Christopher Pyne (Sturt, Liberal Party, Leader of the House) Share this | Hansard source

I move:

That this bill be now read a second time.

Since being elected in 2013, the government has repeatedly sought to honour the commitment it made to the Australian people to legislate to improve the governance and accountability of registered organisations.

Sadly, the Senate has voted against the government's legislation—not once, not twice, but three times.

They can do so no longer. The evidence in favour of reform is compelling.

The initial impetus for reform in the regulation of registered organisations was the sorry, sordid saga of the Health Services Union—the financial impropriety and gross breach of trust demonstrated by its office holders including former ALP National President Michael Williamson and former ALP member of parliament Craig Thomson.

It is now clear that the Health Services Union behaviour was not an isolated instance.

The final report of the Royal Commission into Trade Union Governance and Corruption outlines many appalling examples of misconduct in unions, together with many employers with which they deal. What we find are grave failures of governance and a lack of accountability and transparency within Australia's workplaces and—in some cases—a widespread and deep-seated culture of lawlessness among union officials. The final report outlines allegations of bribery, extortion, and payments being made in exchange for cutting workers' entitlements. It beggars belief that, in a number of case studies examined by the royal commission, union officials were found to have neglected their responsibilities to their members in preference to self-serving motives.

This conduct must be stopped. There is no doubt about the need for appropriate legislative reform. No-one can deny that there is a serious problem that needs to be urgently addressed.

Consequently, the government reintroduces the registered organisations bill—the same bill that has been rejected by the Senate previously. The government sincerely hopes that, in light of the findings of the Heydon royal commission, members and senators will finally be convinced of the need for this legislation.

This need remains stronger than ever. To do nothing is not a responsible option. It is simply no longer tenable to argue that the present system is adequate to deal with or discourage the kind of behaviour exposed by the royal commission.

The Fair Work (Registered Organisations) Amendment Bill 2014 [No. 3] contains measures designed to improve the standard of governance of registered organisations and deter wrongdoing. In short, these include: a robust regulator with appropriate powers and resources; a strong regulatory regime with enhanced financial accountability provisions; and meaningful sanctions that can be applied when wrongdoing is revealed.

To improve oversight of registered organisations, the bill will establish the Registered Organisations Commission, a dedicated independent watchdog with enhanced powers to monitor and regulate registered organisations. The new commission will be established within the office of the Fair Work Ombudsman but will have financial and operational independence to regulate registered organisations effectively, efficiently and transparently.

The establishment of a dedicated registered organisations regulator was identified as a 'foundational issue' by Commissioner Heydon. It addresses the glaring shortcomings in the current arrangements, demonstrated most clearly by the lengthy and expensive investigations into the affairs of the Health Services Union.

Members of registered organisations—and the broader community—have a right to expect that any wrongdoing is identified quickly and dealt with swiftly.

The new commission will be provided with enhanced investigation and information-gathering powers, modelled on those available to the Australian Securities and Investments Commission, and will have the power to commence legal proceedings and refer possible criminal offences to the Director of Public Prosecutions or law enforcement agencies.

The Registered Organisations Commission will also educate, assist and advise registered organisations and their members in relation to the new obligations and ensure members are aware of their rights.

The commission will be required to report to the Minister for Employment annually on its activities, and that report will be tabled in the parliament. The Registered Organisations Commissioner will appear at Senate estimates. The activities of the commission will also be subject to oversight by the Commonwealth Ombudsman. These measures will ensure the appropriate level of transparency and public accountability in the commission's operations.

Transitional arrangements have been included in the bill to ensure any ongoing matters being dealt with by the Fair Work Commission relating to registered organisations can be dealt with by the Registered Organisations Commission.

This bill will also strengthen existing financial transparency obligations of registered organisations and officers and align them with obligations that currently apply to companies and company directors. Many registered organisations control assets worth millions of dollars—they are effectively dealing with cash flow and investments similar to those of large businesses.

It is entirely appropriate to expect a high standard of financial reporting from our registered organisations, given the trust members place in unions and employer associations to operate honestly and to use members' funds to represent their interests. Registered organisations have substantial economic, legal and political influence. It is clearly inconsistent with community expectations for such organisations to operate to lower standards than those that apply to corporations or other comparable bodies.

Registered organisations will need to disclose remuneration paid to their top five officers in the head office and any branches. Officers will be required to disclose their material personal interests to the committee of management. This means disclosing the personal interests of officers, and declaring any payments made to persons or entities in which an officer has declared an interest.

Registered organisations will be required to provide a summary of this information to members in an 'officer and related party disclosure statement' and lodge it with the Registered Organisations Commission.

The government is not alone in its view of the need for these sorts of reforms. Since the bill was last considered in this place former ACTU secretary Bill Kelty has publicly stated:

I was always on that side of the debate which said that unions are public bodies so they are accountable to members for their management … I never cared that people knew how much I got paid. We had very strict rules about how much money you could earn outside the ACTU too.

Sensible figures in the union movement such as Mr Kelty recognise the integrity and credibility of their organisations depends on them being clean and transparent. The royal commission's findings have shown us that the existing regulation does not sufficiently protect members' interests. Unfortunately, there will always be less scrupulous individuals who will seek to take advantage of their positions when standards of accountability and the risk of getting caught are too low. In the face of this kind of behaviour, a strong message needs to be sent to discourage wrongdoing by officers and to rebuild the confidence of members and the community.

These measures, however, will have little impact if the penalties for wrongdoing are not high enough to act as a deterrent.

The current penalties do not fit the gravity of the offences. For this reason the bill introduces higher civil penalties and a range of criminal penalties for organisations and officials who are found by courts to have done the wrong thing. These penalties are consistent with those faced by companies and directors who break the law. There should be no difference between the penalties imposed on a company director who misuses shareholders' funds and a registered organisations boss who misuses members' money.

The bill will also give the Federal Court the power to disqualify an officer from holding office where a civil penalty provision has been contravened and the court is satisfied that disqualification is justified.

Criminal penalties are being introduced for reckless or intentionally dishonest breaches of officers' duties as well as offences in relation to the conduct of investigations under the registered organisations act. Broadly, these offences relate to officers and employees of registered organisations who fail to exercise their powers or discharge duties in good faith and for a proper purpose. They also apply where an officer uses his or her position—or information obtained while an officer—to improperly gain advantage for themselves or someone else. Criminal sanctions will also apply where an officer does not comply with the commission's new investigation powers. These sanctions align with the penalties that apply to non-compliance with an ASIC investigation and will ensure that officers of registered organisations take their obligations seriously.

Some registered organisations have expressed concern that the new penalties will discourage people from taking on official responsibilities. If that is the case, it is a sad reflection on those organisations but, quite frankly, I do not believe it.

It is very simple: no wrongdoing, no penalty. The only people who have anything to fear are those who do the wrong thing. Those officers who operate within the law—and I believe this is the majority of officers—have nothing to fear. Rather, they should be comforted in knowing that unlawful behavior will be dealt with, thus ensuring ongoing members' confidence in registered organisations as a whole.

The government acknowledges that registered organisations play an important role in the affairs of workplace relations in this nation and the broader economy. Registered organisations are given special privileges under the Fair Work Act. With those privileges come countervailing responsibilities. Every year, hundreds of thousands of Australian workers pay hard-earned wages as union dues; similarly, Australian businesses—both small and large—pay membership fees to employer organisations. Workers and businesses invest a great deal of trust in the organisations that represent their interests. They are entitled to expect that these registered organisations operate to the highest standards. This bill ensures that they do so.

Conclusion

The government's commitment to reform is absolutely unwavering. The corrupt and illegal conduct of many union officials will continue unless there is immediate and effective parliamentary intervention, meaningful reform and strong leadership.

Members on this side of the House have made it very clear where we stand. We stand for a clean and honest union movement. Members opposite, from the party of the unions, must now explain why they do not.

I call on all members to support honest union members and honest union officials by supporting this bill.

Again, I commend this bill to the House.

Debate adjourned.

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