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Education and Employment Legislation Committee
04/03/2020
Estimates
ATTORNEY-GENERAL'S PORTFOLIO
Registered Organisations Commission

Registered Organisations Commission

CHAIR: I call representatives from the Registered Organisations Commission, and I welcome Commissioner Bielecki and Mr Enright. Do you wish to make an opening statement?

Mr Bielecki : Yes, thank you, Chair, I have a brief opening statement. The commission is pleased to appear before the committee today. Registered organisations have a special position in the industrial relations framework. They exist to serve their members. Each is responsible for its own conduct. Each is funded by other people's money, members' money.

I will take the opportunity in this opening to share with the committee a few important aspects of our work that don't often get mentioned at these hearings—first, the support that we provide to registered organisations; secondly, the results that we achieve in collaboration with those organisations; thirdly, some emerging compliance issues; and, fourthly, a couple of court decisions since we were last here.

The ROC is heavily invested in practically supporting registered organisations compliance efforts. We have good relationships with the vast majority of organisations. For example, in the 2018-19 financial year, we sent out over 1,500 tailored compliance reminders to individual organisations to help them with their compliance of their obligations under the act.

We have run interactive education workshops in every capital city. The next one is later this month in Parramatta, and that will take the tally to 11 workshops. The workshops are well supported. There have been almost 600 attendances at those workshops and the involvement of almost 80 per cent of all registered organisations. Some 97 per cent of respondents rated the workshops as informative or very informative and 94 per cent of respondents rated their experience with the ROC as positive or very positive.

Since last appearing, we have continued to implement our 2019-20 national Education Strategy. We published four new podcasts, the most recent of which was last week, and in consultation with stakeholders we have streamlined our website.

Contributing to the results we achieved together with registered organisations is that we largely interact with them in a collaborative way. This is consistent with my statutory mandate to provide education, assistance and advice to organisations. The support we provide to and our collaboration with organisations, coupled with the conscientious efforts of my staff, have resulted in very positive compliance outcomes such that in the 2018-19 year lodgement of 92 per cent of the new officer and related party disclosure statements was on time. That was a first time requirement in relation to those statements. Lodgement of 99 per cent of financial returns were on time and lodgement of 100 per cent of annual returns were on time. My assessment is that the majority of organisations and officers want to do the right thing when it comes to compliance. At the ROC we want to support them in that endeavour, and I thank them for their efforts.

In the overwhelming majority of breaches we come across, whether through self-notification, whistleblower disclosures or detection by us, we informally work with organisations to remedy these without any escalated compliance action by us.

On emerging compliance issues, we recently alerted organisations to the requirement under the act for certain officers to undergo financial training. We've also alerted them to an emerging issue around the below-value disposal of motor vehicles to their officials and employees who have then gone on to make windfall gains when selling them.

Since 2017 we have managed and expanded our whistleblower regime. These disclosures, which number around 180 to date, have in some cases acted as an early warning system, revealing problems that might need better compliance approaches. There are well in excess of two million eligible disclosures, and in fact the issue around the below-value disposal of motor vehicles is something that arose as a result of multiple whistleblower disclosures.

On the court proceedings front, on the last occasion we were here, I very briefly mentioned our successful proceedings against the Australian Hotels Association, Queensland branch. You will recall this was an employer organisation which failed to hold elections for a period exceeding 10 years and that failed on 17 occasions to keep accurate records as to who its officers were and which again failed on 17 occasions to lodge timely notifications of changes to its officers. This undermined the democratic control of the organisation. The AHA admitted the breaches, and the court imposed a penalty in excess of $157,000.

Since last appearing before the committee, the Federal Court has handed down two more decisions in cases that we've brought. Those cases represent deep dives into subsets of compliance risk around the democratic functioning of organisations, including inaccurate or manipulated membership registers and the failure to properly maintain records and notify changes of officers. We were successful in both of these cases. The first involved the imposition of civil penalties against the former Victorian branch secretary of the Australian Workers Union. This related to multiple serious admitted contraventions of the Registered Organisations Act. The case related to the union's addition of non-members to its register without their knowledge and its failure to keep an accurate register of members for five years, which covered most of the period that Mr Melhem was the Victorian branch secretary.

The conduct involved the addition of 730 people to the union's membership register and substantial noncompliance with its rules and involved the AWU receiving almost half a million dollars from employers or associations which it was not properly entitled to and which the AWU in a number of instances improperly accounted for in false invoices. In the Federal Court Justice Mortimer entered declarations of contravention and ordered Mr Melhem to pay civil penalties, totalling in excess of $20,000. We are awaiting the judgement in that part of the proceedings, which is against the AWU itself.

The second decision involved another Federal Court compliance decision which was handed down about three weeks ago now, and that arose out of our proceedings against the CEPU. The court found that that union contravened the act on 86 occasions over a period that exceeded two years. The court found that the contraventions were widespread across all three of the CEPU's divisions across six states and one territory, and extended over a considerable period of time. In particular, the court noted that this all happened despite ongoing reminders and warnings being provided by the regulator about that union's obligations, including specific advice that conscious decisions to contravene the provisions of the act would be met with an appropriate regulatory response. The court imposed a penalty of $445,000 in that matter, which is about 25 per cent of the agreed maximum penalty that was available.

The case is important because proper record keeping enables, among other things, members of an organisation, the public and the regulator to identify the officers in an organisation who have or who are exercising the powers and fulfilling the duties of those offices. Once again, it is noteworthy that these legislative requirements underpin the democratic functioning and control of organisations, which is a key objective of the Registered Organisations Act. Compliance with these requirements is important to ensure high standards of accountability of organisations and their officeholders to their members.

Finally, I will briefly mention an appeal that we have lodged. We've appealed the Federal Court decision to quash our investigation into payments made by the AWU to GetUp! and the making of a number of political donations that may not have been properly authorised. The trial judge found in favour of the AWU on a ground which relied upon a first-time broad statutory interpretation of section 320 of the Registered Organisations Act. The grounds of appeal challenge the findings made by the judge as to the scope of our investigation, the way in which that section operates and the statutory threshold necessary for us to commence an investigation. All of these are important to our future work.

Thank you, Chair. That concludes my opening statement. Mr Enright and I would be happy to take questions.

CHAIR: Thank you. Could you table that statement? I have had a request from Senator O'Neill for that.

Mr Bielecki : I can.

CHAIR: Thank you. We'll now go to questions from the Labor Party.

Senator O'NEILL: Thank you very much, Mr Bielecki and Mr Enright. It's a matter of fact that in November 2019 the Federal Court ordered the ROC to quash its investigation into the Australian Workers Union and ordered the return of all documents you seized during the Federal Police raids in 2017. In fact, Federal Court Justice Mordecai Bromberg issued an order quashing the Registered Organisations Commission decision to investigate the AWU in October 2017, and you were also ordered to return all documents seized. You indicated that you would appeal the decision, and you have restated that here this afternoon. How much has the taxpayer-funded Registered Organisations Commission spent so far in legal costs associated with the appeal against Justice Bromberg's judgement in AWU v ROC and Ors?

Mr Bielecki : There are two things. First, the return of any order relating to the return of documents has been stayed by the court pending the appeal. So no documents have been returned.

Senator O'NEILL: Yes, but that was the judgement.

Mr Bielecki : I'm not saying it is not the judgement; I'm just endeavouring to help by telling you the present situation.

Senator O'NEILL: Thank you.

Mr Bielecki : In relation to expenses incurred to date on the appeal, the amount is just over $92,000.

Senator O'NEILL: And do you have a budget for the whole endeavour?

Mr Bielecki : If you're asking whether we have funds to fund the appeal, yes.

Senator O'NEILL: Is there an upper limit that you would set yourselves or will you go to any amount to prosecute this?

Mr Bielecki : We keep a close eye on costs we incur with external legal providers, and we would expect to spend the amount that is properly to be incurred in pursuing the appeal.

Senator O'NEILL: And what do you expect that to roughly equate to?

Mr Bielecki : The estimate we have at present is that the cost of the running of the appeal will be in the order of $350,000.

Senator O'NEILL: The $92,000 currently expended—what date was that?

Mr Bielecki : It's been invoiced. I don't know if it has yet been paid. I can't give you a date.

Senator O'NEILL: If you could take that on notice, that would be helpful. Can you tell the committee what the cost of briefing barristers was in the original case against the AWU, including the rate that was charged by Frank Parry QC?

Mr Bielecki : The amounts charged by the barristers were as follows: Frank Parry QC, $233,145; Matthew Follett, $197,347.83; and Chris O'Grady, who I think appeared when Mr Parry was unavailable, $11,079. I don't have information as to the rate that Mr Parry charged. I can get that on notice.

Senator O'NEILL: You can take that on notice. Thank you very much. Clearly you invested significantly in Mr Parry and you're going back to him despite Justice Bromberg quashing your case. Are you determined to use Mr Parry again for this appeal?

Mr Bielecki : No, we won't be using Mr Parry for this appeal.

Senator O'NEILL: Who will be briefed for the ROC for the appeal process?

Mr Bielecki : Mr Noel Hutley.

Senator O'NEILL: Has any other external counsel been engaged so far?

Mr Bielecki : Mr Hutley will be juniored by Matthew Follett, who was in the first instance trial.

Senator O'NEILL: So you've lost Mr Parry but you've picked up Mr Huntley and kept Mr Follett.

Mr Bielecki : Yes.

Senator O'NEILL: Does Mr O'Grady feature in your next endeavour?

Mr Bielecki : No.

Senator O'NEILL: Are there any other counsel?

Mr Bielecki : No.

Senator O'NEILL: You've indicated that, between them, Mr Huntley and Mr Follett will receive in the order of $350,000 for you to appeal against the Federal Court judgement that ordered you to quash your investigation and return all documents to the AWU?

Mr Bielecki : That estimate will include solicitors costs as well.

Senator O'NEILL: Who is that?

Mr Bielecki : Our solicitors in this matter have been Ashurst.

Senator O'NEILL: For ordinary Australians who were quite shocked at the images that they saw on the day of the raid—this has been well prosecuted here—$350,000 is an awful lot of money. It's a life-transforming amount of money, especially for young people trying to get themselves a house and to manage in a challenging economy. How can the ROC justify this substantial expenditure of taxpayers' money on an appeal proceeding that is simply directed at preserving your ability to pursue historical and politically motivated matters?

Mr Bielecki : I reject that characterisation. That's incorrect. In fact, if you've read the judgement by Justice Bromberg, he spent considerable time looking at the allegations made by the union as to the alleged political taint—if I can put it that way—that attached to the investigation by the ROC. Not only did he not find that there was no evidence in relation to that; he found that there wasn't even a case theory advanced to support that.

Senator O'NEILL: You may engage in all the lawyerly language that you wish this afternoon—

CHAIR: Senator O'Neill, I don't think you need to say things like 'lawyerly'. You don't need to use that, Senator O'Neill.

Senator O'NEILL: I want to remind you that the Federal Court quashed the ROC's investigation and ordered it to return all documents. We are not here to re-prosecute the case that is now going to appeal at a cost of $350,000, of which you've already expended $92,000. I'm hoping that we won't get the fog of all the commentary around why you were right and why you believe the AWU were wrong. That is a matter that is afoot. But I do have some questions relating to the nature of the way that you conceive of your role.

Mr Bielecki : I didn't want to enter the fog; but I wanted to correct the statement you made, which I considered to be incorrect. Part of your previous question was about the amount that's involved in prosecuting the appeal. The fact is that the decision that's been made in relation to the effect of that relevant section of the act, section 320, raises important public policy issues; it conflicts with the approach taken by the Federal Court in previous cases that dealt with duties of officers; and, if ultimately accepted, it has the potential to significantly impact on the ROC's capacity to ensure that officers of registered organisations comply with their officers' duties. So the significance of the appeal goes beyond the one case.

Senator O'NEILL: You have your view about what happened on the day of the raid; but Australians who saw it, many of them, would have a very, very different view. The view that they have, I believe, was supported by Justice Mordecai Bromberg's finding.

CHAIR: Senator O'Neill, let the witness answer the question, please.

Senator O'NEILL: Can I go to another part of your role. How is pursuing this appeal consistent with the ROC's functions as prescribed in section 329AB of the Fair Work (Registered Organisations) Act? That part goes to the functions of the commissioner. I will put it on the record. It states:

The Commissioner has the following functions:

(a) to promote:

(i) efficient management of organisations and high standards of accountability of organisations and their office holders to their members; and

(ii) compliance with financial reporting and accountability requirements of this Act;

including by providing education, assistance and advice to organisations and their members;

(b) to monitor acts and practices to ensure they comply with the provisions of this Act providing for the democratic functioning and control of organisations;

(c) such other functions as are conferred on the Commissioner by this Act or by another Act;

(d) to do anything incidental to or conducive to the performance of any of the above functions.

How is spending $350,000 of taxpayers' money to pursue a matter where you have been found very, very wanting—indeed, you've been ordered by the Federal Court to quash your investigation and return documents—a good use of the Australian taxpayers' dollars?

Mr Bielecki : I have answered your question by explaining why it's in the public interest for the appeal to proceed. By reference to the functions allocated to me under section 329AB of the act, if you look at those functions—take, for example, the importance of maintaining high standards of accountability of organisations and their office holders to their members—the investigation hasn't been permitted to proceed at present but the investigation will ascertain whether or not there have been high standards of accountability to the members of the AWU. Another function is in relation to—

Senator O'NEILL: Mr Bielecki—

Mr Bielecki : I'm answering your question, Senator.

Senator O'NEILL: Mr Bielecki—

CHAIR: Senator O'Neill, please let the witness finish.

Mr Bielecki : Another function provided under the act for me to look at is the compliance with financial reporting and accountability requirements of the act and investigation into payments made to various organisations and political campaigns—

Senator O'NEILL: But you've already had a go at doing this.

CHAIR: Senator O'Neill, please!

Senator O'NEILL: These matters were prosecuted—

Senator ABETZ: Chair—

CHAIR: Senator Abetz on a point of order.

Senator ABETZ: Chair, I am very interested in the answers because they may obviate some questions I am interested in asking. So if the senator could allow the witness to finish, not only is it a courtesy to the witness; it would be helpful for the administration of this committee.

Senator O'NEILL: To be clear, my question relates not to the original case, which has already been heard—

Senator ABETZ: Allow the witness to answer the question!

CHAIR: Senator O'Neill, is this on the point of order?

Senator O'NEILL: It's related to the appeal. How does spending $350,000 on the appeal speak to these responsibilities—not the original case but the appeal?

CHAIR: Senator O'Neill, the witness is answering the question. Let the witness finish please.

Mr Bielecki : I have answered about the public interest that relates to the prosecution of the appeal. The fact is that if the decision is incorrect it needs to be corrected by an appeal court and if it stands as an incorrect decision—and we don't know whether it is or it isn't yet because that's going to be the subject of the appeal—then it will have an impact on the operations of the Registered Organisations Commission going forward.

Senator O'NEILL: Thank you for relating your answer to the appeal because that was the bit that I really wanted to get to. Could you give me an indication if, in your considerations about whether you would appeal this decision by Justice Bromberg, you took into account the financial costs for the AWU members that you say you're advocating for that would inevitably arise from the appeal proceedings when deciding to file the appeal if it's found against them?

Mr Bielecki : When it comes to the financial interests of the members of that union, the critical issue is that what could have been dealt with in a very short space of time was dealt with in a 10-day trial, and 90 per cent of that trial was focused on trying to progress allegations that the ROC was somehow politically directed to undertake this investigation. All of that came to nought, so the expenses that we had to incur in relation to that was in direct response and proportionate to the scope and extent of the allegations raised against us.

Senator O'NEILL: So that is back to the case. My question relates to the appeal. How is it in the interests of AWU members, if there is a finding, that they would be ordered to pay costs of $350,000?

Mr Bielecki : This jurisdiction is a no-costs jurisdiction, so it's unlikely that they'll be ordered to pay our costs if we're successful. In terms of the costs they might incur in defending the appeal, the reality is, as I mentioned before, that we need to get clarity on the law about this section and how it operates. So the significance of the appeal goes beyond the members of the AWU; it goes to the wider jurisdiction of the ROC.

Mr Enright : In relation to the members of the AWU, we think it's absolutely in their interests for this matter to be clarified, for the law to be clarified. We think it's in their interests for a proper regulatory system which is enabled to hold office holders accountable—that includes office holders in the Australian Workers Union, as in every registered organisation. We think it is very much in the interests of all members of registered organisations and in the public interest for this matter to proceed and be clarified.

Senator SHELDON: Well, let's do a pub test here. You raid an office before an election of the candidate to become Prime Minister. You have a matter which was dealt with over many, many years prior, which was public knowledge across the community. It was mentioned in press statements. There was public conversation about it, and then you try to say that that somehow was a devious misuse of members' money. Quite frankly, there is a political bias on the pub test. I'm going to apply the pub test. So, for a union rightly turning around and raising those issues legally to see whether it gets the legal test is the way that the law was written by this government, well then, so they should.

CHAIR: The pub is not a chamber of this parliament, and on that line I might just go to Senator Abetz.

Senator ABETZ: Thank you to the ROC. Mr Bielecki, are you able to advise whether you recall way back in 2017 the current national secretary of the AWU, Daniel Walton, promised that, as soon as the Federal Court hearing before Justice Bromberg had concluded, he would release all of the relevant documents in the AWU's possession regardless of the result?

Mr Bielecki : Yes, Senator, and I remember the media reporting around that.

Senator ABETZ: Did he do so?

Mr Bielecki : No. The position at the moment is that the documents remain with the Federal Police and the return of the documents to anybody has been stayed.

Senator ABETZ: Mr Walton, in fact, said on 24 October 2017, 'We've cooperated from the beginning and we just want to make sure that there's been a fair process undertaken, that the merits of this investigation are on sound logic.' Is it the case that the AWU refused to provide certain information as requested by the ROC?

Mr Bielecki : Yes.

Senator ABETZ: So it's not correct for Mr Walton to state that the AWU cooperated from the beginning, is it?

Mr Bielecki : No.

Senator ABETZ: What commenced the raid that has been referred to? Was there, for example, a whistleblower who said that documents might be in danger of being destroyed? What started this?

Mr Bielecki : I need to be circumspect in what I say, but it is already on the record that there was a concern about destruction and loss of documents, and that led to an application to a magistrate for the issue of a warrant. So the warrant was issued by a magistrate, and ultimately, when it was issued, the AFP were enlisted to execute it.

Senator ABETZ: So this was not a minister's decision but a magistrate's decision, on the evidence provided, that it was appropriate for a warrant to be issued?

Mr Bielecki : Yes.

Senator ABETZ: In circumstances where we had been promised full cooperation, which, of course, was not forthcoming. Did the Federal Court make any finding or decision that your decision in relation to pursuing this matter was free of any direction or influence by the minister?

Mr Bielecki : I don't have the judgement in front of me, but the effect of it was that there was no finding whatsoever that the decision to investigate in these circumstances was at the direction of the minister or that the steps that had been taken had been influenced by the minister.

Mr Enright : I might be able to assist. Paragraph 346 of the court's finding said:

For those reasons—

the reasons provided earlier in the review—

the AWU's third ground of review—that, in commencing the Investigation, Mr Enright acted—

or the ROC acted—

for an improper political purpose must be rejected.

Senator ABETZ: So he categorically rejected that in his judgement?

Mr Enright : Categorically.

Senator ABETZ: And we live in a country where, thank goodness, the rule of law prevails over the rule of the pub, for Senator Sheldon's benefit. But can I continue in asking a few other questions?

Senator SHELDON: I've found it a pretty sensible rule a lot of the time, Senator. In fact, it does go to the reality of what's happening rather than an artificial argument about what's happening.

CHAIR: As much as I like pubs and I'd love to be in one right now, we're in estimates and Senator Abetz has the call.

Senator ABETZ: Was it also the case that His Honour found—and I quote from paragraph 314, and I understand that you have the judgement in front of you:

The coincidence in timing upon which the AWU relies provides no more than a highly speculative basis for the connection or nexus sought to be made.

And did His Honour conclude at paragraph 342:

… the AWU has not presented any evidence or even suggested a case concept or narrative that provides a motive for the knowing and deliberate conduct that it ascribes to Mr Enright.

Mr Enright : Yes, His Honour did say those things.

Senator ABETZ: Thank you. Did His Honour conclude in relation to this matter, in paragraph 356:

The AWU submission referred to those observations but did not otherwise address them. The submission is difficult to follow—

that is, that the investigation was commenced at the direction of the minister?

Mr Bielecki : Yes. That was in his judgement.

Senator ABETZ: The AWU's court challenge included the AFP as the respondent. Is that correct?

Mr Bielecki : Yes. They were a respondent to the proceedings. Although, ultimately, I think they sought leave to not be present during the trial because, in effect, they were simply the custodians of the documents.

Senator ABETZ: Did the AWU ultimately pursue this aspect of its case against the AFP or not?

Mr Bielecki : I don't think there was anything further pursued against the AFP. I don't know what their motivation was but, legally, if you want to impact on a party like the AFP not to do something or to do something with documents, they need to be part of the case.

Senator ABETZ: So there would have been costs involved for the AWU in pursuing this and in linking the AFP and then of course not pursuing it in court.

Mr Enright : Significant cost, because the AWU, as they did with the Registered Organisations Commission, engaged in a discovery process and required the AFP to produce many, many, many documents, emails—any documents that could have in any way been associated, in their view, with this matter.

Senator ABETZ: Mr Oosting of GetUp! fame said, on the 7.30 program on 25 October 2017:

It's stark to us that this Government is unwilling to looking into corporate tax dodgers or major banks that are engaging in money laundering. Yet here they are sending in the Australian Federal Police to a union over a 12-year-old donation that absolutely met the requirements from GetUp's point of view.

Obviously, the statement that 'the government sent in the police' is incorrect, given Justice Bromberg's findings—but also from your evidence?

Mr Bielecki : Yes. It was our application to a magistrate to have the warrant issued and of course the parliament saw fit to give that power to us in the act.

Senator ABETZ: And, ultimately, to the magistrate. Have you received an apology from Mr Oosting or GetUp! for this clearly false assertion on the 7.30 program?

Mr Bielecki : No, we haven't received any apologies.

Senator ABETZ: And, on 25 October 2017, the secretary of the ACTU, Sally McManus on the 7.30 program said: 'This is a sad day for democracy and this is an out-of-control and dangerous government that calls the police to raid union offices about small donations.' Again, that is not what the court found, is it?

Mr Bielecki : No. There are other aspects that might be of concern to people, including a concern about what was happening to documents, and why was a search warrant called for.

Senator ABETZ: Can you just remind me of the donation that we're talking about? There were concerns about donations of, what, $100,000 to GetUp! $25,000 to Mr Shorten's own election campaign, plus over $100,000 more to other ALP campaigns. So, to quote somebody, that's nearly a life-changing amount of money. Isn't it, Senator O'Neill, when you add it all up?

Mr Bielecki : The payments and donations that were the subject of the investigation, which related to what we knew about at the time we commenced, totalled $231,500.

Senator ABETZ: Which the secretary of the ACTU high-handedly dismisses in this TV program as 'small donations'. Well, if they are life-changing amounts of money, according to Senator O'Neill, then one assumes they are not small donations. Have you received an apology from Ms McManus for her description of events on the 7.30 program?

Mr Bielecki : No. We haven't received an apology and we haven't sought an apology.

Senator ABETZ: Thank you.

CHAIR: Senator O'Neill.

Senator O'NEILL: I just have one final question. Senator Abetz has followed a particular line of questions, but I just want you to confirm for me once again that, on 29 November, the Federal Court ordered the ROC to quash its investigation into the Australian Workers Union and return all documents it seized during the Federal Police raids in 2017. Was that the outcome of the judgement?

Mr Bielecki : Yes.

Senator O'NEILL: That's right, thank you very much.

Mr Bielecki : The judgement quashed the investigation.

Senator SHELDON: Can I ask a further question? You raised in your opening statement the CEPU, the Communications Electrical Plumbing Union, and the electrical division. Are you aware that, after $8 million in wage theft by George Calombaris, he paid a contrition payment of $200,000?

Mr Bielecki : I read that in the media, yes.

Senator SHELDON: Are you aware that companies that file late notices with a change of office holder are able to pay a late fee of $80?

Mr Bielecki : I'll take your word for it. I'm not sure what the penalty is under the Corporations Act.

Senator SHELDON: Thank you. I can assure you that is correct. And it is $333 for a change of details lodged more than one month after a change occurred?

Mr Bielecki : Again, it sounds right, but I'm very happy to take your word for it.

Senator SHELDON: Are you aware that those processes are simple online processes, and that most companies have a small number of directorships?

Mr Bielecki : Yes. ASIC has tried to put lots of those kinds of things online.

Senator SHELDON: Can you just repeat what the total fine was for the CEPU from 11 February Federal Court decision?

Mr Bielecki : Sorry, are you asking me?

Senator SHELDON: What the total fine was.

Mr Bielecki : It was $445,000.

Senator SHELDON: If that same fine regime that I just read out to you was to apply to the CEPU, it would be $16,000 for what a corporation is held to account for. So we have a figure of $445,000 against a voluntary organisation that spends its time largely dealing with policy issues to make sure that its members' interests are progressed in an environment of wage theft across industry—a very unsafe industry, and also professional development—that gets fined $445,000. This is a voluntary organisation, meaning those positions were held by volunteers. Yet we have a situation where, if you apply the same fine, it would be only $16,000. That is 16,000 for the bosses, and $445,000 for people that are working in voluntary positions in unions, where there can be hundreds of people involved. Don't you think there is a disparity there?

Senator Payne: Senator Sheldon, you know the official is not required to give you an opinion and should not be asked for an opinion.

Senator SHELDON: Minister, I put it to you: don't you think there is a disparity there: $445,000, but if the exact same fines are applied to a business, it would be $16,000?

Senator Payne: That is your interpretation. I don't have the advantage of having all of the figures in front of me, but the courts, one presumes, apply the law.

Senator SHELDON: Unequally, is my point.

Senator Payne: Well, no. The law is legislated and as the common law sets it. The court's role, one presumes, in adjudicating on these matters, is to apply the law.

Senator O'NEILL: Does it concern you, though, that such inequities exist under the law under which you are presently governing?

Senator Payne: Actually, I would suggest that the parliament, the body that is charged with the responsibility of developing the legislative platform that we're talking about, is a key part of this process as well sometimes. You're a part of that as well.

Senator O'NEILL: I haven't been able to advance much legislation from opposition at this point in time or set the agenda or set the timetable.

Senator Payne: Sometimes your party is in government, and sometimes it is not. It is currently one of those times; frankly, that is probably good for Australia, given the policies you took to the last election. But, that said, it is the legislative platform from which the laws are applied.

Senator SHELDON: You've got a situation where you've turned around and got laws in place for the exact same fines that would apply to corporations, if it was applied to the CEPU, would be $16,000; and yet, with a law that you wrote, it is $445,000.

Senator Payne: You have asserted your view. You are perfectly entitled to do that.

Senator O'NEILL: Fairness, that what it looks like. Your legislation.

Senator SHELDON: When you talk about administering the law, you have—in pursuing matters in the court—this is to ROC—you originally found that Mr Enright, in the case of examining the donations and the decision from Mr Enright's activities, that there was a comment made that the judge characterised Mr Enright's activities as overly enthusiastic or exuberant. The reason why I ask that question is because you have a law that is one for directors of companies, which is $16,000; you have another law which is actually for unions, which is $445,000; and you have exuberance to go after and prosecute, in an exuberant way, in an officious way, organisations that are being unfairly dealt with by the law.

Senator Payne: Officials administer the law, as they are required to do so. My understanding, if I'm correct in my interpretation of what you are saying, is that you are actually trying to conflate a late filing fee with a court-ordered penalty for a breach of a legislative requirement. So we are not comparing equal provisions, which you have tried to assert. I don't agree with you, with respect. The officials will answer those parts of the questions that they are able to, but it is not appropriate to try to assert that these are exactly the same provisions. They're not.

Senator SHELDON: In actual fact they do deal with the same issues.

Senator Payne: One is a court-ordered penalty.

Senator SHELDON: George Calombaris receives a $200,000 contrition payment after he steals $8 million in wage theft from his workforce.

Senator Payne: Which absolutely should be returned. There is no question in relation to that.

Senator SHELDON: A $200,000 fine.

Senator Payne: It absolutely should be returned. If you want to go back to what this government has done in relation to wage theft, it is a significant advance on where it was when we were elected in 2013. A significant advance.

Senator SHELDON: It is incredibly little. We still have $1.35 billion that have been stolen, and the government has still not effectively put forward policies to deal with that.

Senator Payne: You keep saying that that is the amount, but I think Ms Parker provided some extremely compelling evidence to the committee this afternoon—

Senator O'NEILL: I wouldn't characterise it as that.

CHAIR: Let the minister answer the question, please.

Senator SHELDON: You are discrediting PricewaterhouseCoopers because it doesn't suit your particular ends. If they say $1.35 billion, from an organisation who doesn't keep figures—

CHAIR: Senator Sheldon, can you let the minister answer the question, please.

Senator Payne: I'm acknowledging that the evidence provided by Ms Parker was important for the consideration of this committee.

Senator SHELDON: Ms Parker has not put forward—nor is the government requiring her to put forward—the amount of wage theft that is going on in the country. The figures that have been properly put forward by PricewaterhouseCoopers is that figure of $1.35 billion. There have been figures been put forward from the Master Builders Association saying that there is over $6 billion worth of wage theft in the industry, as well. So I guess they're not right, either? Wage theft is quite clearly an important issue to the entire community. I wish it was more important to you and the government understood the severity of it and the significance of it.

CHAIR: Can we let the minister answer the question, please?

Senator Payne: I actually recall discussing this issue with you in the chamber in relation to legislation towards the end of last year. I made the point at the time, and I would make it again, that this government has made significant advances on where this country was in 2013, when we were elected, in relation to wage theft, not the least of which is represented by the resourcing for the Fair Work Ombudsman which we discussed earlier today, not the least of which is represented by securing more than double the amount of court ordered penalties against employers in their work than were secured before and recovering 64 per cent more money for workers in the financial year 2018-19 than you recovered in your last year in office. So you may try to assert that this government is not interested in wage theft, but you would be wrong. The Attorney and Minister for Industrial Relations has given strong undertakings in terms of doing more.

Senator SHELDON: Under your government it has become a business model to carry out wage theft. That is the difference. Because the system and laws that you have put in place have allowed wage theft to thrive in this country and you have to be held accountable for it and take responsibility for it.

Senator Payne: I completely disagree with you. As I understand it, the act which we're discussing is, in fact, your act. That is inconvenient, I know.

Senator SHELDON: Quite clearly there is a situation here where there is one law for Calombaris, one law for directors and there is a higher hurdle for voluntary organisations.

Senator Payne: Absolutely not, as I have said repeatedly, and so has the Attorney-General and Minister for Industrial Relations.

Senator SHELDON: To keep paperwork in order. We have paperwork breaches. I will go back to the example you raised before regarding the Hotels Association.

Senator Payne: I didn't raise that. Do you mean Mr Bielecki?

Senator SHELDON: Ten years of no elections; numerous occasions of improper notifications; and they receive a fine of $157,000. I would be appalled if there were no elections in a union. This is an employer association, which I suspect is run by some of the largest hotel chains in that state. I would expect them to be not voluntary, but people that actually have a significant experience in business. Yet the law has decided to give them a fine of $157,000. How do you turn around and explain to me why they've not received the maximum fine and why you didn't achieve the maximum fine against the Hotels Association?

Mr Bielecki : There are a couple of points to make. The first is that the maximum penalties in the legislation are set by the parliament.

Senator SHELDON: I'm fully aware of that.

Mr Bielecki : The amount of the penalty imposed is set by the Federal Court. In the case of the AHA, what the court heard was that that association admitted all 50 contraventions and cooperated with the ROC from the commencement of the investigation and that those mitigating factors would have been taken into account by the court. But ultimately the court sets the penalty and the parliament sets the maximum.

Senator SHELDON: Is the court influenced by the prosecutor?

Mr Bielecki : The court would, in the normal course, take on submissions from the ROC as the applicant in the matter, and the submissions of the AHA.

Mr Enright : There are very significant differences between these two cases. Every case is different, of course, but in this case, particularly in relation to the CEPU, where after a few breaches, two or three breaches, we started writing to the CEPU saying, 'Listen, you are breaching the act. Can you not breach the act? Can you comply?' After five or ten breaches we kept writing back saying, 'Listen, there have been five or 10 breaches. Can you do something about it, because it's in the act that you have to do this.' After 10 to 20 I started writing saying, 'Listen, we're getting pretty serious here—there are 10 or 20 contraventions.' After 30 or 40: 'Hey, listen, national secretary, can you to something about it?' After 50, 60, 70 we kept writing saying, 'We're going to have to do something about this. We'll have to take action if you don't do something about it.' There were 90, 100 contraventions over a two-year period.

What might assist you is that the ROC has two options: either to write to ask a registered organisation to comply, or to bring civil proceedings. There are no other tools. So after almost two years, many letters pleading with this organisation, the national secretary goes along to the Federal Court proceedings and describes his organisation as dysfunctional, and says, 'These people in my organisation won't talk to each other; we don't have any systems; we were dysfunctional.' To his great credit, that secretary took action and has now brought that organisation into a much more compliant state. But it took over two years and court proceedings, or took the action leading up to these court proceedings to get to that state. We would say that these two are very, very different cases. Again I will make the point that every case is different.

Senator SHELDON: I will make this point, which is that they have hired a governance and compliance officer in January 2017—

Mr Enright : I'm the first to admit—

Senator SHELDON: and established processes—

Mr Enright : They have done a pretty good job.

Senator SHELDON: I haven't even asked the question yet.

Mr Enright : They have done a very good job of becoming compliant.

Senator SHELDON: He is being overly enthusiastic or exuberant.

CHAIR: That is a good thing. We like people who are overly enthusiastic. We want people to stick to the law.

Senator SHELDON: I wish it was the body that was prosecuting higher amounts for corporations. Also I wish he was overly enthusiastic and exuberant when it came to the case against the Hotels Association, which is a serious breach for ten years.

CHAIR: Can we please put a question to the witness?

Senator SHELDON: We have over ten years of breaches by the Hotels Association, experienced businessmen, who I expect are carrying out their business in an appropriate way, but certainly when it comes to their organisation they didn't. Then we have another organisation. I understand that in the case of that particular union they have a number of voluntary workers in various organisations like some charities have, like the local club has. Various organisations have volunteers and I understand they have close to 500 people within their organisation, many of them voluntary. Over a two-year period you overly enthusiastically or exuberantly turn around and go after this union with a prosecution that ends up in a substantial fine. My point is, one is exuberant and enthusiastic, it is a two-year concern; and the other one is a 10-year concern without the enthusiasm and without the exuberance; and what do we end up getting as a result? Because when the prosecution puts a case forward, exuberantly in one and not in the other, the outcome is already delivered.

Mr Enright : Let me reject many of those assertions, but can I tell you, Senator, what—I think he is the national assistant secretary of that union, of the CEPU—said about this case when he presented at a committee hearing that you were present at in relation to the ensuring integrity bill. This is Michael Wright. He said, 'We've been prosecuted for 82 late notifications of change in office holders and failures to maintain a list of officers. These breaches date back. Let me be crystal clear: whilst these contraventions are the result of failings, it is still a legislative requirement that we do it. We take it seriously.' This is the national assistant secretary: 'I do not cavil at all with the requirement for registered organisations to notify changes in its officers and the like. That is a crystal-clear obligation which should apply. I do not say that there should be no penalty for that.'

This is the national assistant secretary of the CEPU acknowledging, to his great credit—and again I give credit to the national secretary, Mr Hicks, as well, for the work that he has done—but they acknowledge that when registered organisations, who collect about $1.7 billion a year in revenue and own or control about $3 billion in assets, when they're spending other people's money—

Senator SHELDON: You're saying that they have about $1.7 billion in revenue, do they—the ETU?

Mr Enright : No, I said all registered organisations. They accept, when you are spending millions or billions of dollars of other people's money, that being accountable for record keeping is absolutely essential.

Senator SHELDON: In all the registered organisations—businesses—in this country, would you estimate how many billions of dollars that that constitutes?

Mr Enright : I'm sorry, I don't understand the question.

Senator SHELDON: You have just conflated every registered organisation in this country as being one whole organisation and they should be held to account. I'm saying that all businesses in this country, if it's worth hundreds of billions—you might be able to give me an estimation—

Senator O'NEILL: In aggregate.

Senator SHELDON: and they get fined $16,000 for the same breaches that the CEPU gets fined $445,000, when it's a voluntary organisation.

Mr Enright : Let me be clear. I don't accept that the comparison is the right one. I don't accept they are the same breaches.

Senator SHELDON: Employers, some million-dollar organisations that are in the Hotels Association, that don't get so exuberantly prosecuted, only pay $157,000 when they have a 10-year period of breaches with many other notifications and other mistakes they made within their organisation. They get fined $157,000. Don't you think that we start smelling that something is wrong here, that there is a fundamental problem?

Mr Enright : Every case is different, and comparing one or two points out of one case and saying that that should be compared against another—there are no two cases that are alike. Every one is individual. It depends on the facts and circumstances of each case. I've tried to describe to you the case leading up to the CEPU. Quite rightly, we took appropriate action in relation to the AHA. We brought those proceedings and they were penalised significantly, as they ought to have been.

Mr Bielecki : There are other factors that influence the penalty that a court might impose. They'll take into account, as I've mentioned already, cooperation and level of admissions. They'll take into account when admissions were made. They take into account a host of factors which have been identified in a number of cases. But, ultimately, it's the court that sets the penalty. Both cases, the CEPU case and the AHA case, were the subject of comprehensive preparation and submissions by the ROC before the relevant courts.

Senator SHELDON: You said that, yes, prosecutions play a significant role—what the prosecutors say—in these cases. What I'm putting to you is that an organisation that has a 10-year history of no elections is a serious matter. With this organisation run by, I would expect, competent businessmen—in some cases, I'd expect, worth many millions of dollars—you found multiple breaches, but there is one exuberance, which is low, and another exuberance when it comes to unions. When you put those sorts of cases forward to the judge as a prosecutor there will inevitably be a difference. As the court said, 'overly enthusiastic or exuberant'.

Mr Bielecki : That remark is from the AWU decision. Those comments were not made in either of the two—

Senator SHELDON: Regarding senior officers of your organisation.

Mr Bielecki : Yes, but I'm making the point that that's in one case and we're talking about two other cases.

Senator SHELDON: So they're over exuberant. In actual fact, I've seen the exuberance from Mr Enright, because he's just explained that somehow there's a difference between voluntary organisations that are individual organisations and how it should be treated between employers. If you were to apply the same logic, the fine should be the same for employers, unlike what it's been in the case with the CEPU.

Senator Payne: Senator, you are really not comparing apples with apples. I know that you know that and I know that you're making a point. But, for the record, you are not comparing apples with apples.

Senator SHELDON: One is a company and, for the exact same breaches, it gets fined $16,000 and when you're a union you get fined $445,000. If you are a corporation—and in the circumstance where the people are earning substantial sums, worth tens of hundreds of millions of dollars—you get fined $16,000 and a union, which is a voluntary organisation, gets fined $445,000.

CHAIR: Senator Sheldon, I have a point of order to my left.

Senator O'SULLIVAN: I think we should give Mr Enright the opportunity to respond to that verballing. What I took from what Mr Enright was saying before was that these registered organisations have responsibility for administering significant sums of money and that they should be complying with the rules that are associated with those funds.

CHAIR: Mr Enright, would you like to respond to Senator Sheldon?

Mr Enright : In summary, the commissioner has already talked about his functions. His functions are to ensure the accountability of registered organisations and their members, largely because they're spending other people's money and they need to be accountable to those members and to the Australian public.

Senator SHELDON: I have some other questions to ask you. Has the ROC investigated alternatives to litigation, such as voluntary compliance regimes of the sort used in the Calombaris case?

Mr Bielecki : In relation to underpayment of wages?

Senator O'NEILL: No; in relation to the matters that you oversee—a more conciliatory approach and a less litigious one.

Senator SHELDON: In the Calombaris case, there was a voluntary compliance regime that was put in place. Has the ROC considered a new litigation model, to apply the Calombaris situation to other situations?

Mr Bielecki : I'm not sure I understand the question, but what I can say is that, when it comes to wage underpayment, that is an issue for the FWO, not the ROC. We regulate registered organisations.

Senator SHELDON: I'm aware, thank you. I will just clarify, if you're not aware, that what I was saying is that in the Calombaris situation, in that case of wage theft, there was an opportunity to have a voluntary compliance regime. Is the ROC investigating alternatives to litigation which could include a voluntary compliance regime?

Mr Bielecki : We don't have the power to impose compliance regimes. We do work, as I said in my opening, with organisations in relation to hundreds of breaches, and those that are willing to work towards remediating the position will be supported by us and will generally not have any escalated compliance action. But, as Mr Enright has said, the tools available to us are quite few: we can make an inquiry, we can investigate and we can take court proceedings. In relation to the proportions of those things, as I say, there are hundreds of breaches that we help organisations to remedy. In relation to court cases, since the ROC commenced, we've only initiated three. There have been six altogether, because we inherited three from the Fair Work Commission which were sent over to us at the time the ROC commenced. So that's a very small component of all the kinds of breaches that we deal with. Some regulators have available to them the ability to issue notices requiring compliance or to issue other kinds of administrative notices. We don't have those powers.

Senator O'NEILL: Mr Bielecki, have you approached the government to get a parallel scheme to what's available to ASIC through the Corporations Act for a late fees regime, which sees companies fined an amount of $80—which is still substantial to many people but seems proportionate? It is $80 for a late filing. Would that sort of regime be appropriate for registered organisations, given what Senator Sheldon has said, which I think is hopefully becoming more known in the Australian community: that unions are run for the most part by volunteers who are doing the work as a union delegate—looking after people in their workplace, going home and trying to comply with paperwork challenges—just out of good intent for their fellow Australians? They're finding themselves in court with you rather than in a breach situation where a small penalty could apply. Have you given that any consideration and advanced it with the government?

Mr Bielecki : Senator, your remarks ignore the fact that there were comprehensive quantities of correspondence with that union about rectifying the position, and it was to no avail until the last minute. But, in terms of approaching the government to modify legislation, that's a political issue which is not one that I see as part of my role. It's a matter for the parliament to decide what it would like to do with penalties. If there's a parliamentary push to increase penalties for corporations and decrease penalties for registered organisations, we will apply the law as we are required to. We don't lobby to achieve particular political outcomes.

Senator O'NEILL: I'm not asking about the political outcome, because I'm sure that you're going to deny that. I am asking you about the practical and effective functioning that you purport to support in your comments today. In your interactions with the government and the minister, do you say, 'This is what we're doing, this is how it's working, this is a way that we could deliver better outcomes for Australians and these are changes we think would be worth considering'? Do you have that kind of interaction with the government?

Mr Bielecki : I haven't had that kind of interaction with the government.

Senator O'NEILL: Mr Enright, have you had that kind of interaction?

Mr Hehir : As the policy agency, that would normally be our responsibility. As a statutory authority, Mr Bielecki's responsibility is to administer the act as it is. It's the department that actually takes the lead on policy advice. In this case—

Senator PRATT: You don't care how it's working on the ground, it seems.

CHAIR: Senator Pratt, please.

Senator Payne: Perhaps Mr Hehir could finish his answer.

Mr Hehir : In this case, as Mr Bielecki has advised, the ROC has brought only three cases before the courts. His general approach has been to work cooperatively and through correspondence with organisations. At this point in time, it hasn't been raised as a specific issue with me. I'm happy to talk to the team about it, but on the face of it, with the majority of work and the majority of noncompliance being dealt with through correspondence and by support from the organisation, that would seem to be the appropriate regulatory response.

Mr Enright : Could I just quickly make a point to finish off Mr Hehir's point. Mr Bielecki said earlier on that we conduct information workshops, and we've had about 600 attendances over the last two years, with far more union representatives and employee representatives than employer representatives. We survey every one of them. They don't all fill the surveys in, but all of those almost 600 attendances at our information workshops were asked about their experience with the ROC. We want to know from organisations what they think of us. The vast majority of those attending these workshops are union representatives. Can I say to you, Senator, that 94 per cent of attendees who completed their evaluations have said that their experience with the ROC has been positive or very positive. That's over the last two years. That is 94 per cent, and the vast majority of those have been union representatives.

Senator O'NEILL: Mr Enright or Mr Bielecki, what is your litigation policy? Do you have such a document?

Mr Bielecki : Yes, there is a compliance policy, and it's on our website.

Senator O'NEILL: Thank you. In terms of giving that policy life, on what basis do you decide whether to pursue court actions or not? You're guided by that policy, I assume, but then—

Mr Bielecki : We are guided by it. There are a couple of fundamental features. First and foremost, we will only think of litigation if there's evidence to support the bringing of an action. Second, we consider whether or not it would be in the public interest to bring proceedings. There are other indicia in the compliance policy, but we are slow to bring proceedings and we try hard to resolve issues without proceedings. Sometimes it's not possible to avoid it. I would say that, in all the cases we're talking about other than the AWU decision, the respondents have effectively admitted all the allegations. In the CEPU matter, they withdrew four admissions on the second day of trial, but the court found that those allegations were proven in any event.

Senator O'NEILL: Could you provide the total amount in legal costs incurred by the ROC in pursuing the CEPU matter?

Mr Bielecki : Yes. I might have it with me. I'll just check.

CHAIR: While you look through papers, I note that there are two minutes to go, and then we will move on to Safe Work Australia.

Mr Bielecki : The total cost involved in the CEPU proceedings was $591,000. A substantial amount of the costs related to an application by the union to be relieved entirely from liability. That involved a very significant amount of evidence and the prospect of the union calling about 20 witnesses. That application, which took a lot of time to prepare for, was abandoned by the CEPU at the trial.

Senator O'NEILL: I'll have some questions on notice about the detailed breakdown of the costs relevant to the CEPU.

Mr Bielecki : We are happy to help.

CHAIR: Thank you very much, everybody from the ROC. Mr Bielecki and Mr Enright, thank you. Consider yourselves released. As always, we appreciate you coming here and your constructive answers.