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Thursday, 19 June 2014
Page: 6654


Mr PYNE (SturtLeader of the House and Minister for Education) (09:03): I move:

That this bill be now read a second time.

The government remains staunchly committed to improving protections for members of registered organisations by implementing the comprehensive plan to enhance the governance and accountability of registered organisations. To be very clear, this bill enacts a coalition policy that was first released in April 2012—more than two years ago.

This is why we are reintroducing the Fair Work (Registered Organisations) Amendment Bill that was voted down by the Labor Party and the Greens in the Senate a month ago. By voting against the legislation, they have demonstrated a refusal to support greater accountability and transparency for registered organisations. They have voted against improved protection for union members and have thereby given the green light to more exploitation of honest union members by dishonest union officials. They have also voted against a clearer and simpler reporting framework that would assist both unions and employer associations to comply with the framework.

The absolute need for this legislation almost goes without saying—the rorts, the rackets and the rip-offs have been in the media on an almost daily basis and the wider community is strongly in favour of these reforms.

Until this parliament acts, Australia will not have a sufficiently robust system to ensure that the sort of corruption that was revealed during the numerous scandals can be uncovered and eradicated before it becomes systemic as it did in the infamous HSU case. It is simply no longer tenable to argue that the present system is adequate to deal with or discourage this kind of behaviour.

Unions and employer associations play a critical role in the workplace relations system and the economy more broadly, and their members invest a great deal of trust in them. The community expectation is that these registered organisations will operate to the highest of standards. These organisations are given special legislated rights. With rights come responsibilities.

The government believes that the majority of registered organisations do the right thing and in many cases maintain higher standards than those that are currently required. However, the investigations into the Health Services Union and the allegations that are coming to light through the royal commission illustrate that, unfortunately, financial impropriety can and does occur under the current governance regime and indeed that there is a rotten underbelly in some of these organisations. Let's be absolutely clear—loopholes have been identified and they need to be closed.

The Fair Work (Registered Organisations) Amendment Bill will provide the certainty and high standards of operation that members of registered organisations and the broader community rightfully expect.

The bill introduces a suite of legislative measures designed to see governance of registered organisations lifted to a consistently high standard across the board. A more robust compliance regime will deter wrongdoing and promote first-class governance of registered organisations.

Members of unions and the community not only want a strong regulatory regime but also want swift action taken when standards are breached. In order to do this, it is necessary to have a robust regulator with appropriate powers and resources, together with meaningful sanctions that can be applied when wrongdoing is revealed.

To improve oversight of registered organisations, the bill will establish the Registered Organisations Commission, a dedicated independent watchdog with enhanced investigation and information-gathering powers to monitor and regulate registered organisations. The new commission will have the necessary independence and the powers that it needs to regulate registered organisations effectively, efficiently and transparently.

The commission will have stronger investigation and information-gathering powers than those that currently apply. These will be modelled on those available to the Australian Securities and Investments Commission. The commission will have the power to commence legal proceedings and refer possible criminal offences to the Director of Public Prosecutions or law enforcement agencies.

The commission will also educate, assist and advise registered organisations and their members in relation to the new obligations and ensure members are aware of their rights.

The commission will be established within the Office of the Fair Work Ombudsman. While located within this office, the commissioner will have independence in the exercise of the relevant functions and powers under the law, and the authority to direct staff in relation to the performance of those functions. A special financial account will also be established for the commission to ensure financial independence, and the commissioner will have responsibility for day-to-day management of the account. The special account cannot be used, as has been suggested by some parties, to raise revenue through collection of moneys related to penalties applied to registered organisations and their officers.

The commission will be required to report to the Minister for Employment annually on its activities, and that report will be tabled in the parliament. The commissioner will appear at Senate estimates. The activities of the commission will also be subject to the same oversight by the Commonwealth Ombudsman as Commonwealth agencies. This will ensure the appropriate level of transparency and public accountability.

The bill also provides for information sharing between the Fair Work Commission and the Registered Organisations Commission to the extent that is required for both organisations to do their job effectively and efficiently. This is required as several administrative tasks relating to registered organisations will continue to be the responsibility of the General Manager of the Fair Work Commission.

Transitional arrangements have been included in the bill to ensure any ongoing matters being dealt with by the Fair Work Commission relating to registered organisations can be transferred to the Registered Organisations Commission.

This bill will also strengthen existing financial transparency obligations for registered organisations and officers. It is entirely appropriate to expect a high standard of financial reporting from our registered organisations, given the trust members place in their unions and employer associations to operate honestly and to use the funds derived from their membership fees to represent their interests rather than for any ulterior purposes. Registered organisations have substantial economic, legal and political influence. It is clearly inconsistent with community expectations for such organisations to operate to lower standards than those that apply to corporations or other comparable bodies.

Mr Thomson, Mr Williamson and the unfolding allegations arising out of the royal commission have shown us that the existing regulation does not sufficiently protect members' interests. Unfortunately, there will always be less scrupulous individuals who will seek to take advantage of their positions when standards of accountability and the risk of getting caught are too low. In the face of this kind of behaviour, a strong message needs to be sent to discourage wrongdoing by officers and to rebuild the confidence of members and the community. These measures, however, will have little impact if the penalties for wrongdoing are not high enough to act as a deterrent.

Currently, registered organisations and officers do not face the same consequences as companies and directors for wrongdoing. That is why the government is introducing higher civil penalties and a range of criminal penalties for organisations and officials who are found by courts of law to have done the wrong thing. These penalties are consistent with those faced by companies and directors who break the law. In relation to civil penalty breaches, the maximum penalty for serious contraventions will be $204,000 for an individual or $1,020,000 for a body corporate. This will apply to serious contraventions. What will constitute a serious contravention is defined in the bill. Other breaches will face a maximum civil penalty of $17,000 for an individual or $85,000 for a body corporate. By way of comparison, the current maximum penalties for even the worst misbehaviour are only $10,200 for individuals.

Let me be very clear, it is the government's expectation that the highest of penalties will be rarely handed out but it is important that the courts have the ability to hand down strong penalties should the crime deserve it. We know that the courts have had an issue with the current framework with Federal Court Judge Anthony North making quite unprecedented comments last year, saying:

The penalties [under the current Act] are rather beneficially low…beneficial to wrongdoers.

This bill will also give the Federal Court the power to disqualify an officer from holding office where a civil penalty provision has been contravened and the court is satisfied that disqualification is justified.

Criminal penalties are being introduced for serious breaches of officers' duties as well as offences in relation to the conduct of investigations under the Registered Organisations Act. The maximum penalties in these areas are $340,000 or five years imprisonment or both and again will be handed down by a court which will use its discretion.

Broadly, these offences relate to officers and employees of registered organisations who fail to exercise their powers or discharge duties in good faith and for a proper purpose. They also apply where an officer uses their position to gain advantage for themselves or someone else or uses information gained while an officer or an employee to gain an advantage for themselves or someone else.

Some registered organisations have indicated concern that the new penalties will mean that they will have difficulty persuading people to take on official responsibilities. The government certainly does not agree. The only people who have anything to fear are those who do the wrong thing. Officers who are operating within the law, which is the overwhelming majority of them, will have no reason to fear taking on official responsibilities. The overwhelming number of officers who are already doing the right thing should be comforted in knowing that the unlawful behaviour will be dealt with, thus ensuring ongoing member confidence in registered organisations as a whole. There should be no difference between the penalties levied against a company director who misuses shareholders' funds and a registered organisations boss who misuses members' money.

I recognise the broad community consensus for the government's amendments, including from one of Australia's most prominent union bosses, Mr Paul Howes, the outgoing head of the Australian Workers Union, who told the ABC on 26 November 2012:

I actually believe there is a higher responsibility for us as guardians of workers' money to protect that money and to act diligently and honestly. The reality is I do not have any issue with increasing the level of requirements and penalties on trade unions for breaching basic ethics like misappropriation of funds.

Anyone in this place who has regard for the best interests of members of registered organisations and the protection of their hard-earned contributions will support this bill. The refusal of the Labor Party and the Greens to support the bill as introduced in November 2013 is delaying the government's attempts to protect honest union members.

The government believes the bill sets an appropriately high standard for the governance and regulation of registered organisations. It responds to the legitimate concerns of members of registered organisations and the community as a result of the shocking behaviour of certain Health Services Union officials and allegations arising out of the Royal Commission into Trade Union Governance and Corruption. Only those officers who do the wrong thing have anything to lose from these changes. Members of registered organisations and the community have everything to gain. I commend the bill to the House.

Debate adjourned.