RO Act « and » Fair Work Act 2009 (FW Act) that allow them to represent the interests of their members more effectively in workplace matters, for example by:

·          in the case of employee organisations, having a right to enter workplaces providing they meet a number of statutory requirements,

·          assisting or representing their members during FWC proceedings, such as unfair dismissal hearings, « and »

·          making an application to vary a modern award outside of the four-yearly modern award review process.

To access these rights « and » privileges, registered organisations must comply with detailed regulations in relation to registration, rules, financial reporting, elections, conduct of officers « and » « other » matters.

The FWC is responsible for administering the provisions of the RO Act that relate to registered organisations. Under Chapter 11, Part 4 of the RO Act, the General Manager of the FWC may make inquiries « and » conduct investigations into registered organisations, in addition to the examination of registered organisations’ financial reports lodged with the FWC each year. As at 19 September 2013, there were seven inquiries « and » seven investigations underway at the FWC.

 

The conduct « and » regulation of registered organisations « and » their officers have recently been of significant public interest. The most prominent example was the lengthy investigation into the Health Services Union (HSU) that arose due to allegations of misuse of members’ funds « and » inappropriate conduct of officers.

 

The previous government’s response to the findings of the FWC investigation into the HSU was the Fair Work (Registered Organisations) Amendment Act 2012 (RO Amendment), which provided for increased financial accountability of registered organisations, strengthened investigative powers of the FWC « and » increased penalties under the RO Act in line with the FW Act. The FWC also made some improvements to its investigative processes.

 

While the RO Amendment was broadly supported, there was concern among some stakeholders that the RO Amendment did not go far enough. In a submission to the Senate Standing Committee on Education, Employment « and » Workplace Relations inquiry into the RO Amendment, the Australian Mines « and » Metals Association wrote that “the changes the government has proposed are not tough enough to deliver accountability that members of those organisations are seeking.” Similarly, the Institute of Public Affairs asserted that “[f]urther measures should be taken to strengthen the financial management « and » regulation of registered organisations, commensurate with their considerable financial resources.”

 

The Government, as an election commitment, announced its policy for Better Transparency « and » Accountability of Registered Organisations (the Policy) in July 2013. This policy outlines measures to further strengthen regulatory oversight of registered organisations « and » their officers. Registered organisations « and » their officers will have fiduciary « and » statutory responsibilities that are more closely aligned with those of companies « and » directors, provided under the « Corporations » Act 2001 ( « Corporations » Act). This is to ensure that they are held to higher standards of accountability in relation to their conduct « and » use of members’ funds. This will be achieved by:

·          increasing civil penalties « and » introducing criminal offences for serious breaches of officers’ duties similar to those applicable under the « Corporations » Act - imprisonment for up to 5 years or 2,000 penalty units (currently $340,000),

·          increasing the requirements surrounding officers’ disclosure of material « personal » interests ( « and » related voting « and » decision making rights) « and » changes to grounds for disqualification « and » ineligibility for office,

·          strengthening financial accounting « and » disclosure obligations under the RO Act by aligning these obligations with the higher standards that apply to companies, putting these obligations on the face of the Act (rather than a requirement in the registered organisation’s rules) « and » making them enforceable as civil remedy provisions, « and »

·          creating a Registered Organisations Commission to enforce the regulations.

1.1       Current regulation of registered organisations

In addition to an overview of the current regulatory framework, the discussion below outlines two elements of the current framework: requirements for organisations’ rules as a result of the RO Amendment « and » the distinct responsibilities of the FWC.

1.1.2    Registration « and » registered organisations’ rules

Chapter 2 of the RO Act sets out the criteria for registration « and » procedural matters. There are a number of steps involved in this process. The FWC cannot register an employee or employer association unless the rules of the association make provision for matters as required by the RO Act. For example, organisations must have rules for:

·          eligibility of members,

·          power « and » duties of the committees of the organisation « and » its branches,

·          the manner in which the « property » of the organisation is to be controlled « and » its funds invested, « and »

·          elections for offices, such as the office of president or secretary.

The RO Amendment introduced disclosure « and » reporting requirements that registered organisations are required to include in their rules. The new rules require organisations to:

·          disclose remuneration paid to officers of an organisation or branch (section 148A),

·          disclose material « personal » interests of officers « and » their relatives (section 148B),

·          disclose payments to related parties made by an organisation or branch (section 148C), « and »

·          provide training to officials in their governance « and » accounting obligations (section 154D).

Associations seeking registration were required to include these provisions in their rules while current registered organisations are required to alter their rules accordingly by 1 January 2014. The procedure for altering rules varies from organisation to organisation « and » must be conducted in accordance with the specific procedures contained in each organisation’s own rules.

The FWC provides the following advice to registered organisations regarding rule changes not involving a change to the name or eligibility rules of the organisation. Once the alteration to the rules has been transacted, the organisation must lodge an application to the FWC for the General Manager or delegate to certify the changes. An application to the FWC must include:

·          a notice setting out the particulars of the alterations, for instance a document stating what the rules looked like before the alteration « and » what they will look like if certified, « and »

·          a declaration signed by the secretary (or if relevant, another authorised officer under the rules) stating:

o    that the alteration was made in accordance with the rules of the organisation,

o    all the steps the organisation took to comply with their rules when making the alteration, « and »

o    that the particulars set out in the notice are true « and » correct to the best of the secretary’s knowledge « and » belief.

Finally, once the application has been lodged with the FWC, a notice must be put on the registered organisation’s website informing members that the notification has been lodged.

1.1.3    Role of the Fair Work Commission

As noted above, the FWC is responsible for administering the provisions of the RO Act that relate to registered organisations. These functions are split between responsibilities conferred on the General Manager (the administrative arm) « and » the Tribunal (the tribunal arm).

The tribunal arm deals with:

·          registration of new organisations,

·          cancellation of registration,

·          approval of amalgamation,

·          representation orders in demarcation disputes,

·          approval of alterations to the name or member eligibility rules of organisations,

·          orders for a member of an organisation to inspect financial records, « and »

·          approval of membership agreements between organisations « and » state registered unions.

These functions are conducted by the tribunal arm via hearings « and » submissions from interested or affected parties.

The administrative arm is responsible for:

·          overseeing the compliance of registered organisations,

·          processing right of entry permit applications, « and »

·          providing information about the rights « and » obligations of registered organisations.

It also conducts inquiries « and » investigations into organisations’ accounting « and » auditing obligations as well as any breaches of the civil penalty provisions of the RO Act.

The General Manager is able to commence proceedings in relation to breaches of civil penalty provisions, or refer matters to the Director of Public Prosecutions, or the police, regarding possible criminal offences.

 



 

2.       Description « and » scope of the problem

Registered organisations play a significant role in Australia’s economy both through their involvement in the workplace relations system « and » by advocating on behalf of their members « and » supporting the interests of their members in industrial matters « and » more broadly.

 

Registered organisations protect their members’ interests by representing members in industrial matters « and » campaigning on policies that affect them, such as taxation, workplace relations regulation, government policies « and » assistance in relation to specific sectors or the social safety net. To achieve their aims, registered organisations require funds to cover direct operating costs « and » « other » monies used for advertising, campaigns « and » legal matters. These funds are derived from membership fees, donations « and » « other » investments, including « property » .

 

As can be seen from Table 1 in section 2.1.1, some registered organisations « and » their branches command significant financial resources. Therefore it is important that the RO Act requires a high level of financial oversight by officers to ensure that funds are used to benefit members. Moreover, member « and » community expectations regarding conduct of officers are high « and » dictate that they must act in the interests of their membership at all times « and » conduct their business in a transparent manner.

There is evidence that some registered organisations do not meet their obligations. For example, during a Senate Standing Committees on Education, Employment « and » Workplace Relations inquiry into the Fair Work (Registered Organisations) Amendment (Towards Transparency) « Bill » 2012, the FWC stated that each year an average of approximately 20 per cent of registered organisations do not submit financial reports on time.

 

Recent reports « and » inquiries have revealed the extent to which some registered organisations are failing to meet their statutory obligations « and » the expectations of their members. An inquiry conducted in 2012 by Ian Temby QC « and » Dennis Robertson into the NSW registered entity, HSUeast, commissioned by that union’s governing council, found that it did not have sufficient processes in place to ensure that members were getting value for their funds.

 

The level of non-compliance with the reporting obligations, combined with the findings of the FWC investigations into the HSU, demonstrate that the existing regulation of registered organisations is not sufficiently strong to protect members’ interests, particularly in relation to financial management. The financial accountability « and » transparency provisions of the RO Act require « amendments » to ensure more adequate oversight « and » enforcement to effectively prevent the malfeasance at which they are directed. The RO Amendment addressed some of these problems, however, it did not provide a strong deterrent for wrongdoing, in the form of criminal sanctions, or give the regulator adequate powers to thoroughly investigate « and » pursue litigation of contraventions of the RO Act « and » FW Act in a timely « and » responsive manner.

 

For example, registered organisations are currently required to provide for certain financial disclosures in their rules, such as related party payments, officer remuneration « and » material « personal » interests of officers « and » their relatives (see section 1.1.2)). As these obligations are contained in rules, alleged breaches can only be dealt with by a relevant court (for example, the Federal Court) on application for a remedy made by a member of the registered organisation. The General Manager of the FWC does not have standing to bring these matters to court « and » lacks the power required to hold a registered organisation « and » its officers to account.

 

KPMG Forensic’s Process review of Fair Work Australia’s investigations into the Health Services Union (the KPMG Review) conducted in 2012 made a number of recommendations to improve administration of enforcement of registered organisations, all of which are currently being implemented by the FWC. However, the KPMG Review was not tasked with considering, « and » did not make recommendations as to whether the General Manager had sufficient powers to regulate registered organisations effectively.

 

While recent changes to the RO Act have increased civil penalties « and » improved the FWC’s investigative functions, further measures are required to allow the regulator to pursue breaches of the RO Act via investigation « and » litigation. For example, during a Senate Standing Committee on Education, Employment « and » Workplace Relations inquiry into the Fair Work (Registered Organisations) Amendment (Towards Transparency) « Bill » 2012, the Institute of Public Affairs highlighted concerns in relation to the RO Amendment « and » added that recent “events give rise to reasonable doubt about the utility of the current regulations, particularly their deterrent effect.”  The New South Wales Government provided evidence on its own jurisdiction where stronger regulation of employee « and » employer associations has been implemented.

 

The findings in relation to the HSU demonstrate a need for reform to meet the expectations of members, « and » the community more broadly, in relation to the standards of financial management « and » fiduciary duties observed by officers of registered organisations.

2.1       Affected parties

The parties likely to be directly affected by the options to address the problem described above are:

·          registered organisations « and » their officials,

·          members of registered organisations:

o    for employee organisations: broadly workers

o    for employer organisations: broadly businesses , including small businesses, « and »

·          the Australian community.

2.1.1    Registered organisations

As at 17 October 2013, there were 112 registered organisations listed with the FWC of which 67 were employer organisations « and » 45 were employee organisations. The majority of registered organisations are not-for-profit « and » operate to serve the interests of their members. Some have additional arms or subsidiaries to the organisation that are not related to their status as a registered organisation, such as a for-profit training arm.

 

To develop a profile of registered organisations, the most recently submitted financial reports « and » annual returns lodged by registered organisations to the FWC have been analysed. These reports are made available on the FWC website. This is considered the best available data for the purpose, however, while the RO Act requires registered organisations to lodge annually, there is a high prevalence of failure to lodge reports, late reports, « and » inconsistency in reporting periods.

 

Based on the available reports, information on the net assets, number of members « and » number of employees has been considered to create a profile of registered organisations « and » their members. This information is set out in Table 1.

 

Table 1 - profile of registered organisations [1]

Value of net assets

Percentage of Employer organisations

Percentage of Employee organisations

Less than $2m

54%

27%

Between $2m - $5m

10%

9%

Between $5m « and » $20m

22%

25%

Between $20m « and » $50m

1%

24%

More than $50m

6%

11%

Not available

6%

4%

Number of employees

Percentage of Employer organisations

Percentage of Employee organisations

Fewer than 15

64%

35%

15 or more

30%

58%

Not available

6%

7%

 

Based on the information in Table 1, « and » for the purposes of this regulation impact statement, registered organisations have been grouped into small « and » large organisations. Small organisations are defined as those with fewer than 15 employees « and » less than $2 million in net assets, while large organisations are all « other » organisations. Just over a half of all organisations are large organisations, « and » just under a half are small.

Based on the information available in financial « and » annual reports lodged with the FWC, the percentage of registered organisation members have been estimated by organisation size. These are set out in Table 2 below.



Table 2 - distribution of members across organisations [2]

Type of organisations

Percentage of total members

large employee organisations

90%

small employee organisations

5%

large employer organisations

4%

small employer organisations

1%

As can be seen from Tables 1 « and » 2, overall, registered organisations are most likely to be small employer organisations or large employee organisations. Furthermore, members of registered organisations are concentrated in large employee organisations, with small employer organisations representing the smallest number of members.



It is expected that these differing characteristics will see registered organisations impacted differently by regulatory change. These differences have been accounted for in estimates of likely compliance costs « and » impact analysis.

2.1.2    Officials of registered organisations

Registered organisations vary considerably in terms of their branch structures « and » rules for appointing individuals in offices. For example, the number of offices in some organisations is fixed, while in others it is dependent on the number of members. Furthermore, in many cases individuals hold multiple offices within one organisation or across its branches.

 

To estimate how many individuals hold office, a sample of registered organisations’ financial reports « and » annual returns have been analysed. Based on this, there are approximately:

·          4700 individuals who hold office in an employee organisation , « and »

·          1600 individuals who hold office in an employer organisation .

2.1.3    Members of employee organisations

Based on financial reports « and » annual returns of registered organisations lodged with FWC there are around 1.9 million people who are members of employee organisations in Australia.

 

This figure is broadly supported by the Australian Bureau of Statistics’ (ABS) data on trade union membership (cat. no. 6310.0). According to the ABS, in August 2012, 1.8 million people were members of trade unions in their main job. Despite a slight increase since 2008, trade union membership has decreased, overall, since 1990. It is expected that the number of members of employee organisations will remain steady or decrease over time if current trends hold. 

2.1.4    Members of employer organisations

Based on financial reports « and » annual returns of registered organisations there are over 90,000 members of employer organisations. While the financial reports compiled by organisations generally do not provide information on the type of members, it is assumed that members are usually businesses or in some cases, not-for-profit bodies or individuals in their capacity as employers. Anecdotal evidence suggests that the majority of members are small or medium-sized businesses.

2.1.5.   « Other » affected parties

The Australian community

Due to the large number of businesses « and » workers that are members of registered organisations, « and » the role that registered organisations play in the workplace relations system, the Australian community is also a stakeholder broadly affected by the regulation.



 

3.       Objectives of the regulation

The proposed « amendments » will give effect to election commitments made by the Government in the Policy.

 

The Government intends to amend the RO Act to ensure as far as possible, that registered organisations are regulated in the same way as companies « and » directors. Currently, registered organisations « and » their officers are required to comply with requirements « and » obligations under the RO Act that are similar to those placed on companies « and » directors under the « Corporations » Act. However, registered organisations « and » their officers do not face the same penalties as companies « and » their officers for breaching these requirements.

 

The objective of the Policy is to increase financial transparency « and » accountability of registered organisations « and » to rebuild member « and » community confidence through stronger governance « and » increased penalties. Transparency « and » accountability is critical to ensuring that members’ interests are protected « and » that funds are not used for « personal » gain or inappropriate purposes. Registered organisations have an important role in the workplace relations system, « and » members « and » the public must have confidence in them or the system itself will be undermined.

 

The Policy outlines a commitment to establish a new independent regulator called the Registered Organisations Commission (ROC). The establishment of this body is to ensure higher standards are effectively monitored « and » enforced.

3.1       Options for addressing the problem

3.1.1    Option One - the status quo

If the status quo is maintained, registered organisations will continue to be subject to the RO Act « and » all functions related to registered organisations will remain the responsibility of the FWC. In addition to enhancing workplace relations in the federal system, the objects of the RO Act are to:

·          provide for the registration of associations « and » accord rights « and » privileges to them once registered,

·          provide for the democratic function « and » control of organisations,

·          ensure that registered organisations are representative of « and » accountable to their members, « and »

·          ensure that registered organisations operate efficiently.

Recent « amendments » to the RO Act which took effect on 29 June 2013 provided for increased penalties to align with the FW Act, a more comprehensive disclosure regime, « and » enhanced investigative powers for the FWC, after the previous Government identified areas of the RO Act that could be clarified « and » strengthened. The maximum penalties that can currently be imposed are 300 penalty units for a body corporate (equivalent to $51,000) « and » 60 penalty units for an individual (equivalent to $10,200).

 

These changes will continue to operate under Option One, however, these penalties may not be sufficient to deter non-compliance.  The Australian Mines « and » Metals Association (AMMA) submission to the Senate Education, Employment « and » Workplace Relations Committee inquiry into the Fair Work (Registered Organisations) Amendment « Bill » 2012 noted that all registered organisations should be subject to “the same high standards as organisations operating under the present-day legislation for corporate entities - the « Corporations » Act 2001.” The AMMA submission also notes that “the more immediate problem is the fact there is not a dedicated body or sufficient resources to properly police those requirements.”

3.1.2    Option Two - applying corporate standards of regulation to registered organisations « and » establishing the Registered Organisation Commission

Under Option Two, registered organisations « and » their officers will have fiduciary « and » statutory responsibilities that are more closely aligned with those of companies « and » directors, provided under the « Corporations » Act. Option Two reflects the Government’s election commitment.

 

Higher civil penalties « and » criminal offences

To deter non-compliance, registered organisations « and » their officials will be subject to similar penalties as company directors. Maximum civil penalties under the RO Act will be increased to align more closely with those in the « Corporations » Act. A three tier penalty system will be introduced:

·          The top tier will impose the maximum civil penalty in line with the existing « Corporations » Act penalties. Civil penalty provisions under this tier would generally be limited to offences that relate to an officer’s fiduciary duties.

·          The middle tier includes provisions relating to the provision of information about the operation « and » internal governance of registered organisations, including making false statements « and » provisions relating to financial disclosure obligations.

·          The low tier relates to either the lodging of documents with the FWC or simple administrative tasks such as removing non-financial members from the organisations register. Breaches of these obligations do not have a direct effect on any person or organisation.

Criminal offences will be introduced to reinforce the importance to officers of complying with their financial management duties under the RO Act. These provisions will operate in the same way as the « Corporations » Act, which imposes criminal sanctions in similar situations. The criminal offences will apply where:

·          an officer of an organisation or branch is reckless or intentionally dishonest « and » fails to exercise his or her powers « and » discharge his or her duties in good faith in the best interests of the organisation or for a proper purpose,

·          an officer or employee of an organisation or branch uses his or her position dishonestly:

o    with an intention of directly or indirectly gaining an advantage for himself or herself (or someone else) or to cause detriment to the organisation, or

o    reckless as to whether the use of their position may result in themselves (or someone else) directly or indirectly gaining an advantage, or in causing detriment to the organisation, « and »

·          a person dishonestly uses information obtained because he or she is, or has been, an officer or employee of an organisation or branch:

o    with the intention to gain advantage for him or herself or to cause detriment to the organisation, or

o    is reckless as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the organisation.

Criminal offences will also be introduced in relation to breaches of new investigation powers of the Registered Organisations Commissioner that will align with those currently exercised by the Australian « Securities » « and » Investments Commission (ASIC) in accordance with the Australian « Securities » « and » Investments Commission Act 2001.

 

Moving financial reporting « and » disclosure obligations to the legislation

Under Option Two, new disclosure « and » reporting requirements for rules of registered organisations introduced by the RO Amendment will become obligations on the face of the legislation. This means that disclosure « and » reporting obligations will be in the legislation itself, rather than the legislation requiring organisations to provide for these obligations in their rules, as is the case under Option One. These obligations will require organisations to:

·          disclose remuneration paid to officers of an organisation or branch,

·          disclose material « personal » interests of officers « and » their relatives,

·          disclose payments to related parties made by an organisation or branch, « and »

·          provide training to officials in their governance « and » accounting obligations.

A new obligation will be included on the face of the legislation that requires organisations or branches to prepare a separate ‘officer « and » related party disclosure statement’ (ORPDS), which will set out the matters required to be disclosed by the proposed « amendments » outlined above. The rules relating to the preparation « and » lodgement of the ORPDS will be built into the general purpose financial report framework to ensure that compliance is straightforward « and » the standards required are already well understood by registered organisations.

 

While there are significant similarities in the obligations on registered organisations for both Option Two « and » Option One, higher penalties (including criminal penalties) will apply for breaches « and » the regulator will have standing to bring alleged breaches to a court under Option Two. This will ensure that a more effective compliance regime is in place to prevent misconduct without significantly increasing the overall compliance burden for registered organisations.

 

Establishing a Registered Organisations Commission (ROC)

Under Option Two, an independent ROC will be created. The ROC will assume functions « and » powers of the General Manager of the FWC under the RO Act outlined above in section 1.1.3, « and » will be given stronger investigative « and » information gathering powers that align with those available to ASIC.

 

The Minister for Employment will appoint an independent Registered Organisations Commissioner who will manage the affairs of the ROC « and » be responsible for the performance of its functions. The ROC will:

·          enforce the RO Act, including the amended reporting « and » compliance requirements,

·          educate registered organisations about the new obligations « and » provide information to members of registered organisations about their rights, as well as acting as the body to receive complaints from members, « and »

·          cooperate with law enforcement bodies where it is in the public interest to do so.

Option Two will create a stronger regulator « and » a real deterrence for non-compliance. Having a body which is independent « and » stand-alone will raise awareness among the public « and » registered organisations of the importance of ensuring strong governance « and » accountability. It will assist in regaining the confidence of members « and » the public in registered organisations « and » the importance of their role in workplace relations.

4.       Impact analysis

The approach taken in this section is to use Option One, the current situation, as the benchmark for estimating the benefits that the enhanced financial transparency « and » accountability of registered organisations described in Option Two, will have for members of registered organisations, registered organisations themselves, « and » the Australian community. This is balanced against estimated compliance costs registered organisations may incur to adopt the changes outlined in Option Two.

 

The methodology takes account of the characteristics of the affected parties described in section 2.1.

4.1       Option One

Option One maintains the status quo. It has been used as the benchmark for considering the costs « and » benefits of the two options.

 

Prevalence of non-compliance

It is expected that the majority of registered organisations operate with acceptable governance arrangements « and » for the benefit of their members. However, there is little information available to confirm how prevalent non-compliance « and » maladministration is among officials of registered organisations.

 

The analysis of registered organisation financial statements « and » annual reports lodged with the FWC indicates that many registered organisations provide timely « and » detailed financial information to their members. However, approximately 20 per cent of registered organisations do not submit financial reports on time. The recent FWC investigations into the HSU provide evidence that serious non-compliance has occurred in the past.

 

Benefits

The main benefit of retaining the existing arrangements is that any costs to registered organisations associated with the regulatory change are avoided. This benefit would be most pronounced for small employer « and » employee organisations that are often solely volunteer-run « and » for their members.

Option One would allow for an assessment of the effectiveness of the RO « Amendments » after they become mandatory on 1 January 2014, noting that the RO Amendment changes do not establish an effective framework for investigating or discouraging non-compliance.

 

Members of organisations will not be deterred from taking up office, voluntarily or in a paid role, by criminal offences or high civil penalties.

 

Costs

The recent FWC investigations suggest that the current approach to regulation of registered organisations may not be an effective way of ensuring that registered organisations comply with the RO Act or operate at the standard expected by their members, « and » the Australian community.  

 

The current obligations on registered organisations are significant (see section 1.1). However, the FWC investigations suggest that the regulator lacks the powers necessary to rigorously enforce these provisions « and » the subsequent penalties available are not sufficient to deter non-compliance. This has a number of impacts. Most directly, it will still be difficult for non-compliance to be identified, investigated or penalised.

 

Registered organisations play a specific role in the operation of the federal workplace relations system, as discussed in section 1. The rights « and » responsibilities are balanced to enhance relations between employers « and » employees, reduce the adverse effects of industrial disputation « and » allow all parties to promote « and » protect their economic « and » social interests. The nature of this representative role is such that non-members are also indirectly or directly affected by the work of registered organisations. For example, non-members may be affected by the outcome of Enterprise Agreement negotiations led on behalf of staff by the relevant registered organisation at the workplace.

 

Registered organisations also play a larger role by advocating publicly for their members on « other » issues that are important to them. If registered organisations cannot be held to account by their members or an effective regulator, maladministration may continue « and » the community may lose further confidence in registered organisations. This will have an adverse social cost by diminishing the credibility of registered organisations in the view of members « and » the community more broadly. This will reduce their ability to be involved meaningfully in public discourse « and » advocate on social « and » economic issues.

4.2       Option Two

To quantify the cost « and » benefits of Option Two, it is necessary to understand how highly members value the principal of “value for money” « and » higher accountability standards.

 

Based on the most recent ABS statistics, workers in three out of the five industries with the highest number of union members earned below the Average Full Time Adult Total Earnings in May 2013 (cat. no. 6102.0.55.001). Employee organisations generally apply a progressive fee structure where higher wages earner pay higher fees.

 

The relatively low earnings of a large number of employee organisation members « and » the prevalence of progressive fee structures supports the conclusion that “value for money” with regards to membership fees, would be valued highly by members of employee organisations. Following from this, it is assumed that higher accountability standards would also be valued highly.

 

There is no definitive data on the profile of members of employer organisations. Knowing that employer organisations are formed to further the interests of their members, it can be assumed that businesses or not-for-profits pay fees to join employer organisations in order to maximise their competitive position, via advocacy or influence on the part of the organisation. Based on this, it can be assumed that “value for money” « and » accountability is also valued highly by members of employer organisations.

 

Benefits

It is expected that the level of non-compliance by officials in registered organisations will decrease « and » that general standards of governance within registered organisations will increase as a result of the changes proposed in Option Two.

 

Even if the current level of non-compliance is low, a small increase in accountability which leads to better oversight « and » management of members’ funds will be valued highly by members. This will benefit all members of registered organisations, regardless of whether serious non-compliance exists in their organisation, through better oversight of expenditure.

 

An indirect benefit of the changes will be increased confidence in registered organisations by members « and » the Australian community. This is important given the role that registered organisations play in the workplace relations framework « and » the recent findings in relation to the HSU which have undermined member « and » community confidence.

 

Costs

The costs associated with Option Two relate to additional reporting « and » disclosure requirements for registered organisations. These costs have been estimated at an average of around $2,300 per year for small organisations « and » $3,500 per year for large organisations. Overall, the average cost is $3,000 per year for each registered organisation. The assumptions to arrive at this figure are discussed in section 5.

Broadly, it is assumed that large organisations have the capacity to absorb these additional compliance costs without charging additional fees from members. This is based on a consideration of financial resources « and » number of employees. Large organisations are likely to incorporate new reporting obligations into standing administrative practices to minimise overall compliance costs because of their higher staff levels which would be more adaptive to new work arrangements « and » tasks.

 

Small organisations, on the « other » hand, with fewer financial resources « and » employees are assumed to have less capacity to absorb new compliance costs than large organisations. They also have fewer members on which to pass on the new costs. Nevertheless, in the case that small organisations were required to pass costs onto members, overall, the cost increase per member would not be significant.

 

« Other » non-monetary costs relate to members nominating for office within organisations. Some individuals may find the reporting « and » accountability obligations associated with holding office « and » new criminal sanctions too burdensome, which may deter them from nominating for office. The deterrence effect is likely to be more pronounced for small organisations because senior officials in small organisations are more likely to be volunteers with fewer resources to help them meet their obligations.

The deterrence effect is expected to be less pronounced on large organisations, which have significant financial « and » staffing resources to assist officials to meet their obligations. There is, however, a risk that large organisations may seek to reduce exposure to criminal « and » civil penalties by restructuring their organisation to significantly reduce the number of officers. Restructuring in this way could centralise decision-making « and » reduce the ability for members to participate in the affairs of the organisations, such as policy development.

 

The budgetary cost to the Government is nil .

5.       Compliance costs

This section estimates the compliance costs associated with Option Two when compared with Option One, which represents business as usual. Option Two will only marginally increase the overall reporting « and » accountability requirements when compared with business as usual. Registered organisations already have reporting obligations under Option One, as required by the RO Act. Under Option Two, these obligations are being transferred from the rules of registered organisations to the face of the legislation. There are, however, a small number of new obligations that will increase compliance costs for registered organisations.

For the purposes of calculating the costs, registered organisations have been divided into two groups - large organisations « and » small organisations. Based on the registered organisations financial data, the compliance costs have been calculated on the assumption that just over one half of all registered organisations are large organisations « and » just under one half are small organisations.

 

In assessing the cost increase associated with Option Two, the Department has compared the detail of the new requirements under Option Two to business as usual. New obligations are summarised in Table 3. Note that this table only includes the « amendments » which will have an increased compliance cost.

 

Table 3 - New obligations

 

Amendment

New obligation

1.

Officer « and » related party disclosure statement

 

 

Require organisations « and » branches to prepare a separate ‘officer « and » related party disclosure statement’ that outlines disclosure information for the organisation

Organisations required to produce a new report

2.

Disclosure of officers’ remuneration

 

 

Rules to provide certain matters, with statutory requirements for those matters to be disclosed:

- identity, remuneration « and » non-cash benefits of the top 5 highest paid officers in the organisation « and » branches

- disclosure must be made as part of the ‘officer « and » related party disclosure statement’

- the actual amount of each officer’s remuneration

- the actual value « and » form of each officer’s non-cash benefits

Increases reporting requirements for branches

3.

Disclosure of material « personal » interests

 

 

Replace rule obligations with statutory requirement to disclose material « personal » interests

a) that an officer or relative of an officer has or acquires

b) as soon as practicable after the interest is acquired

c) provide particulars on nature « and » extent of interest « and » how it related to the affairs of the organisation or branch

Officers must document more information regarding their « personal » interests, which is provided to members

5.1       New obligations incurring compliance costs

Obligation 1 - Officer « and » related party disclosure statement

This is a new obligation that requires organisations to prepare a separate ‘officer « and » related party disclosure statement’. The statement compiles information disclosed as per requirements that will be moved from organisations’ rules to the face of the legislation under Option Two. Therefore, while the obligation to create the statement is new, organisations are already required to keep a record of most of its content. This obligation will affect all registered organisations.

 

The steps involved in preparing the report are the same as the general financial report. These are:

1.       Keep proper financial records to create the statement

2.       Draft statement (or engage third party to draft the report)

3.       Submit the statement to an auditor

4.       Distribute the statement to members « and » present it at a General Meeting or Committee of Management meeting

5.       Lodge the statement with the FWC.

It is assumed that the drafting of the statement is completed by a clerical officer, with clearance by a high ranking official, such as a Secretary or President, of the organisation. A higher number of labour hours are allocated to each step for large organisations because their reports are likely to be more complex. It is also assumed that half of all organisations will engage a third party, such as an accountancy firm, to draft their report.

 

Obligation 2 - Disclosure of officers’ remuneration

This obligation previously existed in Option One, however, Option Two applies it to more officers. The new obligation requires the remuneration of an additional three of the highest paid branch officials to be disclosed. The new obligation only applies to organisations with branches « and » has only been costed for large organisations which are assumed to be more likely to have branches. The obligation introduces new administrative costs to draft documentation « and » have these cleared by senior officials.

 

Obligation 3 - Disclosure of material « personal » interests

This obligation exists in Option One under registered organisations’ rules, however, a new component requires officials to document more information regarding their « personal » interests, which is then provided to members. This information is collected by clerical staff « and » a record is circulated « and » kept in the form of a memorandum. It has been assumed that not all officials will have a « personal » interest to disclose every year.

5.2       Standard costs applied

The compliance costs associated with the proposal are administrative costs, in the form of labour costs. There are no substantive compliance costs or delay costs. A number of assumptions have been made regarding the labour costs used in the analysis. These are based on an assessment of indicative salary range data derived from jobs « and » recruitment websites for the selected occupations « and » , in the case of officials, including « and » high-ranking officials, information contained in registered organisations’ financial reports. Fortnightly wages have been calculated by multiplying annual salaries by 12 « and » dividing by 313. This calculation averages annual pay out over four years to account for an irregular number of fortnights per year « and » a leap year. Assuming 76 working hours in a fortnight, the hourly rates are as follows:

Role

Annual salary

Hourly rate

Clerical officer

$55,000

$27.75

Official

$65,000

$32.79

Financial Accountant

$90,000

$45.40

Secretary/President

$100,000

$50.45

5.3       Regulatory Burden Estimate

The compliance costs discussed above have been calculated using the Business Cost Calculator over a ten year period. These are summarised in Table 4.

 

Table 4 - Regulatory Burden Estimate

Average Annual Change in Compliance costs (from Business As Usual)

Sector/Cost Categories

Business

Not-for-profit

Individuals

Total by cost category

Administrative costs

$0

$331,346

$0

$331,346

Substantive compliance costs

$0

$0

$0

$0

Delay costs

$0

$0

$0

$0

Total by sector

$0

$331,346

$0

$331,346

 

 



 

6.       Stakeholder Consultation

6.1       Consultation with relevant stakeholders

Relevant stakeholders are:

·          State « and » Territory Governments

·          Registered organisations « and » their officials

·          Members of registered organisations:

o    For employee organisations: broadly workers

o    For employer organisations: broadly businesses , including small businesses.

The following groups have been consulted formally in relation to the changes outlined in Option Two:

·          state « and » territory ministers were consulted through the Council of Australian Governments’ Select Council on Workplace Relations (SCWR). Officials from states « and » territories were also consulted through a High Level Officials meeting, « and »

·          employer « and » employee organisations were consulted through the National Workplace Relations Consultative Council’s Committee on Industrial Legislation.

The Department also considered public comments made by stakeholders regarding the regulation of registered organisations following the release of the Policy in July 2013. Stakeholder feedback on related proposed regulation of registered organisations was also considered, including:

·          consideration of submissions to a Senate Committee Inquiry into the Fair Work (Registered Organisations) Amendment (Towards Transparency) « Bill » 2012 moved as a Private Members « Bill » in November 2012, which sought to give effect to parts of the Government’s policy, « and »

·          submissions received on 25 June 2013 by the Senate Committee Inquiry into the RO Amendment which includes opinions on compliance with increased regulation of registered organisations.

6.2       Outcome of formal consultations

SCWR is a consultative forum for relevant state « and » territory ministers to discuss workplace relations, workers’ compensation « and » occupational health « and » safety issues of mutual interest. Consultation with state « and » territory ministers is required under the Inter-Governmental Agreement for a National Workplace Relations System for the Private Sector when changes are proposed to the FW Act, including the RO Act.

 

The Committee on Industrial Legislation (CoIL), a subcommittee of National Workplace Relations Consultative Council (NWRCC) meets when required to provide technical input on draft or existing workplace relations legislation.

 

SCWR was held on 1 November 2013 « and » the proposal to apply corporate standards of regulation to registered organisations « and » establish the Registered Organisation Commission was considered. State « and » territory officials were consulted on the draft legislation through a High Level Officials meeting.

 

The NWRCC includes seven representatives from the Australian Council of Trade Unions « and » seven representatives selected from the Australian Chamber of Commerce « and » Industry, Australian Industry Group, National Farmers’ Federation, Master Builders Australia « and » Business Council of Australia. These organisations are peak industrial relations bodies « and » , as such, are representatives of employer « and » employee associations more broadly. They were consulted on the draft legislation through the CoIL.

6.2.1    Committee on Industrial Legislation

The CoIL was provided with confidential draft legislation giving effect to Option Two for consideration, followed by discussion of their questions « and » feedback with Department of Employment officials on

30 « and » 31 October 2013.

 

CoIL members acknowledged that the draft legislation broadly reflected the Policy.

 

Members expressed some concern in relation to the inclusion of criminal penalties for non-compliance with the RO Act « and » increased disclosure requirements for officers of registered organisations. Members also provided feedback in relation to technical elements of the draft legislation, particularly in relation to alignment of the RO Act with the « Corporations » Act. Consideration of this feedback resulted in various minor « and » technical « amendments » to the draft legislation.

6.2.2    High Level Officials meeting

High level state « and » territory officials were provided with confidential draft legislation giving effect to Option Two for consideration « and » discussion with Department of Employment officials on 31 October 2013. State « and » territory officials provided general high level comments on technical elements of the draft legislation, which have been considered by the Department .

6.2.3    Select Council on Workplace Relations

The Select Council on Workplace Relations was held in Melbourne on 1 November 2013. The SCWR noted the Government’s commitment to strengthen the transparency « and » accountability of registered organisations by giving effect to legislation that reflects Option Two « and » establishing a Registered Organisations Commission.

 



 

7.       Checklist for assessing an options-stage RIS

Does the options-stage RIS include a minimum of three elements—the problem, objective « and » options?

YES

Does the options-stage RIS include at least three options (including a regulatory option, a non-regulatory or light-handed regulatory option, « and » a do-nothing option)?

NA - the policy is an election commitment

Has the options-stage RIS been certified at the secretary or deputy secretary level « and » provided to the OBPR before consideration by the decision-maker?

YES

Has the options-stage RIS been published following the public announcement of an initial decision to regulate?

YES

 

With regard to the options-stage RIS, the Department has fully complied.

8        Conclusion

The Department recommends implementing Option Two for the following reasons:

·          Option Two provides a benefit to members of registered organisations that they value highly.

·          Option Two will restore member « and » community confidence in registered organisations as it will show that the Government is determined to protect their interests through strong regulation, compliance « and » appropriate penalties.

·          The number of organisations affected is low, with only 112 registered organisations as at     17 October 2013.

·          The compliance cost for each registered organisation is comparatively low at around $3,000 per year on average. It is likely that the large majority of registered organisations will be able to absorb these costs.

o    If these costs were passed onto individual members via an increase in fees, the cost increase per member would be negligible.

o    Furthermore, the majority of members are part of registered organisations that have significant financial assets « and » staffing resources.

·          The overall budgetary impact for the Government is nil.



·           

9        Implementation « and » Review

9.1       Implementation

Once the legislation has received Royal Assent, the Fair Work Ombudsman (FWO), FWC « and » the Department will commence consultation « and » negotiations in order to establish the ROC « and » see it commence operations. In particular, staffing arrangements will need to be finalised early in the implementation phase, including the commencement of the appointment process for a Registered Organisations Commissioner « and » transfer of relevant positions from the FWC to the ROC. Appropriate governance arrangements will need to be established for the ROC’s operation within the FWO. A detailed implementation plan which covers ongoing administration of the ROC is being prepared to operationalise the legislative changes proposed in Option Two.

9.2       Review

Review of the implementation phase will assess whether government « and » Parliamentary processes have been adhered to « and » whether the legislation has been fully « and » successfully developed « and » implemented. The key milestone to be achieved is the passage of legislation implementing the measures outlined in Option Two, « and » the corresponding commencement of the ROC.

 

The operation « and » effectiveness of the new body will be monitored by the Department, FWO « and » once established, the ROC. A key aspect of this monitoring will be:

·          whether the legislation has assisted in achieving better transparency « and » accountability standards, « and »

·          whether the ROC is able to effectively regulate registered organisations.

 

 



NOTES ON CLAUSES

In these notes on clauses, the following abbreviations are used:

ASIC

Australian « Securities » « and » Investments Commission

ASIC Act

Australian « Securities » « and » Investments Commission Act 2001

Commission

Registered Organisations Commission

Commissioner

Registered Organisations Commissioner

« Corporations » Act

« Corporations » Act 2001

FMA Act

Financial Management « and » Accountability Act 1997

FW Act

Fair Work Act 2009

FWC

Fair Work Commission

GM

General Manager of the Fair Work Commission

LI Act

Legislative Instruments Act 2003

PS Act

Public Service Act 1999

RO Act

Fair Work (Registered Organisations) Act 2009

ROA Act

Fair Work (Registered Organisations) Amendment Act 2012

the « Bill »

Fair Work (Registered Organisations) Amendment « Bill » 2013

 

Clause 1 - Short title

1.              This is a formal provision specifying the short title.  

Clause 2 - Commencement

2.              The table in this clause sets out when the provisions of the « Bill » commence.  

Clause 3 - Schedule(s)

3.              Clause 3 of the « Bill » provides that an Act that is specified in a Schedule is amended or repealed as set out in that Schedule, « and » any « other » item in a Schedule has effect according to its terms.  



Schedule 1 - The Registered Organisations Commissioner

4.              Schedule 1 of the « Bill » is divided into two parts.

5.              Part 1 sets out the provisions which establish the Commission « and » the Commissioner. The functions « and » powers of the Commissioner « and » the Commission reflect those of the GM. The enhanced investigation powers of the Commissioner, the increased civil penalties for non-compliance « and » the increased obligations on organisations « and » their officers will commence with the commencement of Schedule 2.

6.              Part 1 also sets out the terms « and » conditions of the Commissioner’s appointment, provides for staff from the Office of the Fair Work Ombudsman to assist the Commissioner « and » to be under the Commissioner’s direction while doing so « and » establishes the Registered Organisations Commission Special Account.

7.              Part 2 sets out the consequential, transitional « and » savings provisions which arise from the « amendments » made in Part 1.

Part 1 - « Amendments »

Fair Work Act 2009

Item 1 - Subsection 576(2) (note)

8.              Item 1 is a consequential amendment to the note in subsection 576(2) to reflect item 10, which has the effect that the RO Act will no longer confer on the FWC the function of providing advice « and » assistance to organisations in relation to their rights « and » obligations under the RO Act. Instead new section 329AB of the RO Act (inserted by item 88), confers this function on the Commissioner.

Item 2 - Paragraph 604(1)(b)

9.              Section 604 of the FW Act provides for an appeal to the Full Bench of the FWC in relation to certain decisions of the FWC. New paragraph 604(1)(b) will allow decisions of the Commissioner (or a delegate) to also be appealed to the Full Bench.

Item 3 - Subsection 607(1)

10.          Section 607 of the FW Act sets out the process of appealing or reviewing decisions. This item has the effect that decisions of the Commissioner, in addition to those of the FWC or the GM, may be heard or conducted without holding a hearing only in the circumstances stated in that section.

Item 4 - Subparagraph 613(2)(a)(ii)

Item 5 - At the end of paragraph 613(2)(a)

11.          Section 613 of the FW Act provides for the manner in which appeal decisions are made by the FWC. These items amend subsection 613(2) to allow the President of the FWC, a Vice President or a Deputy President (with the permission of the President) to hear an application for permission to appeal against a decision of the Commissioner (or a delegate) « and » where permission is granted, decide the appeal.

Fair Work (Registered Organisations) Act 2009

Item 6 - Section 6

12.          This item inserts the definitions of Commission « and » Commissioner.

Item 7 - Section 6

13.          This item includes the definition for directions contravention .

Item 8 - Section 6 (definition of FWA Member)

14.          This item repeals the definition of FWA Member which became obsolete when Fair Work Australia (FWA) was renamed the FWC by the Fair Work Amendment Act 2012 .

Item 9 - Section 13 (heading)

Item 10 - Subsection 13(1)

15.          Section 13 describes the functions of the FWC under the RO Act.

16.          Item 10 amends section 13 to reflect that the FWC’s functions under the RO Act are limited to keeping a register of organisations. Its previous function of providing advice « and » assistance to organisations in relation to their rights « and » obligations under the RO Act is now the responsibility of the Commissioner. Item 9 is a consequential amendment to reflect the change made by item 10.

Item 11 - Subsection 26(1)   

Item 14 - Section 31

Item 15 - Subsection 38(4)

Item 16 - Paragraph 73(3)(a)

Item 17 - Subsection 77(2)

Item 21 - Paragraph 110(a)

Item 22 - Subsection 114(2)

Item 23 - Subsection 151(3)

Item 24 - Paragraph 151(10)(b)

Item 25 - Subsections 152(4) « and » 154(4)

Item 26 - Paragraph 160(a)

17.          These items are consequential to item 10. They replace references to paragraph 13(1)(a) in the relevant provisions with references to subsection 13(1).

18.          These provisions deal with matters that must be recorded by the GM on the register of organisations, including registration « and » cancellation of registration of organisations, amalgamations « and » withdrawal from amalgamations of organisations into federations, membership agreements under section 151, assets « and » liabilities agreements under section 152 « and » alterations to names of organisations or their eligibility rules.

Item 12 - Subsection 28(1A)

Item 13 - Subsection 28(1A) (note)

19.          Subsection 28(1A) enables the GM to apply to the Federal Court for an order cancelling the registration of an organisation in certain circumstances. These items replace references to the GM with references to the Commissioner. 

Item 18 - Subsection 95(3A)

Item 19 - Paragraph 95(3A)(a)

Item 20 - Subsections 95(3B) « and » (3C)

20.          Section 95 requires that an application to the FWC for a ballot to decide whether a constituent part of an amalgamated organisation should withdraw from the organisation, must be accompanied by a written proposal for the withdrawal.

21.          Subsection 95(3A) allows the applicant to request the GM to either give or direct the amalgamated organisation to provide, certain information. Subsections 95(3B) « and » (3C) permit the GM to provide the information « and » require an amalgamated organisation to comply with the GM’s direction respectively.

22.          These items amend subsections 95(3A), (3B) « and » (3C) to also confer these powers « and » obligations on « and » in respect of the Commissioner.

Item 27 - Subsection 183(1)

Item 28 - Subsection 183(4)

Item 29 - Subsection 184(2)

23.          Subsection 183(1) allows a committee of management of an organisation or branch of an organisation to apply to the FWC for an exemption from the requirements of subsection 182(1) in relation to elections for offices. Subsection 183(4) requires the GM to give notice of this application to the members of the organisation or branch concerned.

24.          Subsection 184(2) requires the GM to hear these applications « and » any objections made by relevant members.

25.          These items amend subsections 183(1) « and » (4) « and » subsection 184(2) by replacing references to the FWC « and » the GM with references to the Commissioner to reflect that this is now a function of the Commissioner.

Item 30 - Section 186 (heading)

Item 33 - Section 189 (heading)

Item 42 - Section 202 (heading)

Item 53 - Section 207 (heading)

Item 57 - Section 233 (heading)

Item 60 - Section 235 (heading)

Item 62 - Section 236 (heading)

Item 74 - Section 268 (heading)

Item 83 - Section 272 (heading)

Item 89 - Section 330 (heading)

Item 91 - Section 331 (heading)

Item 105 - Subsection 336(1) (heading)

Item 109 - Subsection 336(1A) (heading)

Item 111 - Subsection 336(2) (heading)

Item 114 - Section 337 (heading)

26.          These items replace references to the GM in the relevant section « and » subsection headings with references to the Commissioner to reflect that the functions described are now functions of the Commissioner.

Item 31 - Section 186

Item 32 - Subsection 187(3)

Item 34- Subsection 189(1)

Item 35 - Subsection 189(2)

Item 36 - Paragraph 189(3)(a)

Item 37 - Paragraphs 189(3)(a) « and » (b)

Item 38 - Subsection 189(3)

Item 39 - Paragraph 192(2)(b)

Item 40 - Paragraph 197(1)(a)

Item 41 - Subparagraph 198(6)(b)(i)

Item 43 - Subsections 202(1) « and » (2)

Item 44 - Paragraph 202(5)(b)

Item 45 - Subsection 203(1)

Item 49 - paragraph 203(6)(b)

Item 51 - paragraph 203(6)(c)

Item 52 - Paragraph 206(4)(c)

Item 54 - Section 207

Item 55 - Subsection 215(5)

27.          These items replace references to the GM « and » the FWC with references to the Commissioner to reflect that the functions described in relation to the conduct of elections for office « and » « other » positions are now functions of the Commissioner.

Item 46 - Subsection 203(1)

Item 48 - Paragraph 203(6)(b)

28.          These items replace references to the staff of the FWC with references to the staff assisting the Commissioner.

Item 47 - Subsection 203(1)

Item 50 - Paragraph 203(6)(b)

29.          These items replace references to section 343A, which deals with delegation by the GM, with references to new section 343B (inserted by item 124), which deals with delegation by the Commissioner.

Item 56 - Section 229

Item 58 - Subsections 233(1) « and » (2)

Item 59- Subsections 234(3) « and » (4)

Item 61 - Subsection 235(1)

Item 63 - Section 236

Item 64 - Subsection 237(1)

Item 65 - Subsections 237(1), (2) « and » (4)

30.          These items replace references to the GM « and » the FWC with references to the Commissioner to reflect that membership records « and » lists of office-holders, along with details of some types of loans, grants « and » donations made by the organisation, are now required to be lodged by organisations with the Commissioner.

Item 66 - Subsections 241(1) « and » (2)

Item 71 - Subsections 255(1) « and » (4) « and » 257(11)

Item 72 - Subsection 261(2)

Item 73 - Subsections 265(5) « and » 266(1)

Item 75 - Section 268

Item 76 - Section 268

Item 77 - Paragraph 269(2)(a)

Item 78 - Paragraph 269(2)(c)

Item 79 - Subsection 270(1)

Item 80 - Paragraph 270(3)(c)

Item 81 - Subsection 270(7)

Item 82 - Section 271

Item 84 - Subsection 272(1) « and » (4) « and » 278(2)

31.          These items replace references to the GM « and » the FWC with references to the Commissioner to reflect that the functions described in relation to the requirements that are placed on organisations in relation to financial records, accounting « and » auditing are now functions of the Commissioner.

Item 67 - At the end of section 246

Item 68 - After subsection 247(1)

Item 69 - After subsection 249(5)

Item 70 - After subsection 249(6)

32.          These items require the GM to consult with the Commissioner in satisfying him or herself of matters relating to:

·       The determination of reporting units within an organisation for the purposes of issuing a certificate under section 245 (items 67 « and » 68);

·       The determination of reporting units within an organisation for the purposes of revoking a certificate issued under section 245 (items 69 « and » 70).

 

Item 85 - Subsections 310(1) « and » (2)

33.          Section 310 sets out who may apply for an order in relation to contraventions of civil penalty provisions.

34.          This item allows either the Commissioner or the GM (or a person authorised by them) to apply for a civil penalty or « other » order under Part 2 of Chapter 10 of the RO Act, but does not otherwise affect standing in relation to the relevant provisions.

Item 86 - Section 317

35.          This item inserts a description of new Part 3A in the simplified outline of Chapter 11 of the RO Act. New Part 3A establishes the Commission « and » the Commissioner, provides for terms « and » conditions of appointment « and » makes provision for staff to assist the Commissioner. Part 3A also establishes the Registered Organisations Commission Special Account.

Item 87 - Section 317

36.          This item replaces references to the GM with references to the Commissioner in the simplified outline of Chapter 11 of the RO Act to reflect that the functions described are now functions of the Commissioner. Chapter 11 deals with miscellaneous matters including compliance matters, inquiries « and » investigations « and » whistleblower protections.

Item 88 - After Part 3 of Chapter 11

37.          Item 88 inserts new Part 3A into Chapter 11. Part 3A establishes the Commission « and » the Commissioner.

38.          The Commissioner is an independent statutory office holder that will operate within the Office of the Fair Work Ombudsman. While specific statutory functions will be conferred on the Commissioner, the Commission will not be a separate agency for the purposes of the PS Act or a prescribed agency for the purposes of the FMA Act.

39.          The staff assisting the Commissioner will be persons made available to the Commissioner by the Fair Work Ombudsman. For the purposes of the PS Act, staff assisting the Commissioner will form part of the Office of the Fair Work Ombudsman « and » the Fair Work Ombudsman will be the Agency Head. However, the Fair Work Ombudsman is able to delegate his or her powers under the PS Act to the Commissioner « and » to staff assisting the Commissioner.

40.          The Commissioner « and » staff assisting the Commissioner will form part of the Office of the Fair Work Ombudsman for the purposes of the FMA Act. This will be achieved by an amendment to Schedule 1 of the Financial Management « and » Accountability Regulations 1997 . Doing so will allow the Fair Work Ombudsman to delegate his or her powers under the FMA Act to the Commissioner « and » those staff, including in respect of the day to day management of the Special Account (discussed below).

41.          Although the Commission will not be a prescribed agency in its own right for the purposes of the FMA Act, it will operate under a Special Account established under section 21 of the FMA Act. This will ensure its financial independence from the Office of the Fair Work Ombudsman. For Budget purposes, the Special Account will be allocated to the Employment Portfolio. As a matter of financial administration, for the purposes of the FMA Act, the Fair Work Ombudsman will be the Chief Executive responsible for the Special Account.

42.          It is envisaged that there will be a Memorandum of Understanding developed between the Fair Work Ombudsman « and » the Commissioner that will address « and » clarify responsibility for staffing « and » financial matters.

43.          The Commissioner will have responsibility, independent from the Office of the Fair Work Ombudsman, for the performance of functions under the RO Act including the commencement of legal proceedings to enforce the RO Act. In respect of the procurement of legal services « and » the conduct of litigation, the Commissioner will be subject to the Legal Services Directions 2005 . The Legal Services Directions 2005 are a legislative instrument issued by the Attorney-General under section 55ZF of the Judiciary Act 1903 .

44.          Part 3A also contains provisions about the institutional framework of the Commission « and » the terms « and » conditions of the Commissioner, as well as outlining the functions of the Commission « and » Commissioner.

Part 3A- Registered Organisations Commissioner « and » Registered Organisations Commission

Division 1- Establishment, functions « and » powers of Commissioner

Section 329AA - Establishment

45.          New section 329AA establishes the office of the Commissioner by providing that there is to be a Registered Organisations Commissioner.

Section 329AB - Functions of the Commissioner

46.          New section 329AB sets out the functions of the Commissioner.

47.          The broad functions of the Commissioner are to promote the efficient management of organisations « and » high standards of accountability of organisations « and » their office holders to their members « and » to promote compliance with financial reporting « and » accountability requirements of the RO Act, including by providing education, assistance « and » advice to organisations « and » their members.

48.          The Commissioner will also have the function of monitoring acts « and » practices of registered organisations « and » their office holders to ensure they comply with the provisions of the RO Act, including as amended by this « Bill » .

49.          The RO Act also confers specific functions on the Commissioner. For example, Part 4 of Chapter 11 of the RO Act will enable the Commissioner to conduct inquiries « and » investigations, commence legal proceedings in respect of contraventions of civil penalty provisions « and » refer possible criminal offences to the Director of Public Prosecutions or law enforcement agencies.

50.          « Other » functions may also be conferred on the Commissioner by this Act (including the regulations) or another Act.

51.          The Commissioner’s functions include doing anything incidental to or conducive to the performance of any of the above functions.

Section 329AC - Powers of Commissioner

52.          New section 329AC provides that the Commissioner has the power to do all things necessary or convenient to be done for the purposes of performing his or her functions. 

53.          This section mirrors subsection 657(2) of the FW Act, which provides that the GM has power to do all things necessary or convenient to be done for the purpose of performing his or her functions.

54.          The note to new section 329AC states that the expenditure of public money must comply with the requirements in the FMA Act. The note is included for the information of the reader. The Fair Work Ombudsman may delegate his or her powers under the FMA Act to the Commissioner or the staff assisting the Commissioner « and » where these powers have been delegated, the delegate must comply with the requirements under the FMA Act.

Division 2 - Terms « and » conditions of appointment of Commissioner

Section 329BA - Appointment

55.          New section 329BA provides for the appointment of the Commissioner on a full time basis.

56.          Subsection 329BA(1) provides that the Commissioner is to be appointed by the Minister by written instrument.

57.          Subsection 329BA(2) provides that before the Minister appoints a person as the Commissioner, the Minister must be satisfied that the person has suitable qualifications or experience « and » is of good character.

Section 329BB - Term of appointment

58.          New section 329BB provides that the Commissioner holds office for a term specified in the instrument of appointment not exceeding 5 years.

Section 329BC - Acting Commissioner

59.          New section 329BC enables the Minister to appoint an acting Commissioner during any periods when the Commissioner is absent or is otherwise unable to perform the duties of the office.

60.          Section 33A of the Acts Interpretation Act 1901 provides that acting appointments are made on the same basis as appointments, but may only be made for a maximum term of 12 months.

Section 329BD - Remuneration

61.          New subsection 329BD(1) provides that the Remuneration Tribunal will determine the remuneration of the Commissioner. When no such determination is in operation, the Commissioner is to be paid the remuneration that is prescribed by the regulations.

62.          New subsection 329BD(2) provides that the Commissioner will be paid any allowances that are prescribed by the regulations.

63.          New subsection 329BD(3) also ensures the application of provisions of the Remuneration Tribunal Act 1973 that have the effect, in certain circumstances, of debarring the office-holder from receiving remuneration (for instance, if she or he is at the same time a full-time public servant).

Section 329BE - Leave of absence

64.          New section 329BE provides that the Commissioner’s recreation leave entitlements will be determined by the Remuneration Tribunal « and » that additional leave of absence may be granted by the Minister on such terms « and » conditions as the Minister determines.  

Section 329BF - Outside employment

65.          New section 329BF prohibits the Commissioner from engaging in paid employment outside the duties of his or her office without the Minister’s approval.

Section 329BG - Disclosure of interests to the Minister

66.          New section 329BG requires the Commissioner to give written notice to the Minister of all interests the Commissioner has or acquires that conflict or could conflict with the proper performance of his or her duties. Failure to do so will result in termination of the Commissioner’s appointment (see paragraph 329BJ(2)(d)). 

67.          This is to ensure impartiality « and » avoid any actual or perceived conflicts of interests.

Section 329BH - « Other » terms « and » conditions

68.          New section 329BH provides for the Minister to determine the terms « and » conditions of the Commissioner’s appointment that are not otherwise provided for in the RO Act (including the regulations).

Section 329BI - Resignation

69.          New section 329BI provides that the Commissioner may resign his or her appointment by giving written notice to the Minister. This section also specifies when the resignation takes effect.

Section 329BJ - Termination of appointment

70.          New section 329BJ specifies the circumstances in which the Minister may or must terminate the Commissioner’s appointment.

71.          Subsection 329BJ(1) provides that the Minister may terminate the Commissioner’s appointment for misbehaviour, or where the Commissioner is unable to perform the duties of the office because of his or her physical or mental incapacity.

72.          Subsection 329BJ(2) sets out the circumstances in which the Minister is required to terminate the appointment of the Commissioner. These circumstances include bankruptcy, unapproved absenteeism in excess of the specified period, engaging in paid employment outside the duties of his or her office without the Minister’s consent (see new section 329BF) « and » failure to disclose interests (pecuniary or otherwise) to the Minister that conflict or could conflict with the proper performance of functions, in accordance with new section 329BG.  

73.          These provisions reflect the standard grounds for termination of appointments of statutory officeholders.

74.          In addition, subsection 33(4) of the Acts Interpretation Act 1901 provides that the power to appoint a person includes a power to remove or suspend that person.

Division 3 - Staff « and » consultants

Section 329CA - Staff

75.          The staff assisting the Commissioner will be persons engaged under the PS Act « and » employed within the Office of the Fair Work Ombudsman. They will be made available by the Fair Work Ombudsman to assist the Commissioner in the performance of his or her functions.

76.          When performing services for the Commissioner, the staff will be subject to the direction of the Commissioner « and » will not be subject to the direction of the Fair Work Ombudsman. This is intended to ensure the independence of the Commissioner « and » the staff assisting him or her when performing statutory functions under the RO Act.

77.          The staff will remain subject to the direction of the Fair Work Ombudsman in relation to their employment « and » conditions. However, under subsection 78(7) of the PS Act, the Fair Work Ombudsman (as the Agency Head of the Office of the Fair Work Ombudsman) may delegate his or her powers under that Act to the Commissioner or an APS employee. 

Section 329CB - « Other » persons assisting the Commissioner

78.          New section 329CB provides that the Commissioner may be assisted by:

·       employees of Commonwealth Departments, Executive Agencies or Statutory Agencies (see the PS Act);

·       officers « and » employees of a State or Territory;

·       officers « and » employees of authorities of the Commonwealth, a State or a Territory.

 

79.          The services of these persons can be made available to the Commissioner in connection with the performance of any of his or her functions.

80.          This ensures that the Commissioner has the ability to draw upon the skills, expertise « and » experience of these employees or officers to assist in the performance of the Commissioner’s functions.  

Section 329CC - Consultants

81.          New subsection 329CC(1) permits the Commissioner to engage persons having suitable qualifications « and » experience as consultants.

82.          New subsection 329CC(2) provides that the consultants are to be engaged on terms « and » conditions that the Commissioner determines in writing.

Division 4 - Establishment « and » function of the Registered Organisations Commission

Section 329DA - Establishment

Section 329DB - Constitution of the Commission

83.          New section 329DA establishes the Registered Organisations Commission.

84.          New section 329DB provides that the Commission consists of the Commissioner « and » any staff assisting the Commissioner as mentioned in subsection 329CA(1).

85.          The Commission (that is, the Commissioner « and » staff assisting the Commissioner) will form part of the Office of the Fair Work Ombudsman for the purposes of the FMA Act. This will be achieved by an amendment to Schedule 1 of the Financial Management « and » Accountability Regulations. Schedule 1 identifies prescribed agencies for the purposes of the FMA Act  « and » the Chief Executive in respect of each agency.  The effect of including the Commission as part of the Office of the Fair Work Ombudsman is to make the Fair Work Ombudsman the relevant Chief Executive for the Commission for the purposes of the FMA Act. 

Section 329DC - Function of this Commission

86.          The function of the Commission is to assist the Commissioner in the performance of the Commissioner’s functions.

Section 329DD - Commission has privileges « and » immunities of the Crown

87.          As the Commission is part of the Commonwealth, it has the privileges « and » immunities of the Crown.

Division 5 - Registered Organisations Commission Special Account

Section 329EA - Registered Organisations Commission Special Account

88.          A Special Account for the purposes of section 21 of the FMA Act is established by the « Bill » .  This will be the ‘Registered Organisations Commission Special Account’ (Special Account) (new section 329EA).

89.          The Special Account is an appropriation mechanism that sets aside amounts within the Consolidated Revenue Fund for expenditure for special purposes which, in this case, relates to expenditure for the special purposes of funding the operations of the Commissioner « and » Commission.

90.          Although the Commission will not be a prescribed agency in its own right for the purposes of the FMA Act, the Special Account will ensure its financial independence from the Office of the Fair Work Ombudsman. For Budget purposes, the Special Account will be allocated to the Employment Portfolio. As a matter of financial administration, for the purposes of the FMA Act, the Fair Work Ombudsman will be the Chief Executive responsible for the Special Account.

91.          By virtue of the Commission being part of the Office of the Fair Work Ombudsman, as outlined above, the Fair Work Ombudsman will be able to delegate financial powers to the Commissioner under the FMA Act. Section 53 of the FMA Act enables the Chief Executive to delegate powers under that Act to an official in any Agency. ‘Official’ is defined as a person who is in an Agency or part of an Agency.

Section 329EB - Credits to the Account

92.          The Special Account may be credited by amounts equal to the following:

·       Amounts received by the Commonwealth in connection with the performance of the Commissioner’s functions under the « Bill » ;

·       Interest received by the Commonwealth from the investment of amounts debited from the Special Account;

·         Amounts of any gifts or bequests made for the purposes of the Special Account; « and »

·         Amounts received by the Commonwealth in relation to « property » paid for with amounts debited from the Special Account.

 

93.          It is envisaged that the Special Account will be funded totally from appropriations.

Section 329EC - Purposes of the Account

94.          The Special Account is used to pay or discharge costs, expenses « and » « other » obligations incurred by the Commonwealth in relation to the performance of the Commissioner’s functions; to pay for remuneration « and » allowances to persons in accordance with the « Bill » (including staff mentioned in cluse 329CA); « and » to meet any expenses associated with administering the Special Account.  

Division 6 - Reporting requirements

Section 329FA - Directions from the Minister

95.          New section 329FA permits the Minister to give directions of a general nature to the Commissioner, but not directions as to a particular matter or investigation. The Commissioner would be required to comply with these directions.

96.          In this respect, the Commissioner is subject to the same degree of Ministerial oversight as the Fair Work Ombudsman.

97.          New subsection 329FA(1) provides that written directions given by the Minister are legislative instruments for the purposes of the LI Act. This provision has substantive operation as such directions would not ordinarily be legislative instruments. This provision gives greater oversight by Parliament in relation to directions by the Minister « and » ensures transparency. The effect of this provision is that any such directions will be required to be lodged with the Federal Register of Legislative Instruments « and » tabled in Parliament. However, as explained in the note to this provision, the directions will not be subject to disallowance or the sunsetting provisions of the LI Act. This mirrors section 684 of the FW Act, which applies to directions from the Minister to the FWO.

Section 329FB - Minister may require reports

98.          New section 329FB permits the Minister to direct the Commissioner to produce reports in relation to a function or the functions of the Commissioner. The Commissioner must comply with the direction.

99.          In this respect, the Commissioner is subject to the same degree of Ministerial oversight as the Fair Work Ombudsman (see section 685 of the FW Act).

100.      New subsection 329FB(3) provides that directions « and » reports under this section are not legislative instruments within the meaning of section 5 of the LI Act. This provision is merely declaratory of the law « and » is included to assist readers. It does not amount to an exemption from the LI Act.

Section 329FC - Annual report

101.      New section 329FC requires the Commissioner to produce an annual report about the operations of the Commission to be presented to the Parliament. The annual report must include:

·       details of the number « and » types of investigations conducted by the Commissioner under Part 4 of Chapter 11;

·       details of:

o    when each investigation was started; « and »

o    if the investigation has been completed—when it was completed; « and »

o    if the investigation has not been completed—when it is expected to be completed;

·       details of any orders applied for under paragraph 310(1)(a);

·       details of the types of education activities undertaken by the Commissioner « and » whether the education activities were provided to a registered employer organisation, a registered employee organisation or members of these organisations;

·       any « other » matter prescribed by the regulation s.

 

102.      A note alerts the reader to the operation of section 34C of the Acts Interpretation Act 1901 which contains rules about annual reports.

Item 90 - Subsections 330(1) « and » (2)

Item 92 - Section 331

Item 93 - Subsection 332(1)

Item 94 - Paragraph 332(1)(a)

Item 95 - Paragraph 332(1)(b)

Item 96 - Subsections 332(2) « and » (3)

Item 97 - Subsection 333(1)

Item 98 - Subsection 333(1)

Item 99 - Subsections 333(2) « and » (3)

Item 100 - Sections 334 to 335A

Item 101 - Section 335B

Item 102 - Subsection 335C(1)

Item 103 Subsection 335C(1)

Item 104 - Subsection 335C(2)

Item 106 - Subsection 336(1)

Item 108 - Subsection 336(1)

Item 110 - Subsection 336(1A)

Item 112 - Subsection 336(2)

Item 113 - Subsections 336(3) « and » (5)

Item 115 - Subsection 337(1)

103.      These items replace references to the GM « and » the FWC with references to the Commissioner to reflect that the functions described in relation to inquiries « and » investigations into compliance with financial reporting are now functions of the Commissioner.

Item 107 - Subsection 336(1)

104.      This item replaces the reference to ‘the reporting unit concerned’ with ‘a reporting unit’. This is a technical correction to clarify the effect of subsection 336(1).

Item 116 - Before subparagraph 337A(b)(i)

105.      Section 337A deals with disclosures that qualify for whistleblower protection under Part 4A of Chapter 11 of the RO Act.

106.      This item inserts new subparagraph 337A(b)(ia) which adds the Commissioner or a member of the staff assisting the Commissioner to the list of those to whom a disclosure may be made to be eligible for protection.



 

Item 117 - Paragraph 337K(3)(a)

107.      Paragraph 337K(3)(a) requires the GM to promptly provide a copy of any order made under the RO Act, along with any reasons received by the GM for the order, to each party who appeared at the hearing of the proceeding concerned.

108.      This item requires the GM to also provide this information to the Commissioner.

Item 118 - Paragraphs 337K(5)(a) « and » (b)

109.      This item corrects out-dated references to ‘FWA member’ to ‘FWC member’. Fair Work Australia was renamed the FWC by the Fair Work Amendment Act 2012 .

Item 119 - Paragraphs 343A(2)(c) to (g)

Item 120 - Paragraphs 343A(2)(i) to (j)

Item 121 - Paragraphs 343A(3)(d) to (g)

Item 123 - Subsection 343A(3A)

110.      These items repeal provisions which prohibit or restrict the delegation of certain powers by the GM. As these functions « and » powers of the GM are being transferred to the Commissioner, these provisions are no longer necessary.

Item 122 - Paragraph 343A(3)(h)

111.      Subsection 343A(3) sets out the powers of the GM that can only be delegated to SES employees, acting SES employees or employees prescribed by the regulations.

112.      This item deletes the reference to Part 4 of Chapter 11, which deals with inquiries « and » investigations, as this is no longer a function of the GM.

Item 124 - After section 343A

113.      This item inserts new section 343B which deals with delegation by the Commissioner of his or her functions under the RO Act.

Item 125 - Paragraph 347(1)(c)

114.      This item replaces the reference to the FWC with a reference to the Commissioner to reflect that the relevant documents are now required to be lodged with the Commissioner.

Item 126 - Section 348

115.      Section 348 provides that a certificate given by the GM stating that a person was a member or officer of an organisation at a particular time is, in all courts « and » proceedings, evidence that the facts are as stated.

116.      This item extends this stipulation to a certificate given by the Commissioner.



 

Item 127 - Section 349

Item 128 - Section 349

117.      These items replace the references to the FWC « and » the GM with references to the Commissioner to reflect that the relevant documents are now required to be lodged with the Commissioner.



Part 2 - Transitional provisions

Item 129 - Definitions

118.      This item provides for definitions for the purpose of this Part, including commencement time , which means the time when Schedule 1 commences.

Item 130 - Commissioner to complete certain processes

119.      This item provides for the Commissioner to be able to complete processes that had been commenced by the GM but were incomplete when this Schedule commenced.

Item 131 - Permission to keep records at premises

120.      This item provides that where the GM has given permission for an organisation to keep the whole or a specified part of a record at specified premises instead of at the office of the organisation or branch of the organisation (section 234 of the RO Act) prior to this Schedule commencing, the permission continues to apply as if it had been given by the Commissioner.

Item 132 - Certain references to include documents dealt with before the commencement time

121.      This item provides that certain references are to include documents dealt with before the commencement time .

122.      These references include the reference in:

·       subsection 236(5) of the RO Act to a copy of a document received by the Commissioner includes a reference to a copy of a document received by the GM under section 236 of the RO Act before that time; « and »

·       subsection 237(4) of the RO Act to a statement lodged with the Commissioner under subsection (1) includes a reference to a statement lodged with the FWC under subsection (1) of section 237 of the RO Act before that time; « and »

·       paragraph 347(1)(c) of the Act to a copy of a list lodged with the Commissioner under subsection 233(1) includes a reference to a copy of a list lodged with the FWC under subsection 233(1) of the Act before that time; « and »

·       section 348 of the RO Act to a certificate of the Commissioner includes a reference to a certificate of the GM covered by that section before the commencement time; « and »

·       section 349 of the RO Act to a list of the officers of an organisation or a branch of an organisation lodged with the Commissioner on behalf of the organisation or a copy of any such list certified by the Commissioner includes a reference to a list of the officers of an organisation or a branch of an organisation lodged with the FWC on behalf of the organisation or a copy of any such list certified by the GM before that time.

 



 

Item 133 - Proceedings in relation to civil penalty provisions

123.      This item provides for transitional arrangements where an application made under Part 2 of Chapter 10 (which deals with civil consequences of contravening civil penalty provisions) has not been finally determined before the commencement time.

124.      Where the GM « and » the Commissioner agree by signed writing that the Commissioner be substituted as a party to proceedings arising from the application then the agreement has effect accordingly « and » the GM’s rights « and » obligations in relation to the proceedings become the rights « and » obligations of the Commissioner.

Item 134 - « Other » proceedings

125.      This item applies if an application is made under the RO Act, « other » than an application under Part 2 of Chapter 10 of the RO Act (which is addressed in item 133), has not been finally determined before the commencement time « and » because of the « amendments » made by this Schedule, the power to make applications of that kind has become a power of the Commissioner.

126.      In such circumstances, the Commissioner is substituted for the GM as a party to any proceeding arising from the application, « and » the rights « and » obligations of the GM in relation to such a proceeding become rights « and » obligations of the Commissioner.

Item 135 - Information sharing

127.      This item provides that the Commissioner may, for the purposes of fulfilling his or her functions or powers, request the GM to disclose to them information acquired by the GM or a member of the staff of the FWC under the RO Act before the commencement time.

128.      This reflects the intention that all information acquired by the GM or a member of the staff of the FWC in the performance or exercise of functions or powers under the RO Act before the commencement time should be able to be disclosed to the Commissioner.

Item 136 - Commissioner’s first annual report

129.      This item provides that if this Schedule commences before the end of the financial year ending on 30 June 2014, the Commissioner’s report required by section 329FC of the RO Act for that year must be included with the Fair Work Ombudsman’s report required by section 686 of the FW Act.

Item 137 - Minister may make rules about transitional matters

130.      This item provides that the Minister may, by legislative instrument, make rules in relation to transitional matters arising out of the « amendments » « and » repeals made by Part 1 of this Schedule.

 



Schedule 2 - Increased disclosure requirements, investigation powers « and » penalties

131.      Schedule 2 of the « Bill » is divided into two parts.

132.      Part 1 contains provisions that increase obligations on organisations « and » their officers, increase civil penalties for non-compliance « and » introduce criminal offences. This Part also gives the Commissioner, which was established in Part 1 of Schedule 1, enhanced investigation powers.

133.      Part 2 contains transitional provisions. The Commissioner, whose office « and » functions will be established by Part 1 of Schedule 1, will commence on proclamation of that Part, with the powers « and » functions of the GM of the FWC in relation to organisations. Part 2 of Schedule 2 of the « Bill » sets out transitional provisions required as a result of the new scheme of increased obligations on organisations « and » increased powers of the Commissioner in Part 1 of Schedule 2.

Part 1 - « Amendments »

Fair Work (Registered Organisations) Act 2009

Item 1 - Section 6 (definition of disclosure period )

Item 2 - Section 6

Item 3 - Section 6

Item 4 - Section 6

134.      These items repeal the definition of ‘disclosure period’ which is no longer required because of the « amendments » in the « Bill » « and » includes definitions for new terms used in the « Bill » . In particular, item 3 introduces the definition of a ‘proceeding’ which includes a proceeding in a court or a proceeding or hearing before, or an examination by or before, a tribunal. For the purposes of this definition such a proceeding, hearing or examination may be civil, administrative, criminal, disciplinary or « other » nature.

135.      The concept of ‘serious contravention’ is also introduced. This definition is relevant to the increased civil penalties.

Item 5 - Section 16

Item 6 - Subsection 51(2) (penalty)

Item 11 - Subsections 72(1) to (3) (penalty)

Item 13 - Subsection 103(4) (penalty)

Item 18 - Subsections 105(1) to (3) (penalty)

Item 36 - Subsections 185(1) « and » (2) (penalty)

Item 39 - Section 190 (penalty)

Item 40 - Subsection 191(2) (penalty)

Item 45 - Subsection 193(2) (penalty)

Item 46 - Section 194 (penalty)

Item 47 - Subsections 195(2) to (6) (penalty)

Item 56 - Subsections 199(3) « and » (5) (penalty)

Item 57 - Subsection 202(5) (penalty)

Item 58 - Subsection 203(6) (penalty)

Item 68 - Subsection 232(1) (penalty)

Item 104 - Subsection 258(1) (penalty)

Item 107 - Subsections 260(3) « and » (4) (penalty)

Item 228 - Subsection 337(1) (penalty)

Item 231 - Subsection 337C(6) (penalty)

Item 240 - Subsections 350(1) « and » (2) (penalty)

Item 241 - Subsection 356(6) (penalty)

136.      Occurrences of ‘Maximum penalty’ throughout the RO Act have been amended to read ‘Penalty’, « and » section 16 of the RO Act has been repealed. The use of ‘Penalty’ (rather than ‘Maximum penalty’) will attract the operation of section 4D of the Crimes Act 1914 (section 16 replicated the operation of that section in relation to ‘Maximum penalty’). These « amendments » are technical changes to bring the RO Act into line with current drafting practices « and » do not affect the operation of offence provisions set out in the RO Act.  

Item 21 - Subsection 151(2) (note)

Item 22 - At the end of subsection 151(2)

Item 24 - Subsection 152(3) (note)

Item 25 - At the end of subsection 152(3)

Item 30 - Subsection 172(1) (note)

Item 31 - At the end of subsection 172(1)

Item 37 - Subsection 189(2) (note)

Item 38 - At the end of subsection 189(2)

Item 60 - Subsection 230(1) (note)

Item 61 - At the end of subsection 230(1)

Item 62 - Subsection 230(2) (note 1)

Item 63 - Subsection 230(2) (note 2)

Item 64 - At the end of subsection 230(2) (after note 2)

Item 65 - At the end of subsection 231(1)

Item 66 - Subsection 231(2) (note)

Item 67 - At the end of subsection 231(2)

Item 69 - At the end of subsection 233(1)

Item 70 - At the end of subsection 233(2)

Item 73 - Subsection 235(2) (note)

Item 74 - At the end of subsection 235(2)

Item 75 - Subsection 236(1) (note)

Item 76 - At the end of subsection 236(1)

Item 77 - Subsection 236(2) (note)

Item 78 - At the end of subsection 236(2)

Item 92 - Subsection 256(3) (note)

Item 93 - At the end of subsection 256(3)

Item 94 - Subsection 256(4) (note)

Item 95 - At the end of subsection 256(4)

Item 96 - Subsection 256(5) (note)

Item 97 - At the end of subsection 256(5)

Item 98 - Subsection 256(6) (note)

Item 99 - At the end of subsection 256(6)

Item 108 - Subsection 263(2) (note)

Item 109 - At the end of subsection 263(2)

Item 110 - Subsection 263(3) (note)

Item 111 - At the end of subsection 263(3)

Item 112 - Subsection 263(5) (note)

Item 113 - At the end of subsection 263(5)

Item 114 - Subsection 264(3) (note)

Item 115- At the end of subsection 264(3)

Item 122 - Subsection 266(1) (note)

Item 123 - At the end of subsection 266(1)

Item 138 - Subsection 272(3) (note)

Item 139 - At the end of subsection 272(3)

Item 140 - Subsection 272(5) (note)

Item 141 - At the end of subsection 272(5)

Item 142 - Subsection 274(1) (note)

Item 143 - At the end of subsection 274(1)

Item 144 - At the end of subsection 276(1)

Item 145 - Subsection 276(2) (note)

Item 146 - At the end of subsection 276(2)

Item 238 - Subsection 347(1) (note)

Item 239 - At the end of subsection 347(1)

137.      These items specify that the civil penalty for non-compliance with the specified provisions for an individual is 60 penalty units. The civil penalty for a body corporate is five times that of an individual (i.e. the penalty is increased from 150 penalty units to 300 penalty units) by the operation of paragraph 306(1)(a) as amended by item 203.

138.      The items that refer to « amendments » to notes to a provision are consequential « amendments » required as a result of the « amendments » to the civil penalty provisions described above.

Item 23 - Subsection 151(11)

139.      This item repeals subsection 151(11) « and » inserts new subsections 151(11) « and » 151(11A). The new subsections are in substantially the same form as paragraphs 151(11)(a) « and » (b), which set out obligations of organisations « and » the GM in relation to the term of a membership agreement.

140.      This item also specifies that the civil penalty for non-compliance with subsection 151(11) is increased from 30 penalty units for an individual to 60 penalty units. The civil penalty for a body corporate is five times that of an individual (i.e. the penalty is increased from 150 penalty units to 300 penalty units) by the operation of paragraph 306(1)(a) as amended by item 203.

Item 7 - Subsection 52(1) (note)

Item 8 - At the end of subsection 52(1)

Item 9 - Subsection 52(3) (note)

Item 10 - At the end of subsection 52(3)

Item 12 - At the end of subsection 95(3C)

Item 14 - Subsection 104(1) (note)

Item 15 - At the end of subsection 104(1)

Item 16 - Subsection 104(3) (note)

Item 17 - At the end of subsection 104(3)

Item 28 - Section 169 (note)

Item 29 - At the end of section 169                

Item 32 - Section 175 (note)

Item 33 - At the end of section 175

Item 34 - Section 176 (note)

Item 35 - At the end of section 176

Item 41 - Subsection 192(1) (note)

Item 42 - At the end of subsection 192(1)

Item 43 - Subsection 192(3) (note)

Item 44 - At the end of subsection 192(3)

Item 48 - Subsection 198(1) (note)

Item 49 - At the end of subsection 198(1)

Item 50 - Subsection 198(4) (note)

Item 51 - At the end of subsection 198(4)

Item 52 - Subsection 198(5) (note)

Item 53 - At the end of subsection 198(5)

Item 54 - Subsection 198(8) (note)

Item 55 - At the end of subsection 198(8)

Item 71 - Subsection 233(3) (note)

Item 72 - At the end of subsection 233(3)

Item 79 - Subsection 237(1) (note)

Item 80 - At the end of subsection 237(1)

Item 81 - Subsection 237(3) (note)

Item 82 - At the end of subsection 237(3)

Item 83 - Subsection 253(3) (note 1)

Item 84 - Subsection 253(3) (note 2)

Item 85 - Subsection 253(3) (note 3)

Item 87 - Subsection 254(3) (note)

Item 90 - Subsection 256(1) (note)

Item 91 - At the end of subsection 256(1)

Item 100 - Subsection 257(10) (note)

Item 101 - At the end of subsection 257(10)

Item 102 - Subsection 257(11) (note)

Item 103 - At the end of subsection 257(11)

Item 105 - Section 259 (note)

Item 106 - At the end of section 259

Item 116 - Subsection 265(1) (note)

Item 117 - At the end of subsection 265(1)

Item 118 - Subsection 265(4) (note)

Item 119 - At the end of subsection 265(4)

Item 120 - Subsection 265(5) (note)

Item 121 - At the end of subsection 265(5)

Item 124 - Section 267 (note)

Item 125 - At the end of section 267

Item 128 - Section 268 (note)

Item 129 - At the end of section 268

Item 130 - Subsection 270(4) (note)

Item 131 - At the end of subsection 270(4)

Item 132 - Subsection 270(5) (note)

Item 133 - At the end of subsection 270(5)

Item 134 - Subsection 270(6) (note)

Item 135 - At the end of subsection 270(6)

Item 136 - Subsection 270(7) (note)

Item 137 - Subsection 270(7)

141.      These items increase the civil penalties for non-compliance with the specified provisions from 60 penalty units for an individual to 100 penalty units. The civil penalty for a body corporate is five times that of an individual (i.e. the penalty is increased from 300 penalty units to 500 penalty units) by the operation of paragraph 306(1)(a) as amended by item 203.

142.      The items that refer to « amendments » to notes to a provision are consequential « amendments » required as a result of the « amendments » to the civil penalty provisions described above.

Item 86 - At the end of section 253 (after note 3)

Item 88 - At the end of section 254

143.      These items insert a new subsection (4) in both sections 253 « and » 254 to make clear that there is an obligation not to contravene these sections. The items also increase the civil penalties for non-compliance from 60 penalty units for an individual to 100 penalty units. The civil penalty for a body corporate is five times that of an individual (i.e. the penalty is increased from 300 penalty units to 500 penalty units) by the operation of paragraph 306(1)(a) as amended by item 203.

Item 148- Subsection 285(1) (note)

Item 149 - At the end of subsection 285(1)

Item 150 - Subsection 286(1) (note)

Item 151 - At the end of subsection 286(1)

Item 152 - Subsection 286(2) (note)

Item 153 - At the end of subsection 286(2)

Item 154 - Subsection 287(1) (note)

Item 155 - At the end of subsection 287(1)

Item 156 - Subsection 287(2) (note)

Item 157 - At the end of subsection 287(2)

Item 158 - Subsection 288(1) (note 1)

Item 159 - Subsection 288(1) (note 2)

Item 160 - At the end of subsection 288(1) (after note 2)

Item 161 - Subsection 288(2) (note)

Item 162 - At the end of subsection 288(2)

Item 168 - Subsection 297(2) (note)

Item 169 - At the end of subsection 297(2)

Item 170 - Subsection 297(3) (note)

Item 171 - At the end of subsection 297(3)

Item 173 - Subsection 298(2) (note)

Item 174 - At the end of subsection 298(2)

Item 175- Subsection 298(3) (note)

Item 176 - At the end of subsection 298(3)

Item 178 - Subsection 299(2) (note)

Item 179 - At the end of subsection 299(2)

Item 180 - Subsection 299(3) (note)

Item 181 - At the end of subsection 299(3)

Item 183 - Subsection 300(2) (note)

Item 184 - At the end of subsection 300(2)

Item 185 - Subsection 300(3) (note)

Item 186 - At the end of subsection 300(3)

Item 188 - Subsection 301(2) (note)

Item 189 - At the end of subsection 301(2)

Item 190 - Subsection 301(3) (note)

Item 191 - At the end of subsection 301(3)

Item 193 - Subsection 302(2) (note)

Item 194 - At the end of subsection 302(2)

Item 195 - Subsection 302(3) (note)

Item 196 - At the end of subsection 302(3)

Item 198 - Subsection 303(2) (note)

Item 199 - At the end of subsection 303(2)

144.      These items increase the civil penalties for non-compliance with the specified provisions from 60 penalty units for an individual to 100 penalty units. The civil penalty for a body corporate is five times that of an individual (i.e. the penalty is increased from 150 penalty units to 300 penalty units) by the operation of paragraph 306(1)(a) as amended by item 203.

145.      These items also include a civil penalty of 1200 penalty units for a serious contravention of the specified provisions (6000 penalty units for a body corporate). Item 4 of this Schedule inserts the definition of serious contravention, which is a contravention of a provision that:

·          materially prejudices the interests of the organisation or branch, or the members of the organisation or branch; or

·          materially prejudices the ability of the organisation or branch to pay its creditors; or

·          is serious.

 

146.      The ‘serious contravention’ concept was broadly modelled on subsection 1317G(1) of the « Corporations » Act « and » it is expected that similar principles would apply.

147.      The items that refer to « amendments » to notes to a provision are consequential « amendments » required as a result of the « amendments » to the civil penalty provisions described above.

Item 19 - After subparagraph 141(1)(b)(ii)

148.      This item inserts new subparagraph 141(1)(b)(iia), which provides that rules of registered organisations « and » their branches must provide for the keeping of minute books recording proceedings « and » resolutions of committees of management.

149.      This amendment is intended to ensure that disclosures of material « personal » interest of officers of registered organisations under new section 293D « and » resolutions passed by committees of management in accordance with new subsection 293F(4) are appropriately recorded.

150.      The new subparagraph is broad so as to ensure that registered organisations are free to create rules that are relevant to how meetings are conducted in a particular case « and » to avoid as much as possible the need to amend existing rules that provide for the taking of minutes.

Item 20 - Division 3A of Part 2 of Chapter 5

151.      This item repeals Division 3A of Part 2 of Chapter 5. This Division (as amended by the ROA Act) sets out content requirements for the rules of registered organisations dealing with certain disclosures « and » related matters. Division 3A is no longer required as a result of the legislative disclosure requirements set out in new Part 2A of Chapter 9.

Item 26 - Sections 154C « and » 154D

152.      Item 26 repeals sections 154C « and » 154D (which were inserted by the ROA Act). Sections 154C « and » 154D set out requirements for rules to require officers to undertake approved training « and » related matters.

Item 27 - Paragraph 159(4)(a)

153.      Item 27 is a consequential amendment required as a result of repealing Division 3A of Part 2 of Chapter 5 (as amended by the ROA Act).

Item 59 - Paragraph 212(b)

154.      Item 59 inserts a reference to new section 290A, which establishes offences in relation to breaches of good faith, use of position « and » use of information (see item 163), in the definition of prescribed offence. The effect of this item is that a person convicted of an offence under section 290A will not generally be eligible to be an officer of an organisation or to stand for election to office (see section 215 of the RO Act).

Item 89 - After subsection 255(2)

155.      This item inserts new subsection 255(2A), which provides that the reporting guidelines issued by the Commissioner for the purposes of sections 253 « and » 270 of the RO Act must require a report that shows the total expenditure of the reporting unit in relation to the matters specified in new paragraphs 255(2A)(a) - (e).

156.      A note to the new subsection, informs the reader that the information to be set out in the report may be expressed in diagrammatic form, such as a pie chart. The intention is that members of registered organisations be provided with an easy to understand summary of how the financial resources of their organisation are expended.



 

Item 126 - Section 268

Item 127 - Paragraph 268(c)

157.      These items make technical « amendments » to clarify that a full report must be lodged with the Commission after being presented to a committee of management meeting, if that has occurred in accordance with section 266 of the RO Act.

Item 147- Section 281

158.      This item amends the simplified outline of Chapter 9 of the RO Act to include information about new Part 2A of the RO Act, which relates to disclosure obligations of officers, registered organisations « and » their branches (see item 166).

Item 163 - After section 290

Section 290A - Good faith, use of position « and » use of information - criminal offences

159.      This item introduces new section 290A. Section 290A creates offences for a range of conduct related to existing duties of officers of registered organisations. Broadly, these offences relate to officers « and » employees of organisations « and » branches:

·          failing to exercise powers or discharge duties in good faith « and » for a proper purpose;

·          using their position to gain an advantage for themselves or someone else; « and »

·          using information obtained while an officer or employee to gain an advantage for themselves or someone else.

 

160.      The penalty for contravening new section 290A is 2000 penalty units or imprisonment for 5 years, or both.

161.      These offences are broadly modelled on section 184 of the « Corporations » Act, which prohibits similar behaviour in relation to the conduct of company directors. The « Corporations » Act provisions were adapted as necessary to align with the RO Act framework.

Item 164 - Section 291 (heading)

Item 165 - Section 291

162.      These items make consequential « amendments » to reflect the inclusion of new section 290A.

Item 166 - After Part 2 of Chapter 9

163.      This item inserts a new Part 2A to Chapter 9 of the RO Act. New Part 2A deals with disclosure obligations.



 

Part 2A - Disclosure obligations

Division 1 - Preliminary

Section 293A - Simplified outline

164.      New section 239A provides a simplified outline for the new Part 2A.

Division 2 - Disclosure obligations « and » restrictions on taking part in making decisions

Section 293B - Disclosure of remuneration paid to officers

165.      New section 293B sets out the disclosure requirements for remuneration paid to officers of organisations. New subsections 293B(1) « and » 293B(2) require the disclosure by each officer, to the organisation or branch, of any remuneration paid to the officer:

·          because the officer is a member of a Board    « and » they hold that position only because of their position as an officer of the organisation or branch or because they were nominated for the position on the Board by the organisation, a branch, or by a peak council; or

·          by a related party of the organisation or branch in connection with the performance of the officer’s duties.

 

166.      New subsections 293B(1) « and » 293B(2) are civil penalty provisions.

Section 293BA - Immediate disclosure

167.      New section 293BA requires that disclosure is made as soon as practicable after the remuneration is paid to the officer.

Section 293BB - Standing disclosure of remuneration

168.      New section 293BB provides for a standing disclosure of remuneration.

169.      New subsections 293BB(1) « and » 293BB(2) provide that where an officer’s remuneration is to be paid on a regular basis, he or she may make a standing disclosure to the committee of management of the amounts the officer expects to be paid.

170.      New subsections 293BB(2) « and » 293BB(5) provide when the written disclosure must be given.  

171.      New subsections 293BB(3) « and » 293BB(4) provide for the action that must be taken where the actual amount paid differs from that disclosed in the standing disclosure.

Section 293BC - Disclosure of certain remuneration « and » benefits by organisations « and » branches

172.      New subsection 293BC(1) provides that the organisation must, for a financial year, disclose the relevant remuneration of the five highest remunerated officers of the organisation. The subsection specifies that the identity of each officer must be disclosed as well as the amount of the officer’s relevant remuneration « and » the value « and » form of the officer’s relevant non-cash benefits. This information must be disclosed to the members of the organisation « and » its branches.

173.      New subsection 293BC(2) provides that the branch of an organisation must, for a financial year, disclose the relevant remuneration of the five highest remunerated officers of the branch of the organisation. The subsection specifies that the identity of each officer must be disclosed as well as the amount of the officer’s relevant remuneration « and » the value « and » form of the officer’s relevant non-cash benefits. This information must be disclosed to the members of the branch of the organisation.

174.      New subsection 293BC(3) provides that disclosures made under subsections (1) or (2) must be made as part of the officer « and » related party disclosure statement required under Division 3. A note to this section states that a failure to prepare an officer « and » related party disclosure statement is a civil penalty provision.

175.      New subsection 293BC(4) provides that for the purposes of new section 293BC, the relevant remuneration of an officer of an organisation or a branch of an organisation for a financial year includes:

·          any remuneration disclosed to the organisation or the branch by the officer, under rules made under new subsections 293BC(1) or (2), during the financial year;

·          any remuneration paid, during the financial year, to the officer by the organisation or the branch.

 

Relevant non-cash benefits

176.      New subsection 293BC(5) provides that the relevant non-cash benefits of an officer of an organisation or branch of an organisation for a financial year are the non-cash benefits provided to the officer by the organisation or branch (as the case may be) or by a related party of the organisation or branch (as the case may be), at any time during the financial year, in connection with the performance of the officer’s duties as an officer.

Section 293C - Disclosure of material « personal » interests of officers « and » relatives

Disclosure by officers

177.      New subsection 293C(1) provides that each officer of an organisation must disclose to the organisation, any material « personal » interest in a matter that relates to the affairs of the organisation that the officer, or a relative of the officer, has or acquires.

178.      New subsection 293C(1) is a civil penalty provision.

179.      New subsection 293C(2) provides that each officer of a branch of an organisation must disclose to the branch, any material « personal » interest in a matter that relates to the affairs of the branch that the officer, or a relative of the officer, has or acquires.

180.      New subsection 293C(2) is a civil penalty provision.

181.      New subsection 293C(3) provides that the disclosure must be made as soon as practicable after the interest is acquired « and » provide details of the nature « and » extent of the interest as well as the relation of the interest to the affairs of the organisation or branch.  

Disclosure by organisation or branch

182.      New subsection 293C(4) provides that an organisation must, for a financial year, disclose to the members of the organisation « and » its branches, details of any interests disclosed to the organisation, under 293C(1), during the financial year.

183.      New subsection 293C(5) provides that an organisation must, for a financial year, disclose to the members of the organisation « and » its branches, details of any interests disclosed to the organisation, under 293C(2), during the financial year.

Manner of disclosure

184.      New subsection 293C(6) provides that disclosure must be made as part of the officer « and » related party disclosure statement. A note to this subsection states that the failure to prepare an officer « and » related party disclosure statement is a contravention of a civil penalty provision.

Section 293D - Officer may give members of committee of management standing notice about an interest

185.      New subsections 293D(1) « and » 293D(8) provide that an officer of an organisation or a branch of an organisation may give standing notice to the committee of management of a material « personal » interest in a matter, whether or not the matter relates to the affairs of the organisation at the time that the notice is given by the officer.

186.      New subsection 293D(2) provides that the notice must give details of the nature « and » extent of the interest « and » that it must be given either at a meeting of the committee of management or to the members of that committee in writing.

187.      New subsection 293D(3) provides that where the notice is given to members of the committee of management individually in writing, it must also be tabled at the next meeting of that committee.

188.      New subsection 293D(4) provides that the committee of management must ensure that the nature « and » extent of the disclosed interest is recorded in the minutes of the committee of management meeting at which the standing notice is given or tabled.

189.      New subsections 293D(5) « and » 293D(6) provide that a standing notice takes effect as soon as it is given « and » ceases to have effect when a new person is appointed to the committee of management or if the nature or extent of the interest materially increases above the disclosed level. In situations where a new person is appointed to the committee of management, the standing disclosure will have effect again when the notice is given to that new person.

190.      New subsection 293D(7) provides that a contravention of the section does not affect the validity of any « other » act, transaction, agreement, instrument, resolution or « other » thing.



 

Section 293E - Interaction of section 293C « and » 293D with « other » laws

191.      New section 293E provides that new sections 293C « and » 293D have effect in addition to any general law rule about conflict of interest « and » any provision in the organisation or branch’s rules that otherwise restrict an officer from having a material « personal » interest in a matter that conflicts with their role as an officer of the organisation. New section 293E is modelled on section 193 of the « Corporations » Act « and » follows it closely.

Section 293F - Restrictions on taking part in making decisions

192.      New subsections 293F(1) « and » 293F(2) provide that an officer of an organisation or branch of an organisation, who has a material « personal » interest in a matter, must not be present during any deliberation on the matter by the organisation or branch . The officer must also not take part in any decision of the organisation or branch with respect to the matter.

193.      These subsections are civil penalty provisions.

194.      New subsections 293F(3) « and » 293F(4) provide that the officer may be present « and » take part in a decision with respect to the matter if the members of the committee of management of the organisation or branch, who do not have a material « personal » interest in the matter, pass a resolution identifying the officer, the nature « and » extent of the interest « and » its relation to the affairs of the organisation or branch « and » stating that those members of the committee are satisfied that the interest should not disqualify the officer.

195.      New subsection 293F(5) provides that a contravention of the section does not affect the validity of any « other » act, transaction, agreement, instrument, resolution or « other » thing.

Section 293G - Disclosure of payments made by an organisation or a branch

196.      New subsections 293G(1) provides that an organisation must disclose to the members of the organisation « and » its branches each payment that has been made by the organisation during the financial year:

·          to a related party of the organisation or of a branch of the organisation; or

·          to a declared person or body of the organisation.

 

197.      New subsection 293G(6) defines a declared person or body as an officer who has disclosed a material « personal » interest under new subsections 293C(1), 293C(2) or 293D(1) « and » the interest relates to or is in the person or body « and » the officer has not notified the organisation or the branch that the officer no longer has the interest.

198.      New subsection 293G(2) provides that a branch of an organisation must disclose, to the members of the branch, each payment that has been made by the branch of the organisation during the financial year:

·          to a related party of the branch of the organisation; or

·          to a declared person or body of the branch.

 

199.      New subsection 293G(3) provides that the disclosure must be made as part of the officer « and » related party disclosure statement. A note under this subsection states that a failure to prepare an officer « and » related party disclosure statement is a contravention of a civil penalty provision.

200.      New subsection 293G(4) provides that new subsections 293G(1) « and » 293G(2) do not apply to payments made to a related party where the related party is an officer of the organisation or branch « and » the payment consists of remuneration paid to the officer or is reimbursement for expenses reasonably incurred by the officer in performing his or her duties.

201.      A note to this subsection states that new section 293B deals with disclosure in relation to remuneration.

202.      New subsection 293G(5) provides that subsections 293G(1) « and » 293G(2) do not apply to payments made to a related party where the payment consists of deductions from the remuneration of the employees or officers of the organisation or branch as the case may be.

Section 293H - Section 293G - order for alternative disclosure arrangement

203.      New section 293H provides for the Commissioner to grant an organisation an alternative disclosure arrangement to that specified under new section 293G.

204.      New subsection 293H(1) provides that an application for an order can be lodged by an organisation where it considers special circumstances exist that make new section 293G too onerous.

205.      New subsection 293H(2) provides that an application to the Commissioner must be accompanied by:

·          a statement of the special circumstances that exist in relation to the organisation;

·          particulars of a proposed alternative arrangement to provide for disclosures of payments made by the organisation that are appropriate for the organisation’s special circumstances « and » are appropriately transparent; « and »

·          evidence of past « and » current high standards of financial accountability « and » control that are appropriate for the organisation’s special circumstances « and » provide appropriate transparency.

 

206.      New subsection 293H(3) provides that the Commissioner may make an order granting an alternative disclosure arrangement if he or she is satisfied that:

·          special circumstances exist in relation to the organisation; « and »

·          taking into account the evidence provided, the proposed alternative disclosure arrangement provide for disclosures, of payments made by the organisation, that are appropriate for the organisation’s special circumstances « and » are appropriately transparent; « and »

·          that the proposed alternative disclosure arrangement:

o    complies with « and » is not contrary to this Act ( « other » than section 293G); « and »

o    is not otherwise contrary to law.

 

207.      New subsection 293H(5) provides that an order remains in force until the earlier of the day it is revoked, or 5 years after it was made.

208.      New subsection 293H(6) provides that the Commissioner may revoke an order if either he or she is no longer satisfied of at least one of the matters that he or she had to be satisfied of before granting the order or he or she is satisfied that the organisation has contravened the alternative disclosure arrangement « and » the organisation has been given an opportunity, as prescribed, to show cause why the order should not be revoked.

209.      New subsection 293H(7) makes clear that subsection 604(1) of the FW Act does not apply in relation to a decision of the Commissioner under new subsection 293H(3).

210.      New subsection 293H(8) provides that new section 293H applies in relation to a branch of an organisation as if references to an organisation were references to a branch of an organisation.

211.      New subsection 293H(9) provides that an order under subsection 293H(3) is not a legislative instrument. This new subsection has been included to assist readers by making clear that such an order made by the Commissioner in writing is not a legislative instrument within the meaning of section 5 of the LI Act.

212.      Item 245 provides for transitional rules in relation to what must be considered by the Commissioner in satisfying himself or herself of the matters in new subsection 293H(3).

Division 3 - Officer « and » related party disclosure statements

Section 293J - Officer « and » related party disclosure statements

213.      New subsections 293J(1) « and » 293J(2) require an organisation, or branch of an organisation, to prepare an officer « and » related party disclosure statement in relation to the financial year. The officer « and » related party disclosure statement must be prepared as soon as practicable after the end of the financial year « and » be provided to members « and » lodged with the Commissioner within 6 months from the end of the financial year.

214.      New subsections 293J(1) « and » 293J(2) are civil penalty provisions.

215.      New subsection 293J(3) provides that an officer « and » related party disclosure statement must include the details of the disclosures provided under Division 2 for the financial year.  

Division 4 - Training in relation to financial duties

Section 293K - Officers to undertake approved training

216.      New section 293K provides that each officer of an organisation or a branch of an organisation whose duties relate to the financial management of the organisation or the branch as the case may be must undertake training:

·          approved by the Commissioner under new section 293L; « and »

·          that covers each of the officer’s financial duties.

 

217.      New subsection 293K(2) provides that the organisation or branch must ensure the person completes the course within 6 months after the person begins to hold the office.

Section 293L - Approved training

218.      New section 293L provides that the Commissioner may approve training if he or she is satisfied that the training covers one or more of the duties of officers of organisations « and » branches of organisations that relate to the financial management of organisations « and » branches of organisations.

219.      It is intended that under new subsection 293L(1), the Commissioner will be able to approve a range of training of different formats, styles « and » lengths in recognition of the different significance that financial management duties have to the roles of different officials as well as the backgrounds, experience « and » qualifications of those officials. Similarly, it is intended that the Commissioner will be able to approve general training that covers a range of financial management duties as well as more specific training that is tailored to a particular area or areas of financial management.

220.      New subsection 293L(1) will require the Commissioner to be satisfied that the training being approved will be provided by an organisation or peak council (as usually defined within the RO Act) or a body or person that the Commissioner is satisfied has appropriate skills « and » expertise to provide the training, for example, a peak body for a particular industry or a recognised education provider.

221.      New subsection 293L(2) provides that if the approval under new subsection 293L(1) is made in writing, the approval is not a legislative instrument. This new subsection has been included to assist readers by making clear that an approval of training by the Commissioner that is made in writing is not a legislative instrument within the meaning of section 5 of the LI Act.

222.      Item 244 provides for transitional rules in relation to approved training.

Item 167 - Paragraph 297(1)(a)

Item 172 - Paragraph 298(1)(a)

Item 177 - Paragraph 299(1)(a)

Item 182 - Paragraph 300(1)(a)

Item 187- Paragraph 301(1)(a)

Item 192 - Paragraph 302(1)(a)

Item 197 - Paragraph 303(1)(a)

223.      These items omit references to the FW Act from sections 297 - 303 of the RO Act. These provisions relate to general duties of officers « and » employees of organisations « and » their branches in relation to orders « and » directions of the Federal Court « and » the FWC under the FW Act « and » the RO Act.

224.      The effect of these « amendments » is that certain conduct in relation to orders or directions of the Federal Court or the FWC under the FW Act will no longer be punishable by a civil penalty under the FW Act.

225.      Despite these « amendments » , the FW Act continues to provide for penalties in relation to conduct that contravenes an order of the FWC (see section 675 of the FW Act). The Federal Court, by virtue of the operation of section 24 of the Judiciary Act 1903 (Cth) « and » section 31 of the Federal Court of Australia Act 1976 (Cth) will continue to be able to punish or discipline an individual or organisation where the disobedience the subject of the civil contempt (i.e. disobedience of the judgments, orders or « other » processes of the court) is wilful « and » not casual, accidental or unintentional.

Item 200 - Subsection 305(2)

226.      Item 200 repeals « and » replaces subsection 305(2), which provides a list of civil penalty provisions in the RO Act. New subsection 305(2), defines a civil penalty provision for the purposes of the RO Act.

227.      The insertion of new subsection 305(2) is a consequential change that is necessary due to the new approach to civil penalty provisions taken throughout the RO Act.

Item 201 - At the end of section 305

228.      Item 201 inserts a new subsection 305(4), which is an avoidance of doubt provision that provides that the Federal Court must apply the rules of evidence « and » procedure for civil matters when hearing « and » determining an application for an order under Part 2 of Chapter 10 of the RO Act.

Item 202 - Subsection 306(1)

Item 203 - Paragraph 306(1)(a)

Item 204 - Paragraph 306(1)(b)

229.      These items make « amendments » to section 306 that are consequential to the new approach to civil penalty provisions taken throughout the RO Act.

Item 205 - Subsection 306(1A)

230.      This item is necessary as a consequence of the « amendments » to section 337AA made by item 230 of the « Bill » .

Item 206- Subsection 306(2)

Item 207 - Subsection 306(2)

Item 208 - At the end of section 306

231.      These items make technical « amendments » that reflect the effect of subsection 305(3), which provides that contraventions of a civil penalty provision by a branch or reporting unit of an organisation is taken to be a contravention by the organisation.

232.      Item 208 inserts a new subsection that makes clear that a person is not liable for more than one pecuniary penalty in relation to the same conduct.

Item 209 - After section 307

Section 307A - Disqualification orders

233.      Item 209 inserts new section 307A, which allows the Federal Court to make an order disqualifying a person who has contravened a civil penalty provision from holding office in an organisation for a period if the court is satisfied the disqualification is justified.

234.      The powers of the Federal Court under new section 307A have been broadly modelled on those available to it under section 206C of the « Corporations » Act, including the factors that it may be taken into account when determining if a disqualification is justified.

235.      It is not anticipated that this power would be exercised in relation to relatively minor breaches of the RO Act civil penalty provisions.

Item 210 - Section 311

236.      This item makes a technical amendment to insert a missing reference to an ‘organisation’ in section 311.

Item 211 - Section 317

237.      This item amends the simplified outline of Chapter 11 of the RO Act to include information about new Part 3B, which deals with disclosure of information acquired by the Commissioner « and » the GM.

Item 212 - After Part 3A of Chapter 11

238.      Item 212 inserts a new Part 3B of Chapter 11, which deals with information sharing.

Part 3B - Information sharing

Section 329G - When information may be disclosed

239.      New section 329G sets out when specified information may be disclosed. This section is broadly modelled on the Fair Work Ombudsman’s power under section 718 of the FW Act « and » will replace the existing section 335C (see item 223).

240.      New section 329G deals with the circumstances in which information that has been acquired by persons in the course of performing their work within the Commission or the FWC. This will include information acquired by the Commissioner or member of staff assisting the Commission « and » the GM or member of staff of the FWC.

241.      New subsection 329G(2) provides that the Commissioner or the GM may disclose or authorise the disclosure of information to which new subsection 329G(1) applies if the he or she reasonably believes that it is:

·          necessary or appropriate to do so in the course of performing functions, or exercising powers, under the RO Act or FW Act; or

·          that the disclosure is likely to assist in the administration or enforcement of a law of the Commonwealth, a State or a Territory. 

 

242.      New section 329G is intended to operate in conjunction with relevant provisions in the Privacy Act 1988 « and » the PS Act « and » Public Service Regulations 1999 (including the APS Code of Conduct).

Item 213 - Before section 330

Item 214 - Before section 331

243.      Items 213 « and » 214 create new ‘Division 1 - Inquiries’ « and » ‘Division 2 - Investigations’ in Part 4 of Chapter 11 of the RO Act.

Item 215 - Section 335 (heading)

244.      This item is a consequential amendment to the heading of section 335 to reflect « amendments » to the investigation powers of the Commissioner in items 216 - 221.

Item 216 - Subsection 335(1)

245.      This item amends section 335 to ensure that the Commissioner can require information from a person the Commissioner believes on reasonable grounds can assist with an investigation.

246.      The « amendments » to section 335 more closely align the investigation « and » information gathering powers of the Commissioner with those of ASIC under the ASIC Act.

247.      While the Commissioner has broad powers to require information under section 335, the powers must be exercised in accordance with the limits on Commissioner’s power to commence an investigation in section 331 of the RO Act.

Item 217 - Subsection 335(2)

Item 218 - Paragraph 335(2)(a)

Item 219 - Paragraph 335(2)(b)

248.      These items make technical « amendments » to subsection 335(2) to clarify the operation of the subsection.

Item 220 - At the end of subsection 335(2)

249.      Item 220 inserts new paragraph 335(2)(d), which allows the Commissioner for the purpose of an investigation to issue a written notice to a person requiring the person to give the Commissioner such reasonable assistance as is specified in the notice. This is in addition to the existing powers to require a person by written notice to provide information under subsection 335(2).

250.      A note to subsection 335(2) refers to section 337, which makes it an offence to fail to comply with a requirement in a notice issued by the Commissioner.

Item 221 - Subsection 335(3)

251.      Item 221 amends subsection 335(3) to specify a range of content that must be included in a notice issued by the Commissioner under section 335.

252.      Paragraph 335(3)(c) provides that the notice must explain the effect of new section 337AD, which relates to claims against self-incrimination (see item 230).

253.      Paragraph 335(3)(d) provides that the notice must indicate whether the person will be required to answer questions on oath or affirmation (see item 223). A notice issued by the Commissioner can require a person to appear to answer questions or provide information not on oath or affirmation. However, where an oath or affirmation will be required this must be specified.

254.      If a person will be required to answer questions on oath or affirmation, the notice must also set out the effect of new section 335F (see item 223), which relates to the attendance of the lawyer of a person subject to a notice issued by the Commissioner. Broadly, the attendee’s lawyer may always attend with the attendee. The lawyer will be able to address the investigator « and » question the attendee, provided that in doing so the examination is not obstructed.

Item 222 - Section 335A

255.      Item 222 repeals section 335A, which is a consequential change as a result of the expanded scope for issuing notices under section 335.

Item 223 - Section 335C

256.      Item 223 repeals existing section 335C « and » inserts new Divisions 3 « and » 4, which provide for questioning on oath or affirmation « and » powers in relation to documents. Existing section 335C is no longer necessary as the power to share information is dealt with generally in new section 329G (see item 212).

257.      The « amendments » in item 223 have been broadly modelled on similar provisions in Part 3 of the ASIC Act. Similar offences to those in Division 7 of Part 3 of the ASIC Act have also been created in relation to investigations of the Commissioner (see items 226 - 230).

Division 3 - Questioning on oath or affirmation

Section 335C - When this division applies

258.      New section 335C makes clear that new Division 3 only applies if a person has been issued a notice by the Commissioner under section 331 requiring the person to attend to answer questions on oath or affirmation.

259.      Division 3 does not apply to a person that is given written notice requiring him or her to attend to provide information to the Commissioner « other » than on oath or affirmation.

260.      Functions « and » powers of the Commissioner under this Division can only be delegated to a member of staff assisting the Commissioner (see item 237).

Section 335D - Requirements made of attendee

261.      New section 335D sets out the requirements that may be made of the attendee. The section also gives the investigator the power to administer an oath or affirmation to the attendee that the statements that the attendee will make will be true.

262.      By virtue of paragraph 335(2)(c), the person may only be required to attend before the Commissioner to answer questions that relate to matters relevant to the investigation.

263.      The note to subsection 335D(3) makes clear that failure to comply with a requirement made under this subsection is an offence.

Section 335E - Questioning to take place in private

264.      New section 335E provides that the questioning in accordance with the Division must take place in private « and » that the investigator may give directions about who may attend. The provisions also makes clear that only the investigator, the Commissioner or a member of staff assisting the Commissioner or person approved by the investigator, the attendee « and » the attendee’s lawyer is entitled to be present.

Section 335F - Attendee’s lawyer

265.      As detailed above, an attendee’s lawyer is entitled to be present at the questioning by an investigator. New section 335F provides that the lawyer will be able to address the investigator « and » question the attendee, provided that in doing so the examination is not obstructed.

266.      If the examination is being obstructed by the attendee’s lawyer, the investigator may require the lawyer to stop addressing the investigator or questioning the attendee.

267.      Failure to comply with a requirement under the subsection is an offence.

Section 335G - Record of statements

Section 335H - Copies given subject to conditions

268.      New section 335G makes clear that a record may be made of the statements made during questioning « and » must be made at the request of the attendee. The investigator must require the attendee to read « and » sign the record.

269.      If requested, the investigator must give a copy of the record to the attendee free of charge subject to any conditions imposed by the investigator.

270.      A note to this provision makes clear that failure to comply with a requirement under paragraph 335G(2)(a) is an offence.

271.      New section 335H provides that the conditions imposed by the investigator on a copy of a record provided under 335G(2) also applies to any person that has possession, custody or control of the record or any copy of the record.

272.      Failure to comply with this section is an offence.

Division 4 - Powers in relation to documents

Section 335K - Application for warrant to seize documents

273.      New section 335K permits the Commissioner to apply to a magistrate for the issue of a warrant to search premises where the Commissioner has reasonable grounds to suspect there are documents whose production could be required under section 335.

274.      If appropriate, the magistrate can require further information in connection with the application. Only where there are reasonable grounds to suspect that there are, or will soon to be, on particular premises, documents that have not been produced as required, may an application be granted to search those premises for the documents.

275.      The power to apply for the issue of a warrant is a non-delegable function of the Commissioner (see item 236).

Section 335L - Grant of warrant

276.      A magistrate will be empowered to issue a warrant if satisfied of the matters required under section 335L. The warrant may authorise a member of the Australian Federal Police « and » any « other » named person, to use such force as is necessary « and » reasonable:

·          to enter the premises;

·          to search the premises;

·          to break open « and » search anything on the premises; « and »

·          to take possession of the documents.

 

277.      The information to be laid before the magistrate will also state which of the grounds set out in the information « and » particulars of any « other » grounds that are relied upon to justify the issue of the warrant.

278.      These features are closely based on relevant provisions of the ASIC Act « and » are designed to provide safeguards in the issue of warrants.

Section 335M - Execution of warrant

279.      New section 335M sets out a range of rights « and » obligations in relation to the execution of a warrant under new section 335L.

280.      Importantly, if the occupier of the premises is present the member of the Australian Federal Police must present the occupier with a copy of the warrant « and » permit the occupier to be present during the search.

281.      Further, if documents are seized under the warrant the member of the Australian Federal Police or the person assisting the member must provide a receipt for the documents.



 

Section 335N - Powers in relation to documents produced or seized

282.      New section 335N sets out certain powers in relation to documents produced or seized either under section 335, under a warrant issued under new section 335L or under new subsection 335N(8).

283.      Under new section 335N, relevant documents may be:

·          inspected, copied or have extracts taken from them;

·          used for the purposes of a proceeding (defined in section 6); « and »

·          retained for as long as necessary for the purposes set out in new paragraphs 335N(5)(a) - (d).

 

284.      Liens cannot be claimed against a person retaining any of the documents, but liens are not otherwise prejudiced.

285.      Inspections of retained documents will be permitted « and » if appropriate, retained documents may be delivered to the Commissioner or a person authorised by the Commissioner to receive them.

286.      In certain circumstances, the person who has taken possession of a document can require a person who produced the document or took part in its compilation to make such further explanation as can be made.

287.      Failure to comply with this subsection is an offence.

Section 335P - Powers if documents not produced

288.      New section 335P provides that if a person fails to produce documents required under section 335, a person may be required to explain where the documents may be found « and » the whereabouts of the person who last had possession of the documents.

289.      Failure to comply with this section is an offence.

Section 335Q - Power to require person to identify « property » of an organisation

290.      New section 335Q provides that if documents are not produced, a person may be required to identify « property » of the relevant organisation « and » explain how that organisation has kept account of that « property » .

291.      Failure to comply with this section is an offence.

Item 224- Section 336 (heading)

292.      This item amends the heading of section 336 to create Division 5, which deals with action following investigations. It also changes the title of section 336.

Item 225- Before section 337

293.      Item 225 inserts new Division 6 in Part 4 of Chapter 11. Division 6 deals with offences.



 

Item 226 - Paragraph 337(1)(a)

Item 227 - At the end of subsection 337(1) (before the penalty)

294.      Items 226 « and » 227 amend subsection 337(1) to list all the offences in relation to an investigation by the Commissioner. The « amendments » are consequential to the amended investigation powers in items 215 - 223 above.

Item 228 - Subsection 337(1) (penalty)

295.      Item 228 increases the maximum penalty available for a contravention of subsection 337(1) to 100 penalty units or imprisonment for 2 years, or both.

Item 229 - Subsections 337(2) to (5)

296.      This item repeals subsections 337(2) - (5) « and » inserts new subsections that set out a number of defences for offences in section 337.  

297.      A note to the new subsections makes clear that in accordance with the Criminal Code, a defendant bears the evidential burden in relation to proving the matters in new subsections 337(2) - (4).

Item 230 - Section 337AA

298.      Item 230 repeals section 337AA (which dealt with offences in relation to investigations by the GM) « and » replaces it with a series of provisions detailing new offences in relation to the conduct of investigations by the Commissioner.

Section 337AA - Strict liability offences

299.      New section 337AA provides for a number of strict liability offences, which are generally ancillary to the investigative powers of the Commissioner. The penalty for committing an offence under this section is 60 penalty units.

300.      New subsection 337AA(3) provides that a person will not commit an offence under the section if he or she has a reasonable excuse.

301.      A note to this subsection provides that in accordance with the Criminal Code the defendant bears the evidential burden in proving a reasonable excuse. 

Section 337AB - Obstructing person acting under this Part

302.      New subsections 337AB(1) « and » 337AB(2) provide that a person commits an offence if he or she hinders or obstructs a person exercising a power under the Part or executing a warrant under new section 335L.

303.      The penalty for committing an offence under this provision is 100 penalty units or 2 years imprisonment, or both.

304.      New subsection 337AB(2) provides that a person will not commit an offence under the section if he or she has a reasonable excuse.

305.      A note to this subsection provides that in accordance with the Criminal Code the defendant bears the evidential burden in proving a reasonable excuse.

306.      New subsection 337AB(3) makes it an offence for a person to fail to provide reasonable facilities « and » assistance to a person exercising powers under a warrant issued under new section 335L.

307.      The penalty for committing an offence under this provision is 25 penalty units or imprisonment for 6 months, or both.

Section 337AC - Concealing documents relevant to investigation

308.      New section 337AC provides that where the Commissioner (or delegate) is investigating or is about to investigate a matter, it will be an offence to conceal, destroy, mutilate or alter a document relating to the matter, or to take or send the document out of the particular State or Territory or out of Australia unless it was not intended to defeat the purposes of the investigation or to delay or obstruct an investigation.

309.      In light of the definition of ‘proceeding’ (see item 3), the limitation on use of certain evidence in a criminal proceeding or a proceeding for the imposition of a penalty will apply broadly. Further, Courts have given the term ‘penalty’ a wide meaning, which adds to the scope of the protection in subsection 337AD(3) (see for example Chief Executive, Queensland Health v Jattan [2010] QCA 359).

310.      The penalty for committing an offence under this provision is 200 penalty units or imprisonment for 5 years, or both.

311.      A note to this subsection provides that in accordance with the Criminal Code the defendant bears the evidential burden in proving that his or her actions were not intended to defeat the purposes of the investigation or to delay or obstruct an investigation.

Section 337AD - Self-incrimination

312.      New section 337AD provides that if before giving information, producing a document or signing a record, a person claims that the information, document or record might tend to incriminate him or her or make him or her liable to a penalty, neither the information or the fact the person produced the document or signed the record is admissible in evidence against the person in a criminal proceeding or proceeding for the imposition of a penalty, « other » than a proceeding in respect of the falsity of the information, document or record.

Section 337AE - Legal professional privilege

313.      New section 337AE provides that a lawyer will be permitted to withhold a privileged communication made to that lawyer in that capacity unless the person involved agrees to the furnishing of that information. Where a privileged communication is withheld, the lawyer will be required to provide details of the identity of the person to whom the communication was made « and » the identity of the document containing the communication.

314.      The penalty for committing an offence under this provision is 10 penalty units or 3 months imprisonment, or both.

315.      This provision places additional statutory obligations on lawyers claiming privilege in the context of an investigation by the Commissioner (or delegate). It is not intended to otherwise abrogate common law principles of legal professional privilege. 

Division 7 - Evidentiary use of certain material

Section 337AF - Statements made on oath or affirmation during an investigation - proceedings against attendee

316.      New section 337AF sets out certain rules in relation to the admissibility in evidence of statements made by a person under oath or affirmation in proceedings against the person. A statement by a person is admissible unless:

·          it is subject to a claim against self-incrimination under new subsection 337AD(3);

·          the statement is not relevant to the proceedings;

·          the statement is qualified or explained by another statement made by the person on oath or affirmation; or

·          the statement would disclose matters in respect of which the person could claim legal professional privilege in the proceeding.

 

317.      New subsection 337AF(3) makes clear that if a record of statements is signed in accordance with new subsection 335G(2) the record will be taken to be evidence of the statements. However, nothing in the Part limits the admissibility of « other » evidence of statements made during the questioning.

Section 337AG - Statements made on oath or affirmation during an investigation - « other » proceedings

318.      New section 337AG provides that if direct evidence by a person not at a proceeding would be admissible, a statement made on oath or affirmation that establishes the matter is admissible in the matter on the grounds set out in new paragraphs 337AG(a) « and » (b).

Section 337AH - Weight of evidence admitted under section 337AG

319.      New section 337AH sets out special rules in relation to the weight to be given to statements as evidence that are admitted under section 337AG in a proceeding.

320.      In deciding the weight that must be given to a matter regard must be had to:

·          how long after the matters to which it relates the statement was made;

·          any reason the person may have for concealing or misrepresenting a matter; or

·          any « other » circumstances that may indicate how accurate the statement is.

 



 

321.      In cases where the person is not called as a witness:

·          evidence that would have been admissible in relation to the credibility of the person is admissible; « and »

·          evidence in relation to the consistency of the relevant statements is also admissible.

 

322.      Evidence of a matter is not       admissible if, had the person been present to deny the matter, evidence of the matter would not have been admissible in cross examination.

Section 337AJ - Objection to admission of statements made on oath or affirmation during an investigation

323.      Under new section 337AJ a party that intends to introduce statements made on oath or affirmation as evidence in the proceeding must notify the « other » party to the proceedings in writing.

324.      The « other » party has an opportunity to respond in writing stating whether the « other » party objects to the introduction of the statements as evidence.

325.      The adducing party must notify the court or tribunal of their intention to introduce statements as evidence « and » of any objections raised by the « other » party to the proceedings. The court or tribunal may determine the objections prior to or during the proceedings. The « other » party is not entitled to raise further objections to statements being introduced on evidence unless their object relates to an earlier objection or if the court or tribunal gives the « other » party leave to raise further objections.

Section 337AK - Copies of, or extracts from, certain documents

326.      New section 337AK provides that in certain circumstances, a copy or extract from a document is admissible in evidence as if it was the original document or was the relevant part of the original document.

Section 337AL - Material otherwise admissible

327.      New section 337AL provides that nothing in new Division 7 renders evidence inadmissible in a proceeding in circumstances where it would have been admissible in that proceeding if Division 7 had not been enacted.

Division 8 - Miscellaneous

Section 337AM - Evidence of Authority

328.      New section 337AM makes clear that a person may request evidence of an investigator’s authority to make a requirement under Part 4 of Chapter 11. Upon request the investigator must produce a written authorisation issued by the Commissioner « and » any « other » evidence to make the requirement under the Part as the Commissioner determines.



 

Section 337AN - Application of the Evidence Act

329.      New section 337AN sets out the application of the Evidence Act 1995 to questioning on oath or affirmation.

Section 337AP -Allowances « and » expenses

330.      New section 337AP provides for certain reimbursements to be paid to people subject to a requirement made under section 335 or incurred in complying with a requirement made under the Part.

Section 337AQ - Compliance with Part

331.      New section 337AQ broadly provides that a person is neither liable to a proceeding, nor subject to a liability, merely because the person has complied with a requirement made under Part 4 of Chapter 11.

Item 232 - Section 337G

332.      This item amends section 337G to provide that the FWC may direct that parties be joined or struck out as parties to proceedings before the FWC under the RO Act. This is a consequential amendment required to reflect that a proceeding can also be brought before « other » courts or tribunals.

Item 233- After paragraph 343B(2)(h)

333.      This item inserts subsection 329G(2) as a power that the Commissioner may delegate. This item is a consequential amendment to reflect new Part 3B of Chapter 11 in item 212.

Item 234 - Paragraph 343B(2)(k)

334.      This item removes a reference to section 335A in paragraph 343B(2)(k) as a power that the Commissioner may delegate. This item is a consequential amendment required as a result of item 224 which repeals section 335A.

Item 235 - Paragraph 343B(2)(ka)

335.      This item repeals paragraph 343B(2)(ka) which provided for the delegation of the Commissioner power under subsection 335C(2). This is a consequential amendment required as a result of item 225 which repeals section 335C.

Item 236 - Before paragraph 343B(2)(m)

336.      This item inserts new paragraph 343B(2)(l) which provides that the Commissioner may delegate his power under section 335K. This is a consequential amendment required as a result of item 223 which inserts new section 335K.



 

Item 237 - After subsection 343B(3)

337.      New subsection 343B(4) provides that the Commissioner’s functions « and » powers to question an attendee on oath « and » affirmation under Division 3 of Part 3B can only be delegated to a member of staff assisting the Commissioner.

 



Part 2 - Transitional provisions

Item 242 - Definitions

338.      Item 242 provides for definitions for the purpose of this Part.

Item 243 - Application of Division 3A of Part 2 of Chapter 5 in relation to the 2013-14 financial year

339.      This item provides that Division 3A of Part 2 of Chapter 5 has effect in relation to the financial year ending 30 June 2014 as if it had not been repealed by this Schedule.

Item 244- Approved training

340.      This item relates to training approvals issued prior to the commencement time.

341.      A person who has undertaken training approved by the GM under section 154C of the RO Act, immediately before the commencement time, is taken for the purpose of section 293L to have undertaken that training as approved by the Commissioner. In addition, training approvals issued prior to the commencement time by the GM continue to have effect as if they had been issued by the Commissioner.

Item 245- Alternative disclosure arrangements

342.      This item provides that in satisfying himself or herself as mentioned in subsection 293H(3) of the RO Act during the period of 12 months immediately after the commencement time, the Commissioner must take into account exemptions granted to the organisation under section 148D of the RO Act « and » the statement, particulars « and » evidence provided in relation to any such exemption as required by subsection 148D(2) of the RO Act.

Item 246 - Minister may make rules about transitional matters

343.      Item 246 provides that the Minister may make rules about transitional matters.





Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

 

Fair Work (Registered Organisations) Amendment « Bill » 2014

This « Bill » is compatible with the human rights « and » freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 .

 

Overview of the Fair Work (Registered Organisations) Amendment « Bill » 2014 (the « Bill » )

The « Bill » will amend the RO Act to ensure better governance of registered organisations.

The « Bill » will:

·          establish an independent watchdog, the Commission, to monitor « and » regulate registered organisations, « and » educate their members with enhanced investigation « and » information gathering powers;

·          amend the requirements on officers’ disclosure of material « personal » interests ( « and » related voting « and » decision making rights) « and » change grounds for disqualification « and » ineligibility for office;

·          strengthen existing financial accounting, disclosure « and » transparency obligations under the RO Act by putting certain rule obligations on the face of the RO Act « and » making them enforceable as civil remedy provisions; « and »

·          increase civil penalties « and » introduce criminal offences for serious breaches of officers’ duties as well as new offences in relation to the conduct of investigations under the RO Act.

The « Bill » replicates the Fair Work (Registered Organisations) Amendment « Bill » 2013. [3]

Human rights implications

The « Bill » engages with 3 human rights:

  • The right to freedom of association:
    • The right to form « and » join trade unions « and » the right of trade unions to function freely in Article 22 of the International Covenant on Civil « and » Political Rights (ICCPR),
    • Article 8 of the International Covenant on Economic, Social « and » Cultural Rights (ICESCR); « and »
    • in the International Labour Organisation (ILO) Freedom of Association « and » Protection of the Right to Organise Convention 1948 (No 87) (Convention 87) ; « and »
  • The right to the presumption of innocence « and » the minimum guarantees contained in Article 14 of the ICCPR; « and »
  • The prohibition on unlawful « and » arbitrary interference with privacy « and » reputation in Article 17 of the ICCPR.

The Right to Freedom of Association

 

Article 22(1) of the ICCPR protects the right to freedom of association, including the right to form « and » join trade unions.

 

Relevantly, Article 8(1)(a) of the ICESCR also provides for:

 

The right of everyone to form trade unions « and » join the trade union of his choice, subject only to the rules of the organization concerned, for the promotion « and » protection of his economic « and » social interests. No restrictions may be placed on the exercise of this right « other » than those prescribed by law « and » which are necessary in a democratic society in the interests of national security or public order or for the protection of the rights « and » freedoms of others.

Article 8(3) of the ICESCR also provides that:

 

Nothing in this article [Article 8] shall authorize States Parties to the International Labour Organisation Convention of 1948 concerning Freedom of Association « and » Protection of the Right to Organize to take legislative measures which would prejudice, or apply the law in such a manner as would prejudice, the guarantees provided for in that Convention .

 

ILO Convention 87 provides employer « and » employee organisations with protection for their organisational autonomy. Article 3 of Convention 87 provides:

1. Workers' « and » employers' organisations shall have the right to draw up their constitutions « and » rules, to elect their representatives in full freedom, to organise their administration « and » activities « and » to formulate their programmes.

2. The public authorities shall refrain from any interference which would restrict this right or impede the lawful exercise thereof.

Article 8 of Convention 87 provides that:

1. In exercising the rights provided for in this Convention workers « and » employers « and » their respective organisations, like « other » persons or organised collectivities, shall respect the law of the land.

2. The law of the land shall not be such as to impair, nor shall it be so applied as to impair, the guarantees provided for in this Convention.

The « Bill » will make several « amendments » to the RO Act which engage the right to freedom of association:

 

  • Increasing maximum penalties for breaches of civil penalty provisions across the RO Act;
  • Increasing financial disclosure requirements on officers « and » organisations « and » their branches;
  • Placing restrictions on officers from taking part in decision making in limited circumstances;
  • Increasing the circumstances in which an officer may be disqualified from holding office in an organisation;
  • Increasing the information gathering powers of the independent regulator, the roc, including the introduction of new offences in relation to non-compliance « and » obstruction of requests made by the roc under its information gathering power; « and »
  • Requiring organisations to ensure that officers undertake approved financial management training.

 

These provisions of the « Bill » limit the right to freedom of association. However, the limitations on the right are permissible limitations as they pursue a legitimate objective, are prescribed by law « and » are reasonable, necessary « and » proportionate.

 

Legitimate objective

 

As noted in the outline above, the object of the « amendments » is to ensure better governance of registered organisations. This object arises out of Government « and » community concerns that in light of recent investigations « and » prosecutions of officials of registered organisations relating to misuse of position « and » member funds, the current regulation of registered organisations is not satisfactory in preventing fraud, financial mismanagement « and » adequate democratic governance in the interests of members. [4]

 

As the Parliamentary Joint Committee on Human Rights (the Joint Committee) has previously noted:

 

The ILO Committee on Freedom of Association has considered the question of the permissibility of regulating the operations of unions « and » external scrutiny of their finances. While expressing concern about the possibility of government interference in the operations of trade unions, it has also recognised the legitimacy of external scrutiny in order to prevent or detect fraud or embezzlement. [5]

 

Following the Joint Committee’s comments above, it is important to note that the ILO Committee on Freedom of Association has made the following observations on the rights of organisations to organise their administration:

 

  • “Legislative provisions which regulate in detail the internal functioning of workers’ « and » employers’ organizations pose a serious risk of interference by the public authorities. Where such provisions are deemed necessary by the public authorities, they should simply establish an overall framework in which the greatest possible autonomy is left to the organizations in their functioning « and » administration. Restrictions on this principle should have the sole objective of protecting the interests of members « and » guaranteeing the democratic functioning of organizations. Furthermore, there should be a procedure for appeal to an impartial « and » independent judicial body so as to avoid any risk of excessive or arbitrary interference in the free functioning of organizations”. [6] (emphasis added)
  • “Measures of supervision over the administration of trade unions may be useful if they are employed only to prevent abuses « and » to protect the members of the trade union themselves against mismanagement of their funds . However, it would seem that measures of this kind may, in certain cases, entail a danger of interference by the public authorities in the administration of trade unions « and » that this interference may be of such a nature as to restrict the rights of organizations or impede the lawful exercise thereof, contrary to Article 3 of Convention No. 87. It may be considered, however, to some extent, that a guarantee exists against such interference where the official appointed to exercise supervision enjoys some degree of independence of the administrative authorities « and » where that official is subject to the control of the judicial authorities ”. [7] (emphasis added)

 

On the basis of these observations, the « amendments » in the « Bill » which limit the right to freedom of association pursue a legitimate object because they:

 

  • have the sole objective of protecting the interests of members « and » guaranteeing the democratic functioning of organisations; « and »
  • seek to prevent abuses « and » protect the members of trade unions « and » employer associations against mismanagement of their funds.

 

The « amendments » in the « Bill » are also necessary « and » proportionate to achieve the objective of increased financial transparency « and » improved democratic governance of registered organisations.

 

Registration under the RO Act is not mandatory

 

The system of registration of employer « and » employee associations in the Federal industrial relations system is not mandatory « and » associations freely choose to seek registration with the rights « and » obligations which registration confers. While the RO Act does impose limitations on the right of organisations to organise themselves as they see fit, consequent upon registration an organisation is entitled to significant rights « and » privileges under the FW Act including:

 

  • entitlement to initiate proceedings or appear before the FWC on behalf of a member; [8] « and »
  • exercising rights of entry to workplaces under Part 3-4 of the FW Act.

 

Companies’ regulation is an appropriate model for achieving the legitimate objectives of the « Bill »

 

In seeking appropriate « and » reasonable measures to achieve the objectives of the « Bill » , many of the measures in the « Bill » have been drawn from regulation of companies.

 

The measures in the « Bill » , which increase the obligations on officers, are modelled on the established mechanisms of corporate governance used for the regulation of companies in Australia. These regulations are intended to prevent breaches of the fiduciary duties owed by company directors. In particular, disclosure of material « personal » interests « and » restrictions on voting at meetings protect against the risk that a related party may influence the decision-making of directors to the detriment of the interests of members of the company as a whole when a company is considering whether to enter into a transaction with a related party.

 

Judicial consideration of the role of officers of industrial organisations has made clear that officers of industrial organisations hold a position of trust which involves the maintenance « and » advancement of interests of their members « and » that there are strong fiduciary elements involved in the discharge of the duties of such office [9] . The « amendments » in the « Bill » with regards to the material « personal » interests of officers seek only to prevent breaches of the obligations on officers at common law to act in the interests of members.

 

Similarly, the introduction of criminal offences regarding good faith, use of position « and » use of information for officers « and » employees are aimed at reducing reckless « and » dishonest conduct which would prejudice the interests of members. This provision mirrors the offences under the « Corporations » Act 2001 ( « Corporations » Act). [10] The « amendments » in the « Bill » requiring the disclosure of the identity « and » remuneration of officers is also modelled on similar requirements under the « Corporations » Act « and » builds on the existing obligations of officers « and » organisations. [11]

 

The application of the powers of the ROC is subject to judicial, parliamentary « and » administrative oversight

 

Finally, it is important to highlight that the « Bill » ensures adequate oversight of the exercise of the functions « and » powers of the ROC « and » the Commissioner:

 

  • Decisions of the Commissioner (including a delegate of the Commissioner) will be reviewable by appeal to the FWC under subsection 604(1) of the FW Act;
  • The Commonwealth Ombudsman will have oversight of the actions of the Commission « and » the Commissioner similar to its oversight of the actions of the Australian « Securities » « and » Investments Commission (ASIC) under its corresponding functions « and » powers; « and »
  • The ROC is required to report annually to the Commonwealth Parliament.

 

Increasing civil penalties - human rights implications

 

In addition to the introduction of new criminal offence provisions, as noted above, the « Bill » increases the maximum penalty for a range of civil penalties across the RO Act « and » also introduces some new civil penalties. The Government notes that, given that civil penalty provisions may engage the criminal process rights under articles 14 « and » 15 of the ICCPR, the Joint Committee has highlighted that when a provision imposes a civil penalty, an assessment is required as to whether it amounts to a ‘criminal’ penalty for the purposes of the ICCPR. [12] The Government has relied on the Joint Committee’s guidance in Practice Note 2 (interim) as to the relevant criteria for determining whether the civil penalty provisions amended or introduced by the « Bill » are ‘criminal’ for the purposes of human rights law.

The « Bill » will amend the penalties that may be imposed by the Federal Court for breaches of the civil penalty provisions of the RO Act to provide for three tiers of maximum penalties depending on the relative seriousness of the conduct the subject of the penalty provision:

  • Tier one - 100 penalty units for an individual ($17,000) or 500 for a body corporate ($85,000) or for where a contravention is deemed a ‘serious’ contravention, 1200 penalty units for an individual ($204,000) or 6000 for body corporate ($1,020,000). This penalty applies to breaches of officer’s civil financial management duties under sections 285 - 288, the new obligations introduced by the « Bill » to disclose officer’s material « personal » interests « and » remuneration, payments made by an organisation or branch, general duties in relation to orders « and » directions of the FWC « and » Federal Court « and » restrictions on officers voting on certain matters. The « Bill » amends section 6 of the RO Act to provide that a ‘serious contravention’ in relation to a contravention of a civil penalty provision by an organisation, a branch of an organisation or a person who is, or was, an officer or employee of an organisation or a branch of an organisation, means a contravention that:
    • materially prejudices the interests of the organisation or branch, or the members of the organisation or branch; or
    • materially prejudices the ability of the organisation or branch to pay creditors; or
    • is serious.
  • Tier two - 100 penalty units for an individual ($17,000) or 500 for a body corporate ($85,000). Broadly, this penalty applies to breaches of provisions requiring the lodgement of financial or « other » information with the ROC « and » the making of declarations.
  • Tier three - 60 penalty units for an individual ($10,200) or 300 penalty units for body corporate ($51,000). Broadly, this penalty applies to breaches of the least serious civil penalty provisions including lodging certain documents with the FWC « and » « other » administrative tasks such as removing non-financial members from the organisations register.   


 

Following Practice Note 2 (interim), the Joint Committee will have regard to three criteria for assessing whether a penalty is criminal:

  • The classification of the penalty in domestic law;
  • The nature of the penalty; « and »
  • The severity of the penalty. [13]

Classification of the penalty

The penalties under the « Bill » ’s « amendments » are described as civil penalties « and » will be enforceable in the Federal Court subject to the rules of evidence « and » procedure applicable to civil proceedings in that court. In this way, the classification of the penalty favours classification of the penalty as civil in international law.

Nature of the penalty

Applying the criteria listed in Practice Note Two (interim) with regards to the nature of the penalty, the new « and » increased penalties contained in the « Bill » appear to have the characteristics of both civil « and » criminal penalties. On balance, for the reasons below, the penalties are more likely to be considered civil in nature.

Firstly, many of the increased penalties in the « Bill » , particularly in the middle tier of penalties are administrative in nature « and » are intended to reduce non-compliance with obligations, particularly financial obligations, under the RO Act. Secondly, for the highest tier of offences it is relevant to highlight that in examining the nature of civil penalties in Australia, the Australian Law Reform Commission (ALRC) noted that:

In criminal law, wrongful acts are punished because they violate some kind of collective interest, « and » will apply even if no individual suffered a direct injury. Civil remedies, on the « other » hand, apply to conduct that has directly harmed an individual’s interest. [14]

The application of higher penalties to provisions directly relating to the financial management of organisations is intended to protect the individual interests of the members of organisations.

Considering the nature of the penalties as a whole it becomes clear that the « amendments » in the « Bill » are preventative, disciplinary « and » regulatory in nature.

Severity of the penalty

The severity of the increased penalties indicates that the penalties are more likely to be considered civil rather than criminal. In support of this conclusion it is relevant to note:

  • The maximum penalty is equivalent to that applicable under the « Corporations » Act « and » many organisations have command of considerable resources similar to that of many companies;
  • The application of the maximum penalty is subject to a threshold test which mirrors the protection in subsection 1317G(1) of the « Corporations » Act;
  • There is no provision under the RO Act for imprisonment for non-payment of a penalty; « and »
  • Any increases in penalties reflect the seriousness of the provisions by reference to the objective of ensuring better financial management of organisations.

Having regard to the criteria set out by the Joint Committee, the civil penalties introduced or amended by the « Bill » are civil penalties for the purposes of international law. The discussion below of the rights guaranteed by Article 14 of the ICCPR proceeds on this basis.

Right to the presumption of innocence « and » « other » guarantees

 

Article 14(1) of the ICCPR provides that all persons shall be equal before the courts « and » tribunals, « and » that in the determination of any criminal charge against a person, that person is entitled to a fair « and » public hearing by a competent, independent « and » impartial tribunal established by law.

 

Article 14(2) provides that everyone charged with a criminal offence has the right to be presumed innocent until proved guilty according to the law.

 

Article 14(3) set out a range of guarantees that everyone shall be entitled to in the determination of any criminal charge against them. This includes the right not to be compelled to testify against himself or herself or to confess guilt (Article 14(3)(g)).

 

The « Bill » contains a number of « amendments » to insert new offence provisions in the RO Act:

 

  • Offences in relation to good faith, use of position « and » use of information;
  • Offences in relation to attendance before the Commissioner or a delegate (including for questioning on oath or affirmation);
  • Offences in relation to production of documents;
  • Failure to provide reasonable assistance to the Commissioner;
  • Obstruction of a person exercising powers under Part 4 of Chapter 11;
  • Concealing documents relevant to an investigation; « and »
  • Refusal to comply with a request made to a lawyer under Part 4 of Chapter 11.

 

Article 14(2) ICCPR

 

The « Bill » will insert new section 337AA which provides that certain offences in relation to the conduct of an investigation are strict liability offences. These offences may limit the presumption of innocence guaranteed in Article 14(2) of the ICCPR. However, if these offences are considered to be limiting the right, the limitation is within the permissible limitations to the right because of the objective of ensuring compliance with the requirements under Part 4 of Chapter 11 which is necessary for the effective functioning of the Commission.

 

The limitation is also reasonable insofar as each of the offences relates to a person’s failure to comply with a requirement made of them relating to the conduct of an investigation (under Part 4 of Chapter 11 of the RO Act as amended). However, each of these offences will not apply insofar as the person has a reasonable excuse, a matter that is peculiarly in the knowledge of the defendant. As such, it is more practical for the accused to prove that they are not in breach of the requirement than for the prosecution to disprove that the person does not have a reasonable excuse.

 

Also in favour of the limitation being considered permissible is that the offences of strict liability could also be characterised as regulatory in nature « and » are not punishable by a term of imprisonment.

 

Article 14(3)(g) ICCPR

 

Article 14(3)(g) of the ICCPR provides the right to be free from self-incrimination, in that a person may not be compelled to testify against him or herself or to confess guilt. The « Bill » will insert new subsection 337AD(1) which provides that for the purposes of Part 4, Chapter 11 (as amended) it is not a reasonable excuse for a person to refuse or fail to give information, produce a document or sign a record in accordance with a requirement made of the person because doing so might tend to incriminate the person or make the person liable to a penalty. As such, subsection 337AD(1) limits the right to be free from self-incrimination.

 

The limitation is however, within the permissible limitations to the right as it is for a legitimate objective, « and » is reasonable, necessary « and » proportionate to that objective. The objective of the limitation is to ensure that offences under the RO Act can be properly investigated which is necessary to ensuring compliance with the RO Act. The limitation is also reasonable « and » proportionate. New subsections 337AD(2) « and » (3) contain a derivative use immunity which provides that if a person claims the information, document or record might tend to incriminate them or make them liable to pay a penalty, « and » this might in fact be the case, then the information document or record, or the fact that the person has produced the document or signed the record, will not be admissible in evidence against the person in a criminal proceeding or a proceeding for the imposition of a penalty. This immunity does not apply with respect to proceedings in respect of false or misleading information, documents or records (paragraphs 337AD(3)(c) « and » (d)).

 

Article 14(7) ICCPR

 

Article 14(7) provides a guarantee that no person who has been convicted or finally acquitted of a criminal charge shall be tried or punished again. The « Bill » inserts new section 290A which creates offences for conduct similar to that concerned in sections 285 - 288 for which the « Bill » will increase the maximum penalty. Whilst the Government believes that this increase does not mean that the offences under new section 290A would be considered ‘criminal’ in international law ( « and » therefore limiting the guarantee in Article 14(7)), it is relevant to note that section 311 of the RO Act restricts the Federal Court from ordering a pecuniary penalty against a person or organisation if the person has been convicted of an offence constituted by conduct that is substantially the same as the conduct constituting the contravention.

 

In this respect the ALRC has found that:

 

The ALRC finds value in maintaining provisions in legislation which allow for a choice of criminal or civil proceedings for the same conduct. Such flexibility is an important feature of regulation « and » allows a regulator the ability to tailor appropriate penalties to breaches . [15]

 

Right to Privacy « and » Reputation

 

The right to privacy in Article 17 of the ICCPR prohibits unlawful or arbitrary interferences with a person's privacy, family, home « and » correspondence. It also prohibits unlawful attacks on a person's reputation.

The UN Human Rights Committee, General Comment 16 makes the following comments in relation to the right to privacy « and » reputation:

The term "home" in English…as used in article 17 of the Covenant, is to be understood to indicate the place where a person resides or carries out his usual occupation…Searches of a person's home should be restricted to a search for necessary evidence « and » should not be allowed to amount to harassment. [16]

In order for an interference with the right to privacy not to be ‘arbitrary’, the interference must be for a reason consistent with the ICCPR « and » reasonable in the particular circumstances. Reasonableness, in this context, involves notions of proportionality, appropriateness « and » necessity. [17]

Investigation « and » information gathering powers

 

Under the « amendments » in the « Bill » , the existing investigation « and » information gathering powers of the GM will be transferred to the Commissioner. These powers will also be significantly amended to empower the Commissioner to require any person he or she believes on reasonable grounds:

 

  • has information or a document; or
  • is capable of giving evidence

 

which the Commissioner has reason to believe is relevant to an investigation, (new subsection 335(1)) to produce documents, give evidence or provide information or reasonable assistance (new subsection 335(2)). These powers can only be applied in the course of an investigation (under sections 331 - 334 of the RO Act).

 

The Commissioner’s powers under section 335 (as amended) are supplemented with offence provisions:

 

  • If a person fails to produce documents they can be required to explain where to find the documents or whose possession they were last in (new section 335P).
  • A person can also be required to identify « property » of an organisation « and » explain how the organisation kept account of that « property » (new section 335Q).

 

The Commissioner’s powers are also enforceable as offence provisions (which are set out in full above).

 

These expanded investigation « and » information gathering powers limit the right to privacy, however this limitation is permissible insofar as it is for a legitimate objective « and » is necessary, reasonable « and » proportionate.

 

The objective of the « amendments » is to ensure that the Commission can effectively investigate breaches of the RO Act. In order to achieve this object it is necessary for the Commission to have information gathering powers sufficient to undertake this task. The « amendments » have drawn from the information gathering powers of ASIC under the Australian « Securities » « and » Investments Commission Act 2001 (ASIC Act) (Part 3, Divisions 1 - 10) which provides a suitable comparator for the functions of the Commissioner.

 

There are also important safeguards on the application of these new powers which further indicates that the « amendments » are reasonable « and » proportionate:

 

  • As amended by the « Bill » , subsection 335(3) provides that the notice requiring a person to appear to give evidence or provide information must include certain matters:
    • the general nature of the matters to which the investigation relates;
    • state the person can be accompanied by a lawyer or another person;
    • set out the effect of new section 337AD (discussed above);
    • state whether the person will be required to answer questions on oath or affirmation; « and »
    • the rights of an attendee’s lawyer (under new section 335F).
  • Questioning must take place in private (section 335E).
  • Whilst the Commissioner’s powers are enforceable as offence provisions (amended paragraphs 337(1)(a) - (c) « and » new paragraph 337(1)(d)), the offences in amended paragraph 337(1)(a) « and » new paragraph 337(1)(d) allow a defence of reasonable excuse. Also, the new offences in subparagraphs 337(1)(d)(ii) « and » (iii) do not apply to the extent that the person has explained the matter to the best of his or her knowledge « and » the offence in subparagraph 337(1)(d)(iv) does not apply to the extent that the person has, as far as they are capable, performed the acts referred to in new paragraphs 335Q(a) « and » (b).

 

Search « and » seizure powers

 

The « Bill » includes the ability for the Australian Federal Police to enter premises « and » search « and » seize documents (new section 335M). This power limits the right to privacy, however, this limitation is permissible insofar as it pursues a legitimate objective « and » is reasonable, necessary, proportionate, authorised by law « and » is not arbitrary. The object of the new search « and » seizure powers in the RO Act is intended to ensure that the ROC is adequately empowered to obtain information necessary to perform its investigatory functions. The search « and » seizure powers introduced in the « Bill » are modeled on those of ASIC under the ASIC Act, which as noted above, is an appropriate comparator for the powers necessary for the ROC.

 

There are a number of factors which indicate that the limitation is permissible:

 

  • The powers of the Commissioner, the Australian Federal Police « and » an eligible magistrate are clearly prescribed in domestic law meaning there are detailed rules governing the scope « and » application of the powers in the « Bill » . Also, the application of the provisions should be clear insofar as the provisions are nearly identical to those of the ASIC Act.
  • The powers include adequate safeguards against arbitrariness « and » abuse, including limits on the duration of the power. In this regard, the power is only available conditional upon prior authorization by a magistrate (new section 335L). Also, the warrant must specify the premises « and » documents to which it applies, state whether entry is authorised to be made at any time of the day or night or in specified hours « and » also state that the warrant ceases to have effect on a specified day that is not more than 7 days after the day of issue of the warrant (new subsection 335L(4)).
  • The ROC’s « other » information gathering powers under paragraph 335(2)(b) mean that the application for a warrant to search « and » seize documents will only be required to be used when this less intrusive method of obtaining the information is not sufficient for the ROC to obtain the documents it seeks in the course of an investigation. Further, new section 335M will place important safeguards on the execution of the warrant.
  • There are limitations around the use of documents seized in new section 335N with the intention that such documents are used only for purposes related to the investigation for which they were seized.
  • The Commission will also be subject to independent oversight by the Commonwealth Ombudsman. 

 

Disclosure obligations on officers of organisations

 

« Amendments » in the « Bill » relating to the disclosure of officer’s remuneration « and » material « personal » interests limit the right to privacy. The « Bill » provides that:

 

  • Officers of organisations « and » branches of organisations must disclose to their organisation or branch certain board payments made to them (new section 293B « and » 293BB);
  • Organisations « and » branches must disclose to their members the remuneration « and » non-cash benefits « and » identity of the 5 highest paid officials (new section 293BC);
  • Officers must disclose certain material « personal » interests to their organisation or branch (new section 293C); « and »
  • Organisations « and » branches must disclose to their members the material « personal » interests disclosed by officers (new section 293C).

 

These limitations on the right to privacy are permissible insofar as they are necessary in order to ensure adequate financial transparency in registered organisations. The limitations are also reasonable « and » proportionate insofar as they are based on the existing obligations on officers « and » organisations under the RO Act (sections 148A - 148E (to commence on 1 January 2014)) « and » have a basis in the regulation of companies under the « Corporations » Act.

 

Information Sharing

 

The « Bill » allows the Commissioner or GM to share information acquired by them in the performance of functions or exercise of powers under the RO Act in circumstances where they reasonably believe that:

  • it is necessary or appropriate to do so in the course of performing or exercising his or her functions or powers (including under the FW Act); or
  • the disclosure is likely to assist in the administration or enforcement of a law of the Commonwealth, a State or a Territory.

 

This broad information sharing power may limit the right to privacy. However any limitation is permissible insofar as it pursues the legitimate objective of efficient enforcement of domestic law « and » the exercise of statutory powers. The power is also modelled on the information sharing powers of similar bodies like the Fair Work Ombudsman. [18]

 

In this way, the limitation is prescribed by law, pursues a legitimate objective « and » is reasonable, necessary « and » proportionate to that objective.

 

General power of the Commissioner

 

Proposed new section 329AC gives the Commissioner the power to do all things necessary or convenient to be done for the purposes of performing his or her functions. This is a standard provision for a regulator. For example, subsection 657(2) of the FW Act confers upon the GM ‘power to do all things necessary or convenient to be done for the purpose of performing his or her functions’. While the power of the Commissioner may be delegated under proposed new section 343B, in exercising powers or functions under a delegation, the delegate must comply with any directions of the Commissioner. Furthermore, the Commissioner’s power to do all things necessary or convenient for the purposes of performing his or her functions is limited by the scope of those functions.

 

In this way, to the extent that this provision may be perceived to be limiting any human rights, particularly those outlined above, this limitation pursues the legitimate objective of enabling the Commissioner to undertake his or her functions « and » powers under the RO Act « and » is necessary, reasonable « and » proportionate.

 

Conclusion

The « Bill » is compatible with human rights because, to the extent that it may limit human rights, those limitations are reasonable, necessary « and » proportionate.

 

 

Minister for Employment, Senator the Hon. Eric Abetz

 

 

 




[1] Registered Organisations’ financial reports « and » annual returns can be accessed from the FWC website - http://www.fwc.gov.au/index.cfm?pagename=regorgslist

[2] As above.

[3] The Fair Work (Registered Organisations) Amendment « Bill » 2013 was reported on by the Parliamentary Joint Committee on Human Rights in its First « and » Fourth Reports of the 44 th Parliament.

[4] See Report of the Delegate to the General Manager of Fair Work Australia Investigation into the National Office of the Health Services Union under section 331 of the Fair Work (Registered Organisations) Act 2009, Terry Nassios, 28 March 2012 « and » Report of the Delegate to the Acting General Manager of Fair Work Australia Investigation into the Victoria No. 1 Branch of the Health Services Union under section 331 of the Fair Work (Registered Organisations) Act 2009, Terry Nassios, 23 December 2012.

[5] Parliamentary Joint Committee on Human Rights 2012, Fair Work (Registered Organisations) Amendment (Towards Transparency) « Bill » 2012 , Commonwealth Parliament, Canberra at 1.6 accessed at http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Completed_inquiries/2013/12013/c18 (footnotes omitted).

[6] ILO, Freedom of Association: Digest of decisions « and » principles of the Freedom of Association Committee of the Governing Body of the ILO Geneva , International Labour Office (International Labour Office, Geneva, Fifth (revised) edition, 2006), para 369.

[7] Ibid, para 489.

[8] Fair Work Act 2009 ss 540(2), 596(4).

[9] Diane Margaret Robertson v the State Public Services Federation [1993] FCA 336 at [17] per French J

[10] « Corporations » Act 2001 s 184.

[11] « Corporations » Act s 300A(1)(c) « and » « Corporations » Regulations 2001 r 2M.3.03, see also RO Act ss 148A - 148E ( « amendments » commencing on 1 January 2014).

[12] Parliamentary Joint Committee on Human Rights 2012 , Practice Note 2 (interim) , Commonwealth Parliament, Canberra at 1.6 accessed at http://www.aph.gov.au/Parliamentary_Business/Committees/Joint/Human_Rights/Practice_Notes/practicenote2/index

[13] Ibid, at 1.7

[14] ALRC, Securing Compliance: Civil « and » Administrative Penalties in Australian Federal Regulation , para 2.19

[15] ALRC, Principled Regulation: Federal Civil « and » Administrative Penalties in Australia (Report 95) at 11.65.

[16] Human Rights Committee, General Comment 16, (Twenty-third session, 1988), Compilation of General Comments « and General Recommendations Adopted by Human Rights Treaty Bodies, U.N. Doc. HRI/GEN/1/Rev.1 at 21 (1994).

[17] Toonen v Australia , Communication No. 488/1992, U.N. Doc CCPR/C/50/D/488/1992 (1994) at 8.3

[18] FW Act s 718(2)