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The Coalition's plan for better transparency and accountability of registered organisations



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JOINT PRESS RELEASE

THE HON. TONY ABBOTT MHR, LEADER OF THE OPPOSITION SENATOR THE HON. ERIC ABETZ, SHADOW MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS

THE COALITION’S PLAN FOR BETTER TRANSPARENCY AND ACCOUNTABILITY OF REGISTERED ORGANISATIONS

Australians who join trade unions or employer associations deserve to have confidence in the conduct and administration of those organisations.

Registered organisations are a central part of the Fair Work regime and they must operate to the highest of standards.

The worst aspect of the ongoing HSU scandal is that 70,000 low paid workers have had their hard-earned money misspent by union officials on political campaigns and escort services.

For example, the Fair Work Australia investigation into the Health Services Union in Victoria found that HSU officials had used union members’ money for personal advantage, failed to act in the best interest of members, and breached financial management rules.

Had these offences occurred in a company with directors, the officials would have been subject to criminal penalties including personal fines of up to $200,000 and up to five years imprisonment.

However, under the Fair Work (Registered Organisations) Act 2009, registered organisations and their officers are only exposed to civil penalties with the potential for comparatively modest fines of up to $2,200.

It is now clear that the existing laws need to be stronger.

The overwhelming majority of registered organisations already do the right thing. But there is clear evidence that the money paid by members to some registered organisations is being used for personal gain and inappropriate purposes.

If elected, a Coalition Government will:

amend the laws to ensure that registered organisations and their officials have to play by the same rules as companies and their directors;

ensure that the penalties for breaking the rules are the same that apply to companies and their directors, as set out in the Corporations Act 2001; and

reform financial disclosure and reporting guidelines under the Registered Organisations laws so that they align more closely with those applicable to companies.

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It is also clear that Fair Work Australia, which is responsible for enforcing the laws governing registered organisations, has failed to do its job. The three year FWA investigation into the Health Services Union is a model of incompetence.

There needs to be a watchdog that works, to ensure that the members of trade unions and other organisations are not ripped off.

If elected, the Coalition will establish a new body, the Registered Organisations Commission that will:

take on the role of registered organisations enforcer and investigator, currently held by the General Manager of Fair Work Australia.

provide information to members of registered organisations about their rights and act as the body to receive complaints from their members; and

educate registered organisations about the obligations that apply to them.

The Registered Organisations Commission will be independent and will operate within the office of the Fair Work Ombudsman. The Registered Organisations Commission will also be required to cooperate with other law enforcement bodies.

The Coalition believes that the members of registered organisations deserve transparent and accountable representation. Australian workers who join trade unions deserve to know that their membership fees are being used for proper purposes.

The Coalition will consult with registered organisations on how best to implement these reforms.

28 April 2012

Hope.Reward.Opportunity

The Coalition’s Plan for Better Transparency and Accountability

of Registered Organisations.

Let’s get Australia back on track.

The Coalition’s Plan for Better Transparency and Accountability of Registered Organisations

IntroductIon:

Recent revelations surrounding the Health Services Union have highlighted a failure in Australian laws that apply to those organisations that assist our workplaces.

Many industry associations, such as employer groups and trade unions, are ‘registered organisations’ whose elected officers are required to comply with obligations set out in the Fair Work (Registered Organisations) Act 2009. This registration, amongst other things, helps them to represent members and their industry in workplace relations matters.

These obligations include rules requiring that they act in the best interests of members at all times, do not use their position to seek personal gain, and use members’ money appropriately in a way that can be verified through the lodgement of financial returns and related statements to Fair Work Australia.

The laws applying to these registered organisations are akin to those which apply to companies and their boards of directors. Just as shareholders are entitled to know that the money they have invested is used for proper purposes, members of registered organisations are also entitled to know how and where their membership money is being properly used.

However, unlike companies and their directors, registered organisations and their officials do not face the same consequences for doing the wrong thing.

For example, the lengthy Fair Work Australia investigation relating to the Health Services Union in Victoria found that officials had:

• Used union members’ money for personal advantage;

• Failed to act in the best interest of members; and

• Breached financial management rules.

Had these offences occurred in a company with directors, they would be exposed to criminal penalties including personal fines of up to $200,000 and up to five years imprisonment. However, under the Fair Work (Registered Organisations) Act 2009, registered organisations and their officers are only exposed to civil penalties with the potential for comparatively modest fines of up to $2,200.

It is now clear to every Australian that the existing laws need to be stronger. There is clear evidence that the money paid by members to some registered organisations is being used for personal gain and inappropriate purposes.

the coalition believes that the members of registered organisations, mainly workers and small businesses, deserve better. they are entitled to the same protections as shareholders of companies.

The Coalition’s Plan for Better Transparency and Accountability of Registered Organisations

StrIctEr rEPortInG ruLES And IncrEASEd PEnAL tIES

The Coalition has a plan to ensure members of registered organisations enjoy the same protections that exist for everyone else.

If elected, a Coalition Government will:

• Amend the laws to ensure that registered organisations and their officials have to play by the same rules as companies and their directors;

• Ensure that the penalties for breaking the rules are the same that apply to companies and their directors, as set out in the Corporations Act 2001; and

• Reform financial disclosure and reporting guidelines under the Registered Organisations laws so that they align more closely with those applicable to companies and that required by the ASX corporate governance rules.

Other rules relating to registered organisations, such as taxation laws, will not be affected by these changes proposed by the Coalition. They will remain the same as those that currently exist.

The overwhelming majority of registered organisations already do the right thing and, in many cases, already comply with higher standards than those that currently apply.

What does this mean?

The Fair Work (Registered Organisations) Act 2009 will be improved to require registered organisations and their officers to observe the same fiduciary and statutory duties as companies and their directors as set out in the Corporations Act 20011 . This will harmonise obligations and rules as they relate to general duties and obligations, and penalties for non-compliance. Financial reporting obligations will, as a starting point, also reflect the obligations in the Corporations Act. Consultation will occur with stakeholders to seek their views about how to adapt and apply ASX governance rules.

1 Sections 180-184; 189-190; 191-195; 198D; 208-210; 285-318; and 588G.

The Coalition’s Plan for Better Transparency and Accountability of Registered Organisations

A GEnuInELY IndEPEndEnt WA tcHdoG WItH rEAL PoWErS

It is also clear that the current enforcer of the Registered Organisations laws, Fair Work Australia, has failed to do its job.

The three year FWA investigation into the Health Services Union is a model of incompetence. There needs to be a watchdog that works, to ensure that the members of trade unions and organisations are not ripped off.

The Coalition also has a plan to improve the Registered Organisations watchdog to ensure that reporting obligations are met and that allegations of wrong-doing are investigated quickly and efficiently.

If elected, a Coalition Government will:

• Establish a new body, to be known as the Registered Organisations Commission. It will enforce, and police the expanded reporting and compliance obligations;

• Provide information to members of registered organisations about their rights and act as the body to receive complaints from their members;

• Educate registered organisations about the new obligations that apply to them; and

• Absorb the role of registered organisations enforcer and investigator, currently held by the General Manager of Fair Work Australia.

The Registered Organisations Commission will be independent and will operate within the office of the Fair Work Ombudsman. The new watchdog will have greater powers than those available to the current enforcer and will adhere to a strict charter to ensure all members of registered organisations are protected. The Registered Organisations Commission will also be required to cooperate with other law enforcement bodies.

The first head of the Registered Organisations Commission will be appointed by the Minister but will not be subject to Ministerial direction. The Commission will be required to report to Parliament on a yearly basis.

The Coalition’s Plan for Better Transparency and Accountability of Registered Organisations

What does this mean?

The General Manager of Fair Work Australia (or their delegate) has current responsibility to enforce the obligations in the Fair Work (Registered Organisations) Act 2009. These responsibilities will be transferred to the new Registered Organisations Commission, which will be an independent body, operating away from Fair Work Australia and become part of (but not responsible to) the Fair Work Ombudsman. The new watchdog will be required to ensure that registered organisations comply with their improved obligations. It will have the power to investigate complaints and non-compliance quickly and effectively, while having an express obligation to cooperate with other law enforcement agencies. This will not affect the operation of Fair Work Australia in any of its other day-to-day responsibilities, such as its conciliation and arbitration roles.

The Registered Organisations Commission will be independent of Government but will be required to report to Parliament and appear before Senate Estimates. The Commission will have enhanced powers to enforce the law and will be similar to those held by ASIC.

coStInGS

Expenditure associated with this measure will be met from the existing allocation to Fair Work Australia / Fair Work Ombudsman and savings associated with rolling back the existing FWA compliance powers.

Printed and authorised by Brian Loughnane for the Liberal Party of Australia Cnr Blackall and Macquarie Streets, Barton. ACT 2604.