Andrew Wallace (Fisher, Liberal Party) Share this | Hansard source

It's a basic principle, fundamental to our system of financial regulation, that if someone is managing the investment of a large amount of other people's money we apply governance rules to ensure that investors have a reasonable chance of that money being deployed in their best interests. When it comes to bodies like banks, credit unions and super funds, we oversee them with APRA, the Australian Prudential Regulation Authority. We require them to have independent directors, we require them to meet strict reporting standards and to keep written policies, and we require them to act prudently to protect their members or customers' interests.

There is, however, another kind of organisation that holds and invests billions of dollars of hardworking Australians' money. Each year, millions of dollars are being poured into what are called 'worker entitlement funds', controlled by union and employer organisation officials. These opaque funds are now worth around $2 billion. While they are supposed to pay and protect workers' entitlements, in reality some unions skim around $25 million every year from these funds. The money for these funds comes from employers who are forced to pay as much as $100 per employee per week, or more than $500,000 per year from a single employer. Around 30 per cent of enterprise agreements compel payments into funds just like these, and that figure is as high as 60 per cent in the CFMEU dominated building and construction industry. This is all money which could be going to employing more workers or be invested back into that company.

Currently, the basic rules of good governance that we rightly apply to banks, credit unions and super funds do not apply to worker entitlement funds. They do not need to be managed by trained professionals or even by people of good character, they don't need independent directors, they don't need to be transparent or provide even the most basic of reporting, and they don't need to state in writing their policies on investment. In short, there is no requirement on them to act responsibly, to use workers' funds in their best interests, or even to tell them what they are doing with that money.

This is yet another area of secrecy and corrupt self-service in the union movement uncovered by the Heydon royal commission. The trade union movement and their friends in their political wing, the Labor Party, do not like transparency. When they had the chance, the Labor Party abolished the ABCC and, with it, the powers needed to uncover union corruption and illegality. When we sought to investigate, the Labor Party tried to stop the Heydon royal commission happening at all. They called it a witch hunt. They called it politically biased. They attacked its commissioner on frivolous grounds. And they called its evidence 'smears'. They fought tooth and nail to avoid the Leader of the Opposition being required to testify. They sought to undermine it at every turn.

When the Leader of the Opposition testified, he was—in the words of the commissioner—'evasive', and gave cause for concern as to his credibility as a witness. When the Heydon royal commission had identified widespread union corruption, illegality and violence, and had demonstrated the damage unions were doing to workers, Labor voted down the reintroduction of a tough cop on the beat, and even were willing to force the country into a double-dissolution election to try and prevent its reinstatement.

What do we find when we break through the secrecy and examine what unions are actually doing with their members' funds and their collective power? We find a CFMEU that has accrued fines of more than $12 million for illegal activities, and 90 CFMEU representatives before the courts on more than 1,300 charges. We find the secretary of the ACTU, Sally McManus, saying on national television that it's okay for unions to break the law, that the unions are above the law. Most recently, we find a union picket line at Oaky Creek Mine, where officials threatened to rape the children of those who were simply trying to do their jobs.

So, when it comes to the union movement, we desperately need transparency, and we need governance rules every bit as strong as those that pertain in the private sector. The bill imposes that transparency and those governance rules on unions and their schemes in the area of investing funds on behalf of workers. The need for this has been clearly demonstrated in recent years. There's more than $245 million of workers' money held in the Protect scheme, which ostensibly exists to provide workers with redundancy and income protection. That sounds perfectly good, doesn't it? That's fine. Employers are made to pay into it on their employees' behalf by arrangement with the Victorian Electrical Trades Union and National Electrical and Communications Association, NECA.

So where does this money end up? It's invested for the benefit of the workers, to ensure that they have an income when they need it. Well, is it? Nearly $5 million of it is not. $4.5 million is funnelled straight into the coffers of ETU Victoria, and another $330,000 goes back to NECA. If it were not for the work of the royal commission, workers would never have known about this arrangement. They would never have been told, because there is no rule that forces the fund to tell the very workers it alleges and purports to protect.

UPlus, another Victorian income protection scheme, is a joint venture between that worst of unions, the CFMEU, and insurer Coverforce. The scheme provides free travel and insurance and ambulance benefits to workers whose employers pay into it, but only those who belong to the CFMEU. If you're a law-abiding citizen and you don't want to join a union which has accrued record fines for illegality, then you are out of luck. It almost goes without saying, of course, that the scheme has also made around $810,000 a year in undisclosed payments to the CFMEU.

Sadly, in my own state of Queensland, we have the Building Employees Redundancy Trust, sometimes referred to as BERT. It holds $130 million of workers' money and, like too much of the construction industry in this country, it is controlled by the CFMEU, along with the CEPU and the Queensland Major Contractors Association. The fund regularly uses money that should be helping workers who were made redundant to pay those who actually have a job. It has channelled millions into the unions and associations that control it and has even made illegal payments to striking workers. The CFMEU is so desperate to keep this cash cow that its Queensland secretary, Michael Ravbar, is currently in court facing penalties for boycotting Universal Cranes because their employees had the audacity to find an alternative fund that offered real value for money.

Something must be done to ensure that these funds act in the interests of their members, just as anyone else who holds millions of other people's money must do. This bill does just that. This bill will require funds to be run by people of good character—not a particularly unusual thing, you would think. This bill requires funds to have at least one independent voting director on their boards, and it will require the funds to be managed at arm's length. This bill will require workers' money to be responsibly invested and managed by trained professionals. This bill will require transparency in the form of regular reporting to workers, employers and the Registered Organisations Commission. This bill will require the registered unions and employer organisations that run these funds to have written policies on basic matters like how they make financial decisions, how they use credit cards and how they treat hospitality and gifts. Finally, this bill will put these funds under the proper regulation of the Registered Organisations Commission. The Registered Organisations Commission will monitor the funds. It will ensure that they comply with the law and check whether they are managing workers' money responsibly.

As the Heydon royal commission told us, we need to go further to ensure that workers are not compelled to get involved in schemes like these when they have no interest in doing so. This bill ensures that enterprise agreements and employment contracts cannot include terms that require people to contribute to election funds that are set up to fund the campaigns of people running for office in a union or employer group. The bill also bans the coercion of employers into contributing to specific union approved super funds, welfare funds or other worker benefit schemes like those we've been discussing. The pressure that unions have placed on employers to contribute to specific schemes is not in the interests of workers. As we've seen, it has often been applied because those schemes were to the direct financial benefit of the union, and this must stop.

Once again, we've discussed throughout this debate that the best solution to the blight of union corruption and the selling out of workers in this country is transparency. The unions have proven time and again that they cannot be trusted to obey the law or to act in their workers' interests. I will make a correction on that, because I firmly believe that not all unions are bad. Many unions do a great service to their members, and in fact I'd go so far as to say that we need unions in this country, because if it wasn't for unions then some unscrupulous employers would take advantage of their workers. I'm not against unions, and neither is this government. What we are against is the illegal conduct of unions who continue to break the law, who continue not to observe the rule of law, who continue to think that they are above the law. That's why this bill also requires unions, employer groups and employers to disclose any financial benefit they will receive from promoting or arranging insurance products or payments to workers' entitlements, training or welfare funds.

I recently had a group called MATES in Construction come and see me, just last week. They were concerned about how this bill would impact on them. MATES in Construction does a terrific job in the construction industry. MATES in Construction, as the name suggests, educates people working in the building industry, particularly about how to look after your mates who are working in the construction industry. The construction industry is renowned for high suicide rates and high rates of mental illness. MATES in Construction does a terrific job of teaching building and construction workers how to look for signs and symptoms in mates who might be suffering from mental illness. They were concerned that this bill might impact upon them. They went and saw the minister, and they came and saw me and a couple of my colleagues, and the bill was amended to appease their concerns. MATES In Construction should have no fears with this bill and nor should any other group, any other valid group, any other bona fide group, that is conducting training or welfare services to those who are working in the building and construction sector.

Workers need to know when a conflict of interest exists. Where their interests are being sold out for the benefit of their union or its officials, I'm confident that workers will take action to protect themselves and withdraw from or reform the unions that have abandoned them.

Sunlight is the best disinfectant. It is a steriliser that the government is determined to apply to the union movement and all of its corrupt practices. At the Heydon royal commission we saw the reintroduction of the ABCC, and also the introduction of the registered organisations act, the protecting vulnerable workers act and the corrupting benefits act. In the many years to come, when we reflect on the achievements of this government, our comprehensive and determined delivery in forcing the secretive and corruptive union movement into the light will be one of our enduring legacies. This bill is an important part of that mission, and I commend it to the House.

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