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Trade union Royal Commission forces resignation of Victorian MP -

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ELEANOR HALL: The Royal Commission into trade union corruption has forced a key resignation in the Victorian Government.

Former union leader now Labor MP Cesar Melham stood down from his position as Upper House whip over allegations raised at the Commission.

Mr Melham denies any wrong doing, but has been under pressure to resign since the Commission heard evidence last week that he'd accepted cash donations to the union in return for keeping workers' wages down.

In Melbourne, Samantha Donovan reports.

SAMANTHA DONOVAN: Last week, the trade union Royal Commission heard serious allegations against Victorian Upper House MP Cesar Melham.

The Commission was told that when Mr Melham was the Victorian secretary of the Australian Workers Union, he was aware of a deal with a cleaning company which left workers on low pay in return for donations to the union.

Mr Melham had told the Commission he had no knowledge of such a deal, and that the negotiations were overseen by John Paul Blandthorn, then a state organiser at the AWU.

But Mr Blandthorn contradicted Mr Melham's evidence telling the Commission he was "kept in the loop" the whole time. Mr Blandthorn is now an adviser to the Victorian Premier Daniel Andrews.

For the last few days, Cesar Melham has been under intense pressure to resign from his position as Labor's Upper House whip. The Premier has confirmed he's done so this morning.

DANIEL ANDREWS: Well I had a conversation with Mr Melham last night and he, at the end of that conversation resigned as the whip. That'll be confirmed by caucus this morning as it should be and that's basically the end of the matter. The Royal Commission has got a job to do in relation to other issues, and as I've always said, the Royal Commission ought to be allowed to do that.

SAMANTHA DONOVAN: On his way into the Parliament this morning, the Victorian Opposition leader Matthew Guy said Daniel Andrews should have forced Cesar Melham's resignation earlier.

MATTHEW GUY: Look, Cesar Melham should stand down but more the point, the Premier should ask for the resignation. It really beggars belief that the Premier stood down one of his ministers off a verbal complaint and yet won't even stand down Cesar Melham despite evidence against him by his own staff.

SAMANTHA DONOVAN: Monash University's Dr Nick Economou says Cesar Melham's resignation as Upper House whip is no surprise.

NICK ECONOMOU: Given that the Premier is trying to give the impression that he's running a squeaky clean administration, I think that when people have got allegations being levelled against them in an inquiry, they would probably would be best advised to surrender at least their senior governmental positions. They may not have to surrender their seats in order to allow the Premier to ensure that he can maintain this notion of a clean government.

SAMANTHA DONOVAN: Is it a problem for Mr Andrews that one of his advisers, John Paul Blandthorn, has also been connected with this alleged deal to keep cleaners' pay down?

NICK ECONOMOU: I think a lot of this stuff is really esoteric. I think people like you and people like me are interested in these connections, I don't think the voters really are that interested.

So the Royal Commission is finding out that there's a connection between the Australian Labor Party and the trade union movement - wow, wow! It's always been like that since the 1890s.

The idea that perhaps there's something a little untoward going on amongst trade unionists, well that's hardly front page news either. I think most voters are fairly sanguine about all of this sort of stuff.

SAMANTHA DONOVAN: Cesar Melham succeeded Bill Shorten as the Victorian secretary of the AWU in 2006, could there be problems in all of this for Mr Shorten?

NICK ECONOMOU: Yes, and that's the interesting thing, isn't it? Because there's been hints that there may be connections there, and the Federal Government will be looking at that quite closely too, given that Mr Shorten is struggling a little bit in the polls and, you know, when you're an Opposition leader and you're popularity is falling that can be quite dangerous.

I actually think Mr Shorten has got more important things to worry about at the stage than the Royal Commission and what they might find into Mr Melham because the Labor national conference is due in July. That's got more challenges for Mr Shorten, I think.

SAMANTHA DONOVAN: Bill Shorten was asked about Cesar Melham's resignation this morning.

BILL SHORTEN: Labor has a very strong view about having zero tolerance for corruption in the workplace, be it from employers or from unions. We have no time for that, I have no time for that. Having said that, we don't want a run of running commentary on every bit of evidence which comes out of the Royal Commission.

ELEANOR HALL: That's the Federal Labor leader Bill Shorten ending Samantha Donovan's report.