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Tuesday, 3 December 2013
Page: 1375

Mrs PRENTICE (Ryan) (12:25): I rise to speak on the Fair Work (Registered Organisations) Amendment Bill. It is vital for our country that we have accountable and honestly-run unions. Unlike the previous Labor government, the coalition will follow through on our election commitments. This bill does exactly that: it is one of the steps we are taking to fulfil our election promise to ensure better transparency and accountability of registered organisations.

I note that the Prime Minister, Tony Abbott, when in opposition introduced a fair work (registered organisations) amendment bill similar to the one that we speak on today. Indeed there has been plenty of time to take into consideration all the issues raised. However, the then Labor government refused to put the ordinary working people of Australia first. On this side of the chamber we believe that it is about time we put the interests of workers ahead of the interests of union officials.

The coalition is acting to increase the confidence of the public and of members of registered organisations by requiring these organisations and their officers to observe broadly the same fiduciary and statutory duties as do companies and their directors, as set out in the Corporations Act. This bill will harmonise general rules, duties and obligations, including penalties for noncompliance. Financial reporting obligations will reflect the obligations in the Corporations Act.

Many of my constituents have voiced their concerns about the low standards currently set for registered organisations. Many of these constituents have campaigned against the ease with which registered organisations are able to misappropriate funds. They want greater transparency and accountability for these organisations. They want to know how and why their money is being spent. They ask to be given an assurance that their union is using their money in ways that benefit the members and not for other activities. The coalition is making a strong start in methodically and purposefully delivering on our election promises.

The best public argument for this bill was brought about by the charges and allegations against the former member for Dobell, Craig Thomson, and former ALP national president Michael Williamson in their capacity as officers of the Health Services Union. These charges were brought about because of their behaviour and actions, which were totally unacceptable. Members of unions—particularly those of the Health Services Union—were left asking how such a breach of trust could have occurred.

This bill will provide the required certainty and high standards of operation across the board. A more thorough compliance regime will deter wrongdoing and promote first-class governance of registered organisations. The HSU scandal showed that the laws governing the registration and behaviour of trade unions in Australia are completely inadequate. They fail to ensure that members are properly informed and that the conduct of officials is open to scrutiny. It appears that many trade unions have become personal playthings of long-serving officials who use the organisations to promote and fund various causes which are not necessarily aligned with the interests of their members.

Unions are protected by the so-called conveniently-belonging-to rule, which in effect prevents the registration of rival organisations. This law turns the existing trade union into an effective monopoly—with potentially damaging consequences.

To show how inept the union system is at regulating itself we only need to look a little closer at the Thomson scandal. For years the Australian Industrial Registry had written to Thomson, as the then national secretary, simply rapping him over the knuckles with a damp lettuce leaf for years of failure to meet the most basic regulatory requirements. Furthermore, instead of presenting the financial documents to a general meeting of the members, the documents were presented to the committee of management, where the documents were not lodged within 14 days of the meeting and some were left undated. This is truly a scene of inadequate financial controls and complete management incompetence. Accounts were provided to Fair Work Australia four years late. The lack of action taken by Fair Work Australia and their complete mishandling and disregard for the requirements by the union are deplorable. For years it was almost impossible to make head or tail of the union's financial statements.

While the HSU is not your average union and while other unions seem to be up to date with their filings and accounts, the fact that such an organisation, which should have been accountable to its members, was capable of getting so grossly out of hand clearly shows that action must be taken. If anything, Craig Thomson has done a favour to the community and to ordinary working Australians by highlighting the inadequacy of the current regulation of trade unions. Discussion on the need to increase unions' transparency, brought about by the Thomson scandal, has given light to this bill and will allow us to stand up for the rights of real workers. Members of the union and the community have called for a strong regulatory regime to be put in place to give them confidence in their registered organisations. The coalition promised and is now delivering a robust regulator with the appropriate powers and resources, together with meaningful sanctions that can be applied when wrongdoing is revealed.

This bill establishes an independent watchdog, the Registered Organisations Commission, to monitor and regulate registered organisations and provide it with enhanced investigation and information-gathering powers. The commissioner, appointed by the minister, will have stronger investigation and information-gathering powers than those currently in place. These new provisions, which will further enhance the ability of the commissioner to provide strong and efficient regulation of unions and employer associations, are based 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 to law enforcement agencies.

This bill guards against efforts to hinder or mislead investigations and ensures that a person convicted of particular offences will not be eligible to be an officer of an organisation or to stand for election to office. Education, assistance and advice will all be provided to registered organisations and their members in relation to the new obligations by the commission to ensure that members are aware of their rights. The commission will be accountable to the people. The commissioner will be required to report to the Minister for Employment annually on its activities, and that report will be tabled in parliament. The commissioner will appear at Senate estimates, and, to ensure the appropriate level of transparency and public accountability, the activities of the commission will also be subject to the same oversight by the Commonwealth Ombudsman as Commonwealth agencies.

It has been made clear that the minister will have no powers to give directions as to a particular matter or investigation. The minister, however, is able to give directions of a general nature to the commissioner and these directions must be in writing and are disallowable instruments. Several administrative tasks relating to registered organisations will continue to be the responsibility of the general manager of the Fair Work Commission. For this reason the bill provides for the Fair Work Commission and the Registered Organisations committee to engage in information sharing in order for both organisations to perform their jobs effectively and efficiently. To further this culture of cooperation between the two organisations, arrangements have been included in the bill to ensure that any ongoing matters being dealt with by the Fair Work Commission relating to registered organisations can be dealt with by the Registered Organisations Commission. Many registered organisations control assets with millions of dollars, and this means they are effectively dealing with a cash flow and investments similar to those of a large business.

Australians have every right 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. Funds derived from members should be used to represent the interests of the members, rather than for any other inappropriate purposes. Quite clearly, it is inconsistent with community expectations for registered organisations, with substantial economic, legal and political influence, to operate to lower standards than those that apply to corporations or other comparable bodies. Measures are included in this bill to prevent individuals from improperly benefiting from their role in the organisations. Directors will be required to disclose remuneration paid to their top five officers in the head office and any branches, and officers will be required to disclose their material, personal interests to all members. While directors are required by the Corporations Law to only disclose conflicts of interests to their fellow directors, the coalition government believes that officers of registered organisations should be required to disclose such matters to members, as they are elected by members to represent their interests. Members deserve to know who is in control of their money and where conflicts may arise. Unfortunately, as demonstrated by Mr Thomson and Mr Williamson, existing regulations do not sufficiently protect members' interests. In the face of behaviour by individuals who seek to take advantage of their positions, where standards of accountability and the risk of getting caught are low, a strong message must be sent to rebuild the confidence of members and the community.

This government knows that enhanced reporting and disclosure requirements and a strong and efficient regulator will have little impact if the penalties for wrongdoing are not high enough to act as a deterrent. The government is introducing significantly higher civil penalties, and a range of criminal penalties, for those registered organisations and officials doing the wrong thing. This bill brings penalties for registered organisations and officers into line with the same consequences faced by companies and directors for wrongdoing. Where an officer does not comply with the commissioner's new investigation powers, criminal sanctions will also apply. These sanctions align with the penalties that apply to noncompliance with an ASIC investigation and will ensure that officers of a registered organisation take their obligations seriously. These new laws target only those who are doing the wrong thing. Some registered organisations have expressed concern that the new penalties will mean that they will have difficulty persuading people to take on official responsibilities. The coalition does not agree. These laws and the formation of the commission will comfort the majority of officers, who are already doing the right thing. The coalition government has the firm opinion that there should be no difference between the penalties levied against a company director who misuses shareholders' funds and a registered organisation's boss who misuses their members' money.

Based on the correspondence I have received from constituents in my electorate of Ryan, I recognise the broad community consensus for the amendments proposed in this bill. Mr Paul Howes of the Australian Workers' Union added his support for the amendments, in November 2012, when he told the ABC that he believes there is a higher responsibility for union officials, as guardians of workers' money, to protect that money and to act diligently and honestly. He then added that he did not have any issue with increasing the level of requirements and penalties on trade unions for breaching basic ethics like misappropriation of funds.

The government intends to see the Registered Organisations Commission begin operation from early 2014, with new disclosure and reporting obligations, higher civil penalties and new criminal sanctions coming into effect from 1 July 2014. There is no time to lose in implementing these important safeguards for the operation of registered organisations and their members. Anyone in this place who wishes to act in the best interest of the members of registered organisations and their finances will support this bill. It cannot be made clear enough: the only people who should fear these amendments are those who are engaging in misconduct. Anyone choosing not to support this bill—for greater accountability—is choosing to sanction the despicable behaviour we have seen from Mr Michael Williamson and Mr Craig Thomson. The current scheme is simply inadequate to deal with or discourage that kind of behaviour. Any suggestion otherwise is a delusion.

I have received countless inquiries from my constituents asking how it can be that unions are not made accountable in the same way as corporations. This bill 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. Suitably high standards will be in place to ensure that registered organisations act in accordance with the interest of their members. The coalition is acting in the interest of members of registered organisations and the community. I call on the House to support this bill.