Bill Shorten (Maribyrnong, Australian Labor Party, Minister for Financial Services and Superannuation) Share this | Hansard source

I move:

That this bill be now read a second time.

The government believes in a free and independent trade union movement. The government believes in the advocacy of employer organisations on behalf of their members.

The government believes that the Fair Work (Registered Organisations) Amendment Bill 2012 will improve financial transparency and disclosure by registered organisations to their members. This bill will improve the way that investigations into breaches of registered organisations provisions are conducted by the General Manager of Fair Work Australia and it will introduce a threefold increase in civil penalties for contraventions of the Fair Work (Registered Organisations) Act 2009.

Registered organisations play a fundamentally important role in the operation of Australia's workplace relations system. These are organisations created and registered for the purposes of representing Australian employers and employees. They have particular recognition under Australian workplace relations law by virtue of their representative status and it is because of that registration they have particular statutory obligations in relation to their operation, conduct and disclosure.

In recent weeks and months conduct by a small number of officials in some parts of one organisation has dented public confidence in all registered organisations in this country.

Therefore I wish to place on the record, again, that it is my view and the government's view that registered organisations in Australia—whether employer organisations or unions—are overwhelmingly democratic, representative, highly professional and member focused.

And today, we are improving the laws which govern registered organisations covered by this act.

In addition, to this bill this government has taken the unusual action in respect of some parts of one union by applying to the Federal Court for the appointment of an administrator.

This bill would insert a new object into the Fair Work (Registered Organisations) Act 2009 which provides that the parliament recognises and respects the role of employer and employee organisations in facilitating the operation of the workplace relations system. The new object recognises the fundamental importance of free and independent unions and employer associations as economic and democratic institutions in our society.

The government considers that improved financial disclosure and transparency rules for registered organisations, as well as targeted training in financial management, will improve the operation and accountability of registered organisations and raise and restore public confidence in the operation of the workplace relations system.

This bill will require the rules of registered organisations to provide for the disclosure of remuneration, including board fees, of the five highest paid officials of the organisation as well as the two highest paid in each branch, to the members of the organisation. Determining the five highest paid officials will be based upon monetary remuneration rather than non-cash benefits. However, where an official's remuneration is required to be disclosed, that disclosure will require non-cash benefits paid to the official to be identified.

The rules of the organisation will be able to provide for how remuneration is disclosed. The legislation will enable the rules of the organisation to specify the level of detail on how remuneration is disclosed. This may be on the basis of a specific total remuneration package figure, salary bands or classifications, specifying items of non-cash benefits such as, for example, a 'vehicle'. The amendments do not require the disclosure of the reimbursement of expenses, such as airfares, or certain low-level non-cash benefits like mobile telephones.

In addition, where an official sits on a board because of their status within a registered organisation, or they were nominated to the board by the organisation of which they are an official or peak council, then board fees received from that position must be disclosed by the official to the organisation and, if the official is one of the five highest paid officials of the organisation or one of the two highest paid in a branch, by the organisation to its members.

Under the amendments proposed by the government, registered organisations will be required to amend their rules to provide for the disclosure of transactions between the organisation and related parties, which may include the family members of officials. The proposed amendments use concepts of 'related party' from the Corporations Act 2001 and family members as commonly defined in Commonwealth law.

In addition, the rules of an organisation must require that any material personal interests of officials which relate to the affairs of the organisation will be required to be disclosed.

Disclosure must be at least every 12 months, for example, to align with the usual reporting periods for annual reports and the filing of financial returns.

The proposed amendments will also require the rules of registered organisations to require the organisation to develop and implement policies in relation to financial expenditure. This could, for example, outline policies in relation to the use and authorisation of expenditure on credit cards, procurement matters and internal financial accountability and authorisation.

The bill provides that the minister can develop model disclosure rules. The model rules will be developed in consultation with registered organisations.

To improve financial literacy within registered organisations, the rules of organisations will require each officer whose duties relate to the financial management of the organisation or the branch as the case may be to undertake approved training relating to the officials' financial management obligations.

The General Manager of Fair Work Australia may approve training that can be provided by an organisation, a peak council or another body or person the general manager is satisfied has appropriate skills and expertise to provide the training. This may include, for example, a peak body for a particular industry or a recognised education provider.

It is intended that the general manager will be able to approve a range of training of different formats, styles and lengths in recognition of the different significance that financial management duties have to the roles of different officials as well as the backgrounds, experience and qualifications of those officials.

Similarly, it is intended that the general manager would be able to approve general training that covers a range of financial management duties as well as more specific training that is tailored to a particular area or areas of financial management.

In addition to improvements in the financial management and disclosure regime, the bill proposes to increase penalties. The current maximum civil penalties are $11,000 for an organisation and $2,200 for an individual. These have been unchanged since this legislation was introduced into the parliament by the then Minister for Industrial Relations, the Hon. Tony Abbott MP in 2002. The government's bill proposes to triple the maximum civil penalties to a maximum of $33,000 for an organisation and $6,600 for an individual. This represents a significant increase in penalties to reflect the seriousness with which this government, and registered organisations, take compliance with workplace relations law. The increase in penalties will align them with the maximum civil penalties available under the Fair Work Act 2009.

The government committed in early May this year to introducing improved financial accountability rules for organisations and this bill delivers on that commitment. These amendments can be built upon if organisations want to adopt additional or best practice measures. The government has developed the content of this bill with the members of the National Workplace Relations Consultative Council (NWRCC), who are the peak representatives of this nation's employer and employee organisations.

I thank the representatives of organisations who are members of the NWRCC and who participated in these discussions—representatives from the ACTU, UnionsNSW, the AEU, the Australian Industry Group, the Business Council of Australia, Master Builders Australia, the Australian Chamber of Commerce and Industry and the National Farmers Federation. I thank the NWRCC for their diligence and cooperation in developing this legislation which will apply to their members and organisations. I thank the members of the NWRCC for their unanimous support for this important bill.

The bill also provides for improvements to the conduct of investigations into compliance with the Fair Work (Registered Organisations) Act 2009 by the General Manager of Fair Work Australia, or their delegate.

In addition to the measures contained in this bill, it is the government's intention to implement any recommendations arising from the independent review being conducted by KPMG into the conduct of the investigations into the HSU Victoria No. 1 Branch and the HSU National Office by the delegate to the General Manager, Fair Work Australia. The government has made clear that those investigations took too long. The General Manager of Fair Work Australia has indicated publicly that there are a number of matters that could improve the operation of the investigation provisions within the Fair Work (Registered Organisations) Act. The amendments proposed in this bill are designed to address these matters.

The bill requires Fair Work Australia to conduct investigations as soon as is practicable.

If the general manager has notified an organisation's reporting unit of a contravention, then the general manager must, within 12 months, make inquiries as to whether the reporting unit is complying with the provision, guidelines or rule, the contravention of which was notified to the reporting unit.

The General Manager of Fair Work Australia will be given the express power to disclose information to third parties such as the AFP, state police forces and other government regulatory agencies where the general manager considers it necessary or appropriate to do so in the course of performing their functions or to assist in the administration or enforcement of a law of the Commonwealth, a state or a territory. This power will only be able to be exercised by the general manager and not a delegate.

The general manager will be able to delegate investigative functions beyond current SES officers to third parties with substantial and significant experience or knowledge in fields like accounting, auditing, financial reporting, conducting compliance audits or investigations. This will enable Fair Work Australia to draw upon particular expertise for investigations where this is required. The general manager will retain the current final decision-making functions currently conferred by section 336 of the Fair Work (Registered Organisations) Act.

The bill will expand those to whom notices to produce documents or to attend and give evidence can be issued. Currently such notices can only be issued to designated officers and former officers or the auditor of the reporting unit. The bill will expand this to other parties where the general manager has reason to believe that a third party has information or a document that cannot be provided by the auditor, officers or former officers of the reporting unit and that is relevant to the investigation. This line of inquiry can only be undertaken by the general manager following initial inquiries within the reporting unit. The power to issue such notices cannot be delegated.

Fair Work Australia is an agency independent of the executive. It must retain its independence, particularly in the face of partisan politicking. These amendments are proposed by the government for the sole purpose of improving the operation of Fair Work Australia's investigative function. They are supported by the government and the members of the NWRCC. They deserve to be supported by the parliament.

Debate adjourned.

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