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

I rise to speak on the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2019. This is the second of the government's vitally important industrial relations bills which have come before the House in recent times. In the debate on the government's ensuring integrity bill I said that reform was about making sure that we no longer tolerate a situation where we have one rule for militant unions and a different rule for everyone else. The bill before us now is about applying that simple precept to another important aspect of union activities. It's a basic principle, fundamental to our system of financial regulation, that if someone is managing a lot of other people's money, then we insist that they follow mandated governance rules to ensure that investors can reasonably expect that their money is being deployed in their best interests. The banks, credit unions and super funds, managers of large amounts of other people's money, are over seen by APRA, the Australian Prudential Regulation Authority. We mandate that they have independent directors and that they meet strict reporting standards and keep written policies. We mandate that they act prudently to protect the interests of those whose money they manage. The managers of other people's money enjoy a special fiduciary responsibility to manage that money appropriately and in accordance with the law.

However, there is one kind of large organisation that holds and invests billions of dollars of hardworking Australians' money yet does not have to follow any of these sensible rules and regulations. Millions of dollars every year are entrusted by hardworking Australians to what are called worker entitlement funds, controlled by union and employer organisation officials. In total more than $2 billion is now held by these organisations. The money for these funds comes from employers, who are forced to put in as much as $100 per employee per week. As many as 30 per cent of enterprise agreements compel payments into funds like these. In the case of that most unscrupulous of unions, the CFMMEU, the figure is as high as 60 per cent. I wonder why that might be?

These funds are supposed to pay and protect workers' entitlements. Unfortunately, too often they do no such thing. Unscrupulous unions skim at least $25 million every year from these funds. They are able to do this because right now the basic rules of good governance that we rightly apply to banks, credit unions and super funds do not apply to worker entitlement funds. Worker benefit funds 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 what their policies on investments are. There is no legal requirement for them to act responsibly, to use workers' funds in the best interests of the workers or even to tell them where their money is going. In the absence of this regulation, workers' benefit funds have too often become another murky realm of union secrecy and dodgy practices. When the CFMMEU has accrued more than $16 million worth of fines across hundreds of separate contraventions of the law—and the ACTU's leadership believes that unions are above the law—it is clear that, more than anyone, some unions desperately need strict governance rules and the disinfectant of transparency. Time and again, we have seen that unions need governance rules every bit as strong as those that we apply to the private sector. It cannot be one rule for super funds and another for the unions. It is clear that this legislation is much needed.

Uplus, for example, is a Victorian income protection scheme and is a joint venture between insurer Coverforce and arguably the most lawless union this country has ever seen, the CFMMEU. The scheme sometimes provides free travel, insurance and ambulance benefits to workers whose employers pay into it—as long as they belong to the CFMMEU, of course! Those workers with an interest in obeying the law and who rightly don't want a bar of the CFMMEU get nothing. So where does the scheme's money go? Of it, $810,000 a year goes in undisclosed payments to the CFMMEU.

In another example, there has been more than $245 million of workers' money held in a scheme named Protect, which supposedly exists to provide workers with redundancy and income protection. Employers have been forced to pay into the fund on their employees' behalf by arrangement with the Victorian Electrical Trades Union and the National Electrical Communications Association, or NECA. Despite what the member for Cooper said in her speech just now, the Heydon royal commission discovered that $4.5 million of that fund is funnelled straight into the coffers of ETU Victoria, while another $330,000 goes back to NECA. Without the royal commission, workers would have known nothing of this use of their money, because no regulation exists to force the fund managers to tell them.

Unfortunately, in Queensland we have our own version of these opaque funds in the form of the Building Employees Redundancy Trust, BERT for short. It holds $130 million of workers' money and it is controlled by the CFMMEU, along with the Communications, Electrical and Plumbing Union and the Queensland Major Contractors Association. This fund, like many others, regularly uses millions of dollars in money, which should be helping vulnerable workers, to prop up its own funds. In this case it has even used these funds to make illegal payments to striking workers.

It is a theme we so often return to when it comes to some unions in this country. But, simply put, enough is enough. These funds need to start acting in the interests of their members just like their counterparts in the corporate sector. They have shown time and again an inability to do this consistently on their own, so now it is time for us to regulate to force their hand. This is what the bill before the House will achieve.

The bill requires funds to be run by people of good character. You wouldn't think that would be a sensational concept. It requires funds to have at least one independent voting director on their boards and it requires the funds to be managed at arm's length. This bill will require workers' money to be responsibly invested and it will require transparency in the form of regular reporting to workers, employers and the Registered Organisations Commission. The 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 to ensure they comply with the law and manage workers' money responsibly.

None of the standards set in this bill should be controversial or even problematic unless, of course, you are controlling these funds and you are perhaps not of good character, perhaps not acting in the best interests of those who you purport to be looking after or perhaps not even acting independently. In short, if you are doing the right thing, you have nothing to fear from this bill.

However, no worker should ever be forced to contribute to any specific scheme like this—even if it is properly managed—if they do not feel they need to. So this bill ensures that enterprise agreements and employment contracts cannot include terms that force workers to contribute to a particular union approved fund. It is simply unacceptable that unions put pressure on employers to contribute to specific schemes that are not in the interests of workers; nor is it acceptable to force workers to participate against their will. As we've seen to date, this pressure has too often been needed precisely because those schemes were to the direct financial benefit of the union. It is wage theft, plain and simple, and this bill will stop it.

As I said in our earlier debate on registered organisations, I firmly believe that not all unions are bad. Many—perhaps even most—unions provide important services for their members. I'll go so far as to say we need unions in this country. They undoubtedly have a role to play in preventing unscrupulous employers from taking advantage of their workers. I don't oppose unions and neither does this government. What we do oppose is the illegal conduct of unions who continue to break and flout the law. We oppose unions who flout the law and we oppose unions who believe that they are above the law.

The debate on the bill currently before the House and our earlier debate on the government's ensuring integrity bill have enumerated an overwhelming mass of examples of union illegality and corruption. There is no doubt that some unions in this country are selling out the very workers that they purport to protect. These unions have proven again and again that they cannot be trusted. 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. Workers needs to know when a conflict of interest arises. Where they discover that their interests are being sold out for the benefit of their union, its officials or the employer, I hope workers will take action to protect themselves and force reform from the unions that have abandoned them.

For those who may think that these are some kind of victimless crimes, think again. We all pay for the extra costs of this sort of union lawlessness. As much as, if not more than, 30 per cent greater costs are incurred on union building sites than non-union building sites. That figure, in my estimation from 30 years in the industry, is very conservative. We are all paying for those additional costs.

As I've often said in this place, sunlight is the best disinfectant. This government is determined to apply it liberally to the bad unions in this country and to the unscrupulous practices exposed in the Heydon royal commission. The time for one rule for the unions and one for everyone else is over. Members opposite now need to do the right thing: they need to stop accepting tainted donations from lawless unions like the CFMMEU. Those opposite must show some tough love to their mates in the union movement and help us to stop the rot of corruption and self-interest which has infected the CFMMEU and others. This bill is a vital step forward, and I commend it to the House.

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