Ian Goodenough (Moore, Liberal Party) Share this | Hansard source

I rise to support the Fair Work Amendment (Corrupting Benefits) Bill 2017, which seeks to protect the interests of working Australians by introducing disclosure requirements, similar to those currently required by the contemporary governance standards for elected members of local government, parliament and boards. The legislation essentially requires potential conflicts of interest to be made more transparent, while introducing greater accountability for those involved in the process of negotiating or enterprise bargaining. The bill requires that any financial benefits obtained, by an employer or union, during enterprise agreement negotiations be disclosed to employees before they vote on the agreement. If any payments are exchanged between an employer and a union then both parties have an obligation to transparently disclose these payments to their employees and members respectively. The Turnbull government seeks to raise the standard of governance in the workplace relations sector to match that of corporate Australia, effectively applying the same high standards, responsibilities and fiduciary duties to union officials as currently applied to company directors.

The Turnbull government has recently introduced related legislation: the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, which prohibits cashback demands, where employers make employees pay back a portion of their wages in an attempt to circumvent minimum wage laws. That legislation aims to prevent cases of widespread underpayment of workers, as has been discovered with a number of national franchise chains. The government is committed to ensuring that the workplace relations sector is fair and that the legitimate employment conditions of vulnerable workers are protected.

Workers who pay regular membership dues to unions to represent them in workplace negotiations are entitled to expect that the union officials will act in good faith, putting the best interests of their members first, to obtain the best possible working conditions. Consider the opportunity cost of paying several hundreds of dollars per year in union membership dues. Workers could instead make additional mortgage repayments, reduce high-interest consumer credit card debt or make additional contributions to superannuation. These measures would add up to tens of thousands of dollars in accumulated wealth over a lifetime. That is why it is so important to ensure that union officials fulfil their obligations to their members after having charged membership fees.

By way of background: the measures proposed in this bill are in response to findings by the Heydon royal commission, which uncovered a series of payments between employers and unions which were designed to ensure that companies received favourable treatment from unions, often to the detriment of the employment conditions of workers. Justice Heydon referred to these payments as 'corrupting benefits'. The payments were often disguised by false invoices marked as payments for training or similar, made as part of a deal in enterprise agreement negotiations or accompanied by lists of names of employees, who were made members of the union without their knowledge.

The royal commission found that some officials were paid private kickbacks that they used for personal gain. The royal commission heard evidence that former CFMEU Queensland official Dave Hanna used free building materials and labour to renovate his home in Brisbane. The AWU's Bruce Wilson used funds to buy an investment property and renovate former Prime Minister Julia Gillard's residence.

Some officials used threats to pressure employers to pay them money in order to bolster union coffers. Testimony revealed that the former CFMEU ACT official Fihi Kivalu demanded cash for work in Canberra. The New South Wales CFMEU demanded that employers pay 'donations' for a drug and alcohol rehabilitation fund, money from which they secretly misappropriated funds for their union. Other extracted payments bolstered status and power, particularly within the Labor Party. The Leader of the Opposition and Cesar Melhem were very effective at this, regularly signing employees up to the union without their knowledge and securing ongoing payments for the AWU in Victoria.

In return, employers expected to gain more flexible or cheaper employee pay or conditions, win work or avoid strikes and other industrial disruption.

The Heydon royal commission revealed that these payments have arisen in many cases involving the AWU in Victoria. Thiess John Holland paid AWU Victoria $300,000 plus GST whilst they built the EastLink freeway extension in Melbourne's eastern suburbs. The AWU issued false invoices to disguise the payments as training, back strain research, AWU magazines and advertisements, forum tickets and conference sponsorships, but none of these benefits were actually provided. The payments were never disclosed to AWU members or employees.

ACI Operations paid AWU Victoria around $500,000 while they laid off workers from their Spotswood glass-manufacturing factory. The AWU invoiced the payments as paid education leave, but the payments were predominantly used to offset loans to renovate the union's Victorian office and for other general union costs.

Cleanevent paid AWU Victoria $75,000 to maintain an enterprise agreement that paid cleaning workers well below award rates and stripped them of penalty rates, overtime and shift loadings. The payments were detailed in a secret letter between the AWU and Cleanevent and never disclosed to cleaning workers. Level 1 casuals working at events were entitled to 176 per cent more per hour under the award than under the agreement sealed by these payments.

Unibilt paid the now Leader of the Opposition $32,000 to fund his 2007 election campaign manager while the company was negotiating an enterprise agreement with the AWU, for which the Leader of the Opposition was then the national secretary.

Chiquita Mushrooms paid AWU Victoria $24,000 while it was casualising its mushroom-picking workforce. The AWU falsely invoiced the payments as paid education leave and never disclosed the payments to Chiquita employees.

Winslow Constructors paid AWU Victoria around $200,000 and provided the union with lists of names of employees, who were secretly signed up to the union, but AWU hid these payments behind false invoices for occupational health and safety training, workplace inspections and similar.

In response to these findings of serious misconduct, the Turnbull government is introducing legislation to ban illegitimate payments and to require full disclosure of legitimate payments made to unions. The Heydon royal commission recommended outlawing secret payments. The government will amend the Fair Work Act to make it a criminal offence to give, receive, offer or solicit such payments. This prohibition will apply to unions and employers. Certain legitimate payments will be allowed, such as payments to unions for genuine services that are actually provided. Where legitimate financial benefits would arise in a workplace deal, the government's changes will also require these benefits to be fully disclosed to employees before they vote on a deal.

The Leader of the Opposition, and the Labor Party, should now support this important reform to outlaw corrupting benefits and clean up the unfair, secretive and often corrupt payment systems that have tainted Australian workplaces for decades. How can any fair-minded person condone these blatant conflicts of interest? Under this legislation the penalty for offering benefits intended to corrupt a union official will be a maximum of 10 years imprisonment or a fine of $900,000 for an individual or $4½ million for a company. Penalties for other than legitimate payments or benefits, such as a payment for a genuine service actually provided, will be two years imprisonment or a fine of $90,000 for an individual or $450,000 for a company.

Our workplace relations and industrial relations system does not operate in isolation but in the context of increasing global competitiveness from emerging nations in our region and beyond. Our industrial relations and workplace relations system must be competitive with our major trading partners yet offer reasonable protections for Australian workers. Employment conditions must be matched with productivity—the long-established mantra of 'a fair day's pay for a fair day's work'. When these are in equilibrium our economy is strong. When they get out of kilter then either workers are exploited or Australian companies go out of business and jobs are lost to overseas competitors.

When I started my early business career we manufactured pressed metal components and pipe supports in our Bayswater and Belmont factories, with Australian workers. When things got tight, my family, including my father and mother, worked long hours in the factory, at the presses, to fill orders. Those were the good old days, nearly 20 years ago—when we washed our hands in Solvol! As the years progressed, intense competition from overseas meant it was unviable to manufacture in Australia anymore as our products could be purchased from suppliers in Taiwan at little more than the price of the materials. So we were forced to change our business model to warehousing as opposed to manufacturing. This has been the case in many industries across Australia.

The government is committed to restoring integrity and fairness to workplaces. This starts with requiring employers and unions to act with integrity and fairness in negotiations. Professional associations have codes of ethics. If you hire a real estate agent, you expect to get the best price for your house; obviously you would be unhappy if, after the sale, you discovered they had taken a secret payment from the buyers. If you hire a lawyer, you expect them to act in your best interests, not take secret payments from the other party. It should be no different for workers who join a union; union bosses have a responsibility to put their members first, not themselves.

Through the Heydon royal commission, evidence has emerged that a raft of secret and corrupt payments in recent years between businesses and unions have collectively been worth millions of dollars. Often these payments were for highly questionable purposes disguised by false invoices or marked as payments for training or other services never provided. Some secret payments have been made for personal gain. As I mentioned earlier, a former CFMEU boss was recently arrested after allegedly receiving more than $100,000 worth of renovations to his home, paid for by the company employing his union workers. Some secret payments boosted union coffers. For example, the recent royal commission uncovered evidence of the CFMEU demanding donations for a drug and alcohol rehabilitation fund, from which money was misappropriated.

Other payments were accompanied by lists of names of employees who were secretly joined to the union without their knowledge to boost influence within the ALP. In some cases, unions received payments while members sacrificed their benefits and conditions of employment. For example, the deal between Clean Event and the Leader of the Opposition's AWU stripped low-paid cleaners of penalty rates, overtime and shift loadings while providing the union $75,000 in undisclosed payments. In other cases, companies made payments to unions while making workers redundant. These secret payments are a blight on our workplace relations system. Surely, workers should have confidence in negotiations between their union and employer and that they are conducted honestly and fairly, without conflicts of interest.

The Turnbull government is taking action to stop improper payments between employers and unions. It will become an offence to secretly make corrupt payments between businesses and unions, and any legitimate payments will require disclosure. In future, only specified legitimate payments such as genuine membership fees will be permitted, and these will need to be disclosed. For payments or benefits provided outside these rules, serious criminal penalties will now apply. The proposed legislation will apply equally to employers and unions. Whether in receipt of or paying a benefit, or soliciting or receiving it, both parties will be held accountable. This legislation will help clean up the unfair, secretive and often corrupt payments. I commend the bill to the House.

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