Christopher Back (WA, Liberal Party) Share this | Hansard source

I rise to support the Fair Work (Registered Organisations) Amendment Bill 2014 [No. 2] and I look forward to it being unanimously supported in this chamber. In fact, we already have an indication that the Labor Party, when in government, had themselves introduced amendments contained in the Fair Work (Registered Organisations) Amendment Act 2012, demonstrating at that time that their certainly was, in the view of the Labor government at the time, a need for increased financial accountability of registered organisations, strengthened investigatory powers and increased penalties. One would think we are all singing from the same sheet of music.

Those amendments were not adequate; they did not go far enough. Indeed, they contained some clauses that were totally unnecessary and required the coalition in government to address—for example, full financial accounting by people who really had little if anything to do with the financial accountability or financial reporting.

Secondly, there was the inadequacy of the original Labor government amendment, which I remember speaking to at the time and pointing out the fact that there were onerous demands for training, particularly in economics, accounting and accountability upon some people acting where their role would not take them to a requirement for that sort of training, and even more foolishly for people who were already professionals in that space. They were not to receive any immunity.

This bill does a number of things to improve what were the then Labor government's amendments in their Fair Work (Registered Organisations) Amendment Act 2012. They are: firstly, to strengthen the reporting and disclosure obligations to align more closely with the Corporations Act, which of course stands in good stead and which has such a critically important oversight role in the management of corporations in this country; secondly, moving the obligation from the rules of registered organisations to the face of the legislation itself; and, thirdly, the amendments that we are discussing here today, and upon which I hope there will be full unanimous support, give the new commissioner greater scope to ensure that officers are complying with their obligations and greater powers to investigate when a member makes a complaint—when a member makes a complaint—about a registered organisation. So, here we are speaking about people who are themselves members of that organisation.

There is little doubt at all that the community expects the highest levels of accountability and transparency from anybody charged with responsibility for the monies of members and the monies of shareholders and, ultimately, the confidence of the wider community—be they corporations, employer groups or registered organisations in the context of unions—in being accountable to their members. As I said, this is an area in which we would expect to see full agreement, because there would not be anybody in this place—surely!—who would not agree that there must be, in the context of the dollars which are handled and which are actually contributed by members of registered organisations, employer organisations and, indeed, corporations, the highest standard of accountability and transparency to make sure there are none of the unfortunate events that we have seen in recent years and which have been canvassed adequately this afternoon by my colleague Senator Johnston.

So, what does the bill do? The first thing is that it establishes an independent watchdog—the Registered Organisations Commission—to monitor and regulate registered organisations with enhanced investigation and information-gathering powers. As we have seen in the events of the last four or five years—as we have seen spelled out in the media, in the courts and, indeed, in this place—it has been an inability to undertake adequate investigation and to compel the provision of information that has led to the ludicrous positions that we have had.

The second thing the bill does is to strengthen the requirements on officers—disclosures of material personal interests and related voting and decision-making rights—and to change the grounds for disqualification and ineligibility for office, be that in an employer group, in a union group or in any other registered organisation. Thirdly, as one would expect, the commission's role will be to strengthen existing financial accounting, disclosure and transparency obligations under the act itself by putting into place regulations and obligations on the face of the act and making them enforceable as civil remedy provisions. And, fourthly, it will increase those civil penalties and introduce criminal offences for serious breaches of officers' duties, as well as introduce new offences in relation to the conduct of investigations under the Registered Organisations Act. Therefore, as I said, what is necessary is a circumstance that will ensure community confidence—that we are building a stable, fair and prosperous future for Australia's workforce, for Australia's businesses and for the wider Australian economy.

Why is there a need for this legislation? Because we have seen the rorts, we have seen the rackets and we have seen the rip-offs in both employer groups and in union groups. We have seen this in the media and we have heard of it in the courts. We have actually heard about it in this place. And we know that they have been so frequent that the wider community has spoken strongly. Indeed, when the coalition first released its policy for better accountability and transparency of registered organisations in April 2012, some 15 months before the 2013 election, it received widespread public support. The Australian parliament must act. We will not have a sufficiently robust system to ensure that the sort of corruption that has been revealed in numerous and recent scandals is stopped until or unless we actually introduced this legislation.

It is no longer tenable to argue that the present system is adequate or that it is discouraging the type of behaviour about which we have heard and of which we will no doubt hear more. It is the case that union and employer associations play a critical role in workplace relations and the economy more broadly in this country. Their members, be they members of employer groups, unions or other registered organisations, invest an enormous amount of time and money and a great deal of trust in these officers. Unfortunately, we have seen too many instances on both sides where those confidences have been abused and where funds have been misappropriated and, indeed, we have seen the end result. There is a community expectation that registered organisations will operate to the highest of standards, and this legislation will ensure that that does take place.

The organisations are given special legislated rights. But with rights come responsibilities and with responsibilities come accurate management, probity and transparency, and complete and full reporting.

The government believes that the majority of registered organisations in this country do the right thing, and in most instances maintain higher standards than perhaps even those that are currently required. But our recent investigations into the Health Services Union, for example, illustrate that financial impropriety has occurred under the current governance regime for registered organisations. The charges and allegations against former member of parliament Craig Thomson and former ALP national president Michael Williamson in their capacities as officers of the HSU—and now Ms Kathy Jackson—are shocking. They are unacceptable, and the wider community wants action taken.

Senator Johnston spelt out some of those areas into which Mr Thomson, and indeed Mr Williamson found themselves. All I can do is remind those who might be attendant upon this session to reflect on the background of most of the people who pay union dues in the health services sector. Those of us who have had relations in aged-care facilities, for example, know very well the devotion of these people. We know they are not highly paid.

I recall, when matters associated with Mr Thomson were being discussed in this place, being informed of a lady of eastern European descent who had been working—and still is working—in the health services sector. She had paid, from a fairly modest salary, her union dues over many years, and somebody had calculated that, if she had today all those union dues she had paid—which we now know were totally abused and misappropriated by Messrs Thomson and Williamson, and possibly Ms Jackson—she could have afforded to go back to her native country in eastern Europe. Her response was: 'No. If I had that money available to me today I would not go back to my original homeland. I would want to put those funds towards the education of my grandchildren.' That really resonated with me. How those two or three people could possibly have done what they did with funds of workers in low-paid jobs in the health services sector is something they themselves are going to have to come to terms with into the future.

The bill introduces a suite of legislative measures designed to see governance of registered organisations lifted to a consistently high standard across the board. We require a more robust compliance regime, which is going to deter wrongdoing and promote first-class governance of registered organisations. We are a leading world economy; surely, we should not see the sorts of abuses that we have seen unfortunately unfold in the last couple of years.

We know that Fair Work Australia took far too long with their investigations in the Health Services Union. We know that the legal proceedings that ensued should well and truly have been brought to a head much more quickly. I recall, as deputy chairman of the committee at the time, a KPMG review into Fair Work Australia's investigations into the HSU which identified shortcomings in the conduct of the investigations. Members of that union and the wider community not only want a strong regulatory regime to give them confidence in these organisations; they also want swift action taken when standards appear to be breached or have been breached. To do this, we have to have a robust regulator in place with appropriate powers and resources, together with meaningful sanctions. That is what was absent when Fair Work Australia conducted those investigations. Those of us who sat through Senate estimates hearings at that time were extremely disappointed—those from both sides of the political divide—as to the tardiness. It was clear that there was not a robust regulator in place. This is what this legislation aims to achieve.

To improve oversight of registered organisations the bill will establish a dedicated independent watchdog, the Registered Organisations Commission, to monitor and regulate organisations and provide it with enhanced investigatory and information-gathering powers. The commission will have the necessary independence and powers—and reporting obligations, incidentally—that it needs to regulate organisations. The commission will be headed by a commissioner appointed by the minister. The commission will be required to report to the Minister for Employment annually on its activities; that report will be tabled in parliament, and the commissioner will appear at Senate estimates on each occasion that the Senate requires.

The activity of the commission will be subject to the same oversight by the Commonwealth Ombudsman as Commonwealth agencies. It will ensure appropriate levels of transparency and public accountability by the commissioner himself or herself. And, as is common with statutory officeholders, the minister can give directions of a general nature to the commissioner, but they must be in writing and they are a disallowable instrument. For avoidance of any doubt, I want to make the point strongly: the minister will not have any powers to give directions as to a particular matter or an investigation.

The commission will have stronger investigatory and information-gathering powers than those that currently apply, but they will be modelled on something that already exists and those are the powers available to the Australian Securities and Investments Commission. So this will further enhance the capacity of the commissioner to provide strong, efficient regulations of employer associations and unions, with all of those reporting and accountability requirements to the people who sit in this chamber.

Under the bill, there will be appropriate sanctions against efforts to hinder or mislead investigations—something that, as we know, dragged out the course of recent events in the HSU. It will give all members of registered organisations confidence that, should they make a complaint to the commission about the organisation of which they are a member, that organisation and its officials must comply with the requirements of the investigatory process, or they will face sanctions.

Members of registered organisations can have the confidence that, under this new legislation, a person convicted of a particular offence will not be eligible to be an officer of an organisation or to stand for election to office. For the first time we are going to see those elements that members of registered organisations have been asking for actually enacted in legislation.

We know very well, contrary to the comments of some, that many of these registered organisations control assets worth millions of dollars. They are effectively dealing with cash flow and investments similar to those of large businesses. And we, quite rightly, expect in this place and in this country that large businesses are held to a very high standard of account and that those people responsible for the handling of funds and making decisions associated with the fate of members' funds are adequately trained, are adequately competent and are required to report in a full and transparent fashion, and that is what this legislation aims to do.

It is entirely appropriate to expect a high standard of financial reporting from our registered organisations, given the trust that members place in their unions and employer associations that they will operate honestly and use the funds derived from membership fees to represent their interests rather than the sorts of interests that we have seen played out in the cases of Messrs Thomson and Williamson, and Ms Jackson.

Registered organisations must have substantial economic, legal and political influence. It is clearly inconsistent with community expectations for organisations of this type or people who are officers of those organisations to operate to lower standards than those that apply to corporations or other comparable bodies.

The officers of registered organisations under this legislation will need to disclose remuneration paid to the top five officers in the head office or their branches. They will be required to report material personal interests to their members, disclosing personal interests of officers and their relatives, and declaring any payments made to persons or entities in which that officer has declared an interest.

This will prevent officials from improperly benefiting from their role in organisations—for example, by an officer procuring goods or services to a company in which they hold some interest without disclosing that interest in an appropriate and transparent process. And we have seen all too often it played out in the courts, somewhat belatedly in many instances, where there have been serious abuses by officials of registered organisations using their privileged position to benefit themselves and indeed those closely associated with them.

We have seen in the case of Messrs Thomson and Williamson that the existing regulations do not sufficiently protect members' interests and that there will always be less than scrupulous individuals who will seek to take advantage of the positions that they hold. And this, apart from anything else, is the compelling reason why this legislation must be passed. It is in the interests of everybody in this place, from whichever political colour or persuasion. There are of course criminal penalties to be introduced for more serious breaches, in addition to those I have outlined. I finish with the words of Justice North, who made comments last year:

The penalties are rather beneficially low … beneficial to wrong doers.