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Education, Employment and Workplace Relations Legislation Committee
22/06/2012

LYONS, Mr Tim, Assistant Secretary, Australian Council of Trade Unions

Evidence was taken via teleconference—

CHAIR: Welcome, Mr Lyons. Before I invite you to make some opening remarks, do you intend to provide a written submission to the committee?

Mr Lyons : It is our intention to have a short written submission filed with the committee by close of business this afternoon.

CHAIR: Thank you very much. I now invite you to make some opening remarks to the committee, to be followed by some questions.

Mr Lyons : We start from the proposition that, both as the ACTU and on behalf of all of our affiliates, we support strong, well-governed and accountable registered organisations, and trade unions in particular. In that respect, we support regulation of unions which is designed to promote the autonomy and the independence of member controlled unions and that provides appropriate mechanisms to ensure that they are well governed. We are on record—including, most recently, at our most recent congress, which concluded only last month—as being absolutely in favour of a regulatory environment in which members are entitled to control their union, unions are accountable, matters are transparent and unions are able to go about their important business of representing the interests of working people. If you like, that is the overarching framework under which we view matters to do with registered organisations in general and unions in particular. In respect of the specific measures which are included in the bill that is currently before the parliament, I can indicate to the committee—and we are on record as doing this—that we support the proposed amendments to the Fair Work (Registered Organisations) Act that have been moved by the government. In each respect, insofar as they will affect the organisations which are our affiliates, we support them because they are measures which go directly to meeting those objectives that I outlined in the first place.

The five specific elements of the bill that we support I just wanted to touch on very briefly. We think that the requirement that those persons who are involved in financial management of unions receive training which is relevant to that role is an important and useful contribution. That is already well something which occurs in many organisations, but we think making relevant training a requirement is an appropriate step.

We also think that including a requirement that unions develop and implement policies relating to expenditure is a sensible measure. Again, that will not cause many if not most organisations to actually alter their current arrangements, as in our experience organisations do already have extremely robust policies in relation to those matters. But it is an appropriate matter to be dealt with by statute and indeed the rules of the union.

In relation to the third element, which is the disclosure of officers' remuneration, we do consider that to be an appropriate step. That is already something that the ACTU has been championing in respect of other entities that operate within the economy and within society. We think it is appropriate that it occur with respect to registered organisations. The same is true I think of the material interest declaration for family members of officers to the extent that there would be any.

The fourth element, which is the requirement for the disclosure of any payments to a body in which officers of the union or relevant relatives might have an interest, again we think is simply a buttressing provision to the earlier disclosure requirement and is indeed sensible. The final aspect, again, is the requirement for the disclosure of payments made by the union to related parties as defined.

We support these because we think they are targeted measures which deal with those matters which have been in the public domain most recently as a result of the publicity surrounding the Health Services Union East branch, but they do so in a way which does not put unreasonable or unnecessary burdens on unions. That is, they are targeted series of measures which are designed to put information and power in the hands of rank-and-file members of unions. We say that is the task that the parliament should approach legislation in this area. It is to ensure that the members of unions have the appropriate information and the appropriate powers to ensure that their union is well governed.

We think the balance that is struck in the bill between setting specific statutory requirements and then requirements for the development of model rules builds on the mechanisms which already exist and, as I say, it does strike an appropriate balance.

If this legislation is passed in its entirety in its current form, there will be some changes that will need to be made at an individual union level. But I might say, in consultation with our affiliates, many of them have reported to us that these are matters they already do in one form or another and, while there may need to be some attention paid to any extensions of those, we think these represent already elements of what would be best practice governance for a registered organisation in any event.

Chair, in view of the what I understand to be some limits on the committee's time, I might leave my opening remarks there.

CHAIR: Thank you, Mr Lyons.

Senator ABETZ: Thank you, Mr Lyons and the ACTU for the submission. You raised the Health Services Union. Can I ask whether the ACTU supports or accepts the findings of Fair Work Australia in relation to the Health Services Union?

Mr Lyons : I am not in a position to assess whether all of the individual findings that were made in the Fair Work report are accurate or not. I have certainly read the report. What I can say—and we have unequivocally done this—is that we supported the actions of the minister to seek the appointment of an administrator to help the Health Services Union East Branch. We have supported the actions of Mr Brown, the acting national president, and others to seek to reform the union. And we of course took the quite extraordinary step of suspending the entire Health Services Union as an affiliate in recognition of the seriousness of the matters that appeared to be occurring in relation to the Health Services Union. And we did that act of suspension prior to the issuing of the Fair Work Australia report—that is, it was an action that we took prior to those matters all being in the public domain. As to the granular detail in the volume of the report, I am not in a position to have the information about to whether all of those matters are accurate or not.

Senator ABETZ: All right. I think we might be agreed. Were you aware of the draft Temby report at the time of the affiliation?

Mr Lyons : I cannot remember the exact sequence of events. There was a version of the Temby report that entered the public domain. I am not sure of the exact sequence of events about what date that entered the public domain and when we took our decision.

Senator ABETZ: The allegations about the health services union had been swirling about for a long time. In any event, you disaffiliated the union.

Mr Lyons : We suspended the union. I think there is an important difference.

Senator ABETZ: There is. Thank you for the correction. What in this bill do you think would have mitigated against that which occurred in the Health Services Union that led to the ACTU believing the union should be suspended?

Mr Lyons : I think each of the aspects of the bill systematically addresses the issues that are in the public domain in respect of Health Services Union East Branch and indeed some of the findings in respect of the HSU national office. Just going through those, first of all, saying that not just the full-time officers but also the members of committees of management who have obligations in respect of the union's accounts need to receive appropriate education puts power into the hands of the committees of management to deal with these matters and also ensures that anybody engaged in the financial management of unions has appropriate training. They are two very important things.

Senator ABETZ: Do you honestly believe that the issues relating to the Health Services Union were just honest mistakes as a result of inappropriate training?

Mr Lyons : No, and that is not what I was suggesting. What I indicated at the start of that answer was that these are a package of measures which, taken together, address the underlying failings that are apparent from the matters that are in the public domain. So training and empowering members of committees of management is a very important aspect of that, but it is not the only aspect of that. The second aspect is the development and implementation of appropriate policies in respect of expenditure. There are clearly some findings that there were no policies or insufficient policies. The bill addresses that aspect of it. The cascading levels of disclosure in respect of remuneration, material interest and related party transactions—all of those things—I think would have dealt very effectively with the core governance failings which are apparent from the matters on the public record. So I think that in terms of the response of the civil law, if you like, this is an entirely appropriate, targeted and effective group of measures.

Senator ABETZ: So you think that the maximum penalty of $6,600 is appropriate even given all the matters that have been disclosed by the Health Services Union matter.

Mr Lyons : We think the civil penalty arrangements proposed in this bill are appropriate, but of course they are not the only laws that may have application to a range of the matters that are alleged in respect of the Health Services Union. The important thing to remember, of course, is that we have the criminal law. The purpose of this legislation is, if you like, the civil regulation of the affairs of the organisation, but many of the allegations—I think you described them as the worst allegations, Senator—would go to matters of the ordinary criminal law of the land: theft, fraud, obtaining financial advantage by deception, receiving secret commissions et cetera. It is appropriate that those laws not only apply but be implemented and applied absolutely in full. Those are the appropriate multiple levels of regulation that would apply to unions, as they apply to other individuals and organisations.

Senator ABETZ: All right. Can you tell me, then, the material difference or the public policy arguments that would have a different regime for a company director as opposed to an office bearer in a registered organisation?

Mr Lyons : Certainly. The first thing to say is that state law, and to a lesser extent federal law, already recognises that not all organisations are the same and regulates different organisations in different ways. Companies and unions are different creatures, they are created for different purposes, and throughout Australian history they have always been regulated by different statutory regimes, for good reason. I draw a couple of analogies here in answer to your question. The first is, of course, that the law recognises all sorts of different organisations and regulates them in different ways. There are corporations, as you point out. Each state and, I think, each territory—certainly the ACT—has an incorporated associations act, not the Corporations Act, which applies to matters like clubs and other organisations which are not trading corporations, if you like. There are also charities, and in this case there are obviously also industrial organisations, which are regulated by some state law and by federal law in a different way. The law has always recognised that these sorts of organisations are different for purpose reasons and because of the nature of their operations and the nature of their scale, and we regulate them in different ways, because they are different. Unions are membership-based organisations, so the purpose of regulating unions is to ensure that that accountability goes back to the rank-and-file members of that union. That is not, in my submission, what the corporations law is designed to do or, in fact, would deliver.

I would note, of course, that we are not-for-profit organisations; we do not operate for the purpose of having a business or trading at a profit. In the end, corporations law is fundamentally designed to regulate businesses that turn a profit or, even if they are not-for-profits, are otherwise engaged in a trading business. We do not participate in any sort of market. Corporations law protects investors, particularly the interests of minority investors in many case, as you would be aware, Senator. In some cases it acts to protect creditors and, indirectly, customers of businesses. Unions do not have shareholders and we do not have customers; we have members. Accountability and transparency need to be delivered back to members. That is best done by specialist legislation and it is best done—as it always has been in Australia—by having a regulatory regime which is focused on the specific nature of what an industrial organisation is.

Senator ABETZ: Do you accept that some of your members have holdings of tens of millions of dollars worth of assets?

Mr Lyons : Some unions are quite large and are very old and certainly do have assets. Those assets are held in property and other investments.

Senator ABETZ: So why would you say that an officeholder in a company that might hold less assets than some of your member organisations who do not act in good faith should have a higher penalty regime applied against them than officeholders in registered organisations that have a bigger property and cash base to them?

Mr Lyons : I would say that even the largest union—or employer association, for that matter—in terms of its turnover and assets, would pale into insignificance and into even a modestly sized business which is regulated by the Corporations Law which has to extend to the extent of being able to regulate what are giant multinational companies. While you are correct in suggesting that assets run into the millions of dollars, I do not think a suggestion that that scale implies some parallel with large businesses is an accurate one. The point is that, to have a specialist regulatory regime which recognises that the accountability required in this case is to members and not shareholders is a fundamentally different relationship.

Senator ABETZ: What is the fundamentally different relationship? I would have thought members want a service from their particular organisation and they would consider themselves to be, in effect, shareholders of a particular organisation whereas commercial shareholders would see themselves as members of a company and they are investing in that for a financial return whereas their investment in a registered organisation is for a service return. Tut they do it in the hope of getting something in return and getting value for money for their investment.

Mr Lyons : I think it is a matter on which you and I might part company. I simply do not accept that all relationships can be monetised. A shareholder investment and a membership of a trade union are two fundamentally different things. Workers form and join unions for the purpose of collectively advancing their interests and having a voice at work and getting a fair reward for their work. Unions are predicated on being democratic, accountable and member driven. They are not corporations under which one makes an investment with the hope of obtaining a financial return which can be calculated this year's increase in profitability or this year's dividend or this year's capital gains. It is not, in my respectful submission, the same thing. In fact, going back to the colonial era, trade union acts of state parliaments recognised that collectives of workers organising in their own interests was a different thing to a trading corporation just as we had a different act that applied to the local footy club incorporating which, of course, had much lower penalties than either registered organisation legislation or the Corporations Law.

Senator ABETZ: In response to that, clearly there are many, many corporations in Australia that do not have an asset base of $42 million such as the Electrical Trades Union and I could go through the asset and financial base of the CFMEU and others. Basically you are saying exactly the same conduct by a company director against shareholders is deserving of a higher penalty regime than exactly that same conduct by an officer of a registered organisation against its membership base.

Mr Lyons : Senator, those are your words, 'exactly the same conduct', and you have not put any particular form of conduct to me.

Senator ABETZ: Good faith—

Mr Lyons : The core answer to the question is that we support separate regulation of industrial organisations for the reasons that I have advanced, including the penalty regime—which is a tripling of the penalty regime—that is proposed by the government in this bill.

Senator ABETZ: But if the findings—which I note you are not willing to accept—of Fair Work Australia are accepted of over $500,000 being lifted out of the Health Services Union, the highest penalty for an individual offence is $6,600. It hardly seems to match that which has been found to have occurred.

Mr Lyons : I think you have left to things out there. One is the operation of the criminal law, as I have suggested, and the second is that the Federal Court has the power currently to make restitution orders where it finds that there has been a breach of the civil remedy provisions.

Senator ABETZ: But not against third parties—is that correct?

Mr Lyons : Certainly against the officers, and that is who the allegation is made against.

Senator ABETZ: Yes, but if the wealth has passed from an officer to a third party the officer can just declare themselves bankrupt, can't they?

Mr Lyons : People being unable to pay fines or restitution orders because they declare themselves bankrupt is a hazard in more parts of the legal system than this one.

Senator ABETZ: I would just draw your attention to the member for Barton's speech yesterday. I will go to a few technical issues in the bill. The disclosure requirement is that it be 'as soon as practicable'. It just seems to me that that leaves room for lawyers and others and employers, good people though they be, to argue as to what 'as soon as practicable' is. Why wouldn't you have, say, 'within 30 days' or 'as soon as practicable but no later than 30 days' or something of that nature?

CHAIR: Mr Lyons, this is in relation to proposed new section 148 about officers' requirements for personal declarations.

Senator ABETZ: Yes. Thank you for that, Chair; I should have made that clear.

Mr Lyons : The model rules that would be developed would, I would imagine, be very likely to contain suggestions as to time frames in relation to those matters. I might say I think it is important in drafting the rules of organisations that there are not, if you like, compliance traps related. One of the overarching concerns that we have and wanted to ensure that this bill would reflect is that matters are advanced by having, as far as possible, consolidated reporting requirements with equivalent deadlines so that members and, indeed, committees of management know when material is supposed to be placed before them, in what form it is supposed to come before them and what periods it deals with. If you have cascading reporting requirements at different times of the year for different aspects of the bill, the risk is that unintentionally, if you like, things can fall through the cracks and end up being missed in terms of being communicated to membership in the most effective way because there are not consolidated reporting requirements. So we do think that that consolidation is an important feature of the bill.

We do not think it is appropriate that the bill contain a specific time limit. Terms like 'reasonable' are very common in respect of these sorts of disclosure requirements in other areas of the law, including in relation to superannuation corporations and other things. So it is not an unusual provision.

CHAIR: In terms of organisations reporting, I would probably agree with you there. But, in terms of the obligation on an individual to report—and these go to matters that only the individual could know about: it is not an obligation on any one else to report that, so it is in relation to 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, or to 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 acquired. In that sense, what then is the objection to having 'as soon as practicable' or 'no longer than 30 or 60 days' or words to that effect?

Mr Lyons : If I were to be involved in drafting—not that it is my role any more, but when I was with the union, directly, rather than with the ACTU it certainly would have been my view that something like that, with a specific requirement, is appropriate to be done at an individual union level. The question of whether or not that is appropriate in the statute I think is worthy of some consideration. But, clearly, if the intention of the law is to have material personal interests disclosed, it needs to be done quickly.

Senator ABETZ: With regulations or rules, they cannot limit the actual legislation. So if the legislation says 'as soon as practicable,' and then you try to limit that further, I do not know whether that will necessarily assist. What were the material differences between this bill, which you support, and that which Mr Abbott announced, which the ACTU did not support?

Mr Lyons : I do not have a copy of that bill in front of me. I will just say a couple of things about this. I know it has received some coverage but not, in my view, enough. The current legislation is the product of the former government. In essence, when the fair work system was created, the only change that was made to the regulation of registered organisations was changing the name of the act to insert the term 'fair work'. So this legislation was the product of some negotiation, I might add, which occurred between ourselves and employer associations and the then government and the then minister, Mr Abbott. So it was good enough for an extended period, and we think the authorship of it ought to be acknowledged.

The more substantive point about the proposed bill that was foreshadowed by Mr Abbott is: the core of it is to pick up union regulation and to dump it into the corporations system. I have already dealt with a range of aspects that. I might make one additional point—and, really, this is the reason we oppose it. In our submission it is a counterintuitive position to say that we need more attention paid to the regulation of trade unions and so the answer to that is to abolish the specialist jurisdiction and to take those 119-odd—and that is all there are; 119-odd—registered organisations of employers and unions, and dump them into the system that regulates corporations, which regulates millions of entities, and is within a regulatory organisation, ASIC, which is about regulating companies, trading corporations and markets, not not-for-profit, membership based, representative organisations. It seems to me that, if the suggestion is that more attention from a regulatory basis is required in this area, then the answer is not to pick up a very small group of modestly sized organisations and dump them into a very much larger regulatory regime constructed for a fundamentally different purpose, but rather to retain the specialist regulation, make appropriate changes to the framework and, of course, appropriately resource and empower the specialist regulator, as this bill does, with the additional powers of the general manager I haven't referred to, to get the job done. So, if you are actually concerned about well-governed unions, actually concerned about well-governed employer associations, then a specialist regulator with the right powers is absolutely the way to go; not dumping 120 or 119 organisations into a much bigger system.

Senator ABETZ: Just for what it is worth—and I do not want to get into an argument with you—the coalition announcement was not to put it into the ASICS regime, but to leave it within the umbrella of the Fair Work Act and with the Fair Work Ombudsman. I will leave that aspect there.

What mechanisms of accountability or governance do you have for your various political funds for the ACTU? What I am getting at is: you are not a registered organisation; registered organisations will be making substantial donations or contributions to the ACTU for political campaigns but the ACTU does not have to report to Fair Work Australia as do all your constituent members. So how do the members of the registered organisations actually find out what the ACTU does with all the moneys that they provide to the ACTU?

Mr Lyons : There is something inherent in your question which risks being misleading to anybody who heard or read this evidence. The ACTU is not and has never been a registered organisation, because we have never met any statutory definition of what a registered organisation could be, since the original enactment of Commonwealth industrial law. That is because we are not an organisation of workers—

Senator ABETZ: There is no criticism of that, and I understand—

Mr Lyons : So we could not be a registered organisation under any version of federal law that has ever existed. I think it is important that we record that.

Senator ABETZ: For what it is worth, I make that comment as well about ACCI; they are not a registered organisation either, but they do represent registered organisations.

Mr Lyons : Yes.

Senator ABETZ: Like you do.

Mr Lyons : To be a peak council in the same way that ACCI is on the employer side. We do not have large political funds, which is what I think you indicated in your question. We are not an affiliate of a political party nor do we make political donations.

In respect of money that is spent by affiliates of ours, the disclosure comes in respect of their own accounts. In respect of political expenditure, it comes because of their obligations as disclosing entities under the relevant electoral law. So, if you like, all of our money comes from unions—so the disclosure comes at the union level—provided to us in the form of affiliation fees or campaign levies; all of which I think have been, in terms of the amounts, have been the subject of public discussion.

Senator ABETZ: Yes. But if, let's say, Union A provides you with a levy or a contribution or whatever we call it of, let's say, $100,000 for a fighting fund, all that that Union A could provide to its membership is advice that that $100,000 was paid to the ACTU. Where do the union members find out from Union A how the ACTU has in fact dealt with that levy, that political fighting fund or whatever we call it?

Mr Lyons : The ACTU executive receives financial reports of the ACTU. The ACTU congress receives a triennial report of the expenditure of the organisation.

But the point is that the members of the union are told where that money goes by their unions because that is the source of the funds. If any money spent by us or by any individual union meets a political definition within the meaning of the relevant electoral law then that disclosure comes by that level as well. So you can have multiple means of disclosure.

Senator ABETZ: But look: the registered organisation only has to disclose if it spends the money. If it hands the money over to another organisation such as the ACTU then it falls on behalf of the ACTU, I would imagine, to make any disclosure. To assist us, what did Mr Oliver announce at the recent ACTU congress in relation to a levy for a fighting fund?

Mr Lyons : There were a range of discussions about that. I do not know whether you have ever been involved in the management of a peak organisation of any kind, but what happens—I know people in other areas of activity have had the same experience—is that, when there is the triennial ACTU congress, which goes back to the days of Mr Hawke and Mr Kelty and no doubt before, there is a discussion with our affiliated unions about the level of affiliation fees that will be payable over the following three years. Mr Oliver, in taking office as our new secretary, indicated that he was seeking additional contributions from unions to the ACTU. I might add that this is on the public record. At the moment, we receive $3.30 per year per union member. We are an incredibly modestly funded organisation, including by global standards, even amongst union movements. So, like all bosses of an organisation and perhaps like all new bosses, Mr Oliver indicated that he was looking to have more resources within the ACTU in order to have a louder voice for working people. That is a noble objective and one I fully support.

Senator ABETZ: It was a very long answer to a very simple question, but that is fine.

Mr Lyons : I am not sure it was a simple question, with respect.

Senator ABETZ: What did Mr Oliver announce at the ACTU congress about a levy?

Mr Lyons : That he would be seeking additional contributions from unions for the purposes of giving working people a stronger voice.

Senator ABETZ: That is a very short answer and the sort of answer I would have expected rather than that which we received—but that is fine. Time is up. Thank you very much.

Senator THISTLETHWAITE: To follow on from Senator Abetz's questions: the ACTU publishes financial statements on an annual basis, doesn't it?

Mr Lyons : They are provided to our executive and to each of our affiliates, so yes.

Senator THISTLETHWAITE: And they would detail the affiliation fees paid by those affiliated unions and any levies that may be collected in that year?

Mr Lyons : They do. We obviously audit it. I might add that at a union level the disclosure level in a union's accounts will show, for example, ACTU affiliation fees X and Unions New South Wales affiliation fees Y. So that disclosure occurs.

Senator THISTLETHWAITE: Could you outline for the committee the process of consultation with the union movement regarding this bill?

Mr Lyons : Matters to do with union governance have been a matter of ongoing consideration. I think the committee would be aware that at the congress we did establish a high-level panel for the purposes of examining best-practice governance in unions to provide recommendations to us and to our affiliates in the future about what the best-practice standards for governance are. That process will continue irrespective of this bill, although some of the aspects of this bill were part of the remit that we have given that committee. The other officers and I at the ACTU have been in consultations with unions about this since the draft of the bill was released. We have also had discussions with the minister, as have the employer associations. I might say there is very strong support right across the union movement for the government's legislation and for a zero-tolerance approach to any malfeasance, particularly financial irregularity within unions.

Senator THISTLETHWAITE: So from your perspective there has been adequate consultation with the union movement regarding those reforms and their implications?

Mr Lyons : Yes.

Senator THISTLETHWAITE: Thank you.

CHAIR: Thank you for your presentation to the committee today.

Mr Lyons : I should have started by thanking the committee for allowing me to appear by phone. I am sorry I did not do that at the start. Thank you.

CHAIR: That is fine. And thank you for appearing on such short notice too.

Proceedings suspended from 12 : 30 to 12 : 38