Thursday, 21 June 2012
Fair Work (Registered Organisations) Amendment Bill 2012; Second Reading
I rise today to speak on the Fair Work (Registered Organisations) Amendment Bill 2012. You will not get any argument from those of us on this side of the chamber about the need for far greater accountability of registered organisations and their officeholders. The never-ending saga of the Fair Work Australia inquiry into the Health Services Union has made it absolutely clear that major reform is needed. Fair Work Australia has finally handed down its report, which is 1,200 pages in length and outlines the widespread unauthorised spending of its members' hard earned dollars on the member for Dobell's federal election campaign, on cash withdrawals, on travel, on expensive restaurant dining and on escort services. The report also clearly highlights significant mismanagement of the HSU national office by the member for Dobell. In fact, the report goes so far as to suggest that substantive parts of the member for Dobell's evidence provided to Fair Work Australia were 'false and misleading'.
However, though I hate to appear as a cynic, this bill introduced by the Minister for Employment and Workplace Relations seems to be little more than a hasty attempt by those opposite to give the appearance that they are making an effort to resolve the many issues plaguing the oversight of registered organisations. The reality is that this bill falls well short of doing what is necessary, and we in the coalition have a number of real concerns with it.
The minister said, in response to a question on notice to my colleague Senator Abetz in the other place, that the government would consider the KPMG report currently being undertaken into Fair Work's investigation before changes were considered. That report is underway and may yet make further recommendations, yet here we are with this rushed job of a bill in front of us.
In this bill, Fair Work Australia retains control of investigating registered organisations. My concern with this is that there is very recent evidence of the inability or reluctance Fair Work Australia to undertake timely and comprehensive inquiries into registered organisations. We also face the prospect of having union bosses being regulated by former union bosses if the minister has his way. Quite frankly, this does nothing to alleviate the concerns of the coalition. We have seen this government obliterate the Australian Building and Construction Commission, turning it into a toothless tiger, and we have seen a government willing to accept the vote of a tainted member of parliament, all to ensure that they remain in power. This is a government indebted to the union movement. At the Prime Minister's recent childcare round table, the unions sat front and centre. The unions are so sure of their influence over this government that the United Voice union has put forward a claim for $1.4 billion from this government to meet the wage claims of the childcare sector. That is almost as much as the forecast surplus of the Treasurer. This is a union who, I have been informed by childcare providers, has been touring the childcare centres in this country offering free union membership and promising to deliver wage rises for childcare educators.
I am the first to admit that many childcare workers are not well paid. However, if this really is the approach being taken by this union it is the absolute height of arrogance, promising to deliver something that is entirely out of its hands. Proven by the appalling situation over at HSU headquarters, the arrogance that has been spawned within the union movement in this country is quite terrifying. Union members everywhere should be angry and upset at the contempt in which some union leaders appear to hold them, given these leaders are so free to splash around the cash to benefit their own circumstances. This is a key reason why we must have urgent action to better regulate these organisations. We on this side of the chamber have a comprehensive plan to ensure that all members of registered organisations can rest safe in the knowledge that their money is being spent wisely and will not be misused by those in control of the purse strings.
Interestingly, this minister announced his lesser plan just 10 days after the Leader of the Opposition announced the coalition's plan. This is not the first half-baked policy set by the government. Indeed, in recent months we have had a trifecta. In the Employment and Workplace Relations portfolio we announced before the last election a seniors employment policy. We were told at the time by Labor that it was bad policy. But just a few months ago it was announced by the government as their policy, albeit they have managed to bungle it. The announcement just last week regarding the job relocation plan for unemployed people looks remarkably similar to the coalition's job relocation plan that we took to the last election, the difference being that they will pay job agencies rather than paying job seekers, those who are actually prepared to make the move.
Members will remember back to 2007 when we had Kevin 'Me-too' Rudd and Labor and now we have the me-tooisms back. I say the same thing today that we said then: if you want a coalition policy, it is best that a coalition government deliver it because, if you cannot trust those opposite to get it right, you need the coalition. That is why we have a government with a half-baked seniors employment plan, a half-baked job seeker relocation plan and this half-baked bill that does not really deal with the issues.
I refer again to the situation that enabled the powers-that-be of the Health Services Union to use moneys from the workers they represent—some of the lowest paid workers in this country—to pay for what can only be described as a lavish lifestyle. We firmly believe that registered organisations should be accountable and transparent to their members, just as companies and directors are required to be accountable and transparent to their shareholders. Our plan would ensure that registered organisations and their appointed officers would follow the same rules and regulations that govern companies and their directors. The level of accountability and transparency that currently applies to companies and their directors would be extended to registered organisations. The level of reporting and penalties for non-compliance for registered organisations is different from that which exists for companies. For example, had the Fair Work Australia findings of both investigations into the Health Services Union been made against a company and directors, they would have been subject to significant financial penalties and potential imprisonment. Instead, HSU officers in Victoria are exposed to a comparatively modest civil penalty. Indeed, even if the full civil penalties were applied, you would have former union bosses paying a penalty less than the monetary value that was taken. Indeed, there is no disincentive for the bosses of registered organisations that do the wrong thing.
The coalition would establish a new regulator—the Registered Organisations Commission. It would be required to cooperate fully with law enforcement agencies when it is in the public interest to do so. Removing this responsibility from Fair Work Australia is really the only sensible course of action. They have clearly demonstrated that they are not up to the task of regulating this sector in a timely and effective manner. They are too plagued with demands from their various taskmasters, with their investigation into the Health Services Union blowing out to more than three years in duration.
We are told that justice delayed is justice denied and for the low-paid members of the Health Services Union, that is exactly what has happened. We need legislation that will see real change, and only a coalition government can deliver the hope, reward and opportunity in this space that Australians are clamouring for. This bill is a poor bill that does not deal with the problems. It does not even enforce comparable standards to those requirements sought of company directors. At a minimum, this should be the case, with officers of registered organisations being liable for equal penalties to those imposed on company directors who are in breach of their charter. Regrettably, the civil penalties imposed by this bill will merely bring the penalties in line with other penalties in the Fair Work Act. The Corporations Act, on the other hand, has provision to impose more significant, deterrent penalties.
The other area of concern the coalition hold is that this bill, while expanding police cooperation powers, does not make it expressly clear that Fair Work Australia can cooperate with police. We never again want to witness an agency that refuses to cooperate with the police or a law enforcement body when it is apparent to all that cooperation is in the public interest. I think the Australian public have a right to expect that tax payer funded agencies in particular have a duty to help uphold the laws of this land and, as such, they must cooperate fully with requests from law enforcement.
We know that the former Industrial Registrar, Doug Williams, on the last day before Fair Work Australia came into existence said this should be referred to the police. Now the government tell us that the laws did not change. They cannot have it both ways. Fair Work Australia should have done what any decent Australian would have done and cooperated with the police. Indeed, the advice of eminent workplace relations lawyer Stuart Wood SC tells us that there was no impediment to Fair Work Australia cooperating with police. We know from a detective sergeant of the Victorian fraud and extortion squad in correspondence released under freedom of information that Fair Work Australia's ridiculous view was based on 'mistaken beliefs' that the police wanted Fair Work Australia to conduct its investigation, which is a total farce. Australians expected better and they have been let down. On this bill we should not need to move an amendment; the minister should have stepped in and ensured that Fair Work Australia was under no illusion that it should be cooperating with police. Instead, all Australians are made out to be mugs.
To make matters worse, this bill is lacking explicit provision to allow Fair Work Australia to provide a brief of evidence to the Director of Public Prosecutions. We saw even more obfuscation from Fair Work Australia when it sent its report to the Commonwealth Director of Public Prosecutions. The DPP told Fair Work Australia it could not pursue the report because it was not provided in a brief of evidence. Fair Work Australia's response? 'We can't do that; our legislation doesn't allow for it.' What a joke! Never before have we seen an institution so insistent on putting itself into a straitjacket and purporting to be completely helpless. One just have to read the emails coming from members of the Health Services Union about how distressed they are about the goings on to know that this is just plain wrong. Fair Work Australia recommended that the DPP should pursue some matters, but now we will not see them pursued because of another Fair Work Australia straw man—this legislation.
Now we have a government that has lost total confidence in the Prime Minister's own institution, Fair Work Australia, such that under this bill Labor is seeking to allow the total outsourcing of investigations to outside bodies. That means no scrutiny from the Australian parliament and no scrutiny as expected by the Australian people. Will Fair Work Australia investigations be conducted by anyone the general manager sees fit? If anybody is wondering what this means, it means that Fair Work investigations could be conducted by so-called secret police, external to government, and the findings never made public.
No-one believes that, if it were not for the Coalition's work in ensuring that Fair Work Australia lifted its game, we would see any movement from the government, and Fair Work Australia may even still be considering its inquiry. The coalition agrees that more information needs to be given to members of registered organisations, but the coalition also believes that this additional information should be given to Fair Work Australia to ensure that spending by bosses of registered organisations is on the public record and easily available to the statutory body charged with responsibility for managing registered organisations.
Ultimately, we believe that this bill reeks of union involvement and is a desperate attempt to regulate its own patch as lightly as can possibly be achieved. It has been designed by a former union boss and will be regulated by former union heavies. Sadly, it does not go far enough, and the coalition will be proposing a number of commonsense amendments to try to restore some confidence in an institution that is the laughing stock of the country. If those opposite are honestly committed to preventing the widespread rorting of union members into the future, they will agree with our amendments, and I call on the Independents to do so as well.
That all words after 'That' be omitted with a view to substituting the following words:
'the House notes with approval that, in response to public pressure, the Government has introduced this limited bill, but deplores the Government's failure to:
(1) establish an independent Registered Organisations Commission to:
(a) enforce, and police the reporting and compliance obligations;
(b) provide information to members of registered organisations about their rights and act as the body to receive complaints from their members;
(c) educate registered organisations about the new obligations that apply to them; and
(d) absorb the role of registered organisations enforcer and investigator, currently held by the General Manager of Fair Work Australia;
(2) ensure registered organisations face the same accountability and transparency measures as required of companies and their directors under the Corporations Act; and
(3) ensure registered organisations face the same penalties as companies and their directors under the Corporations Act.'
I am tired of prejudice being dressed up as policy. I am tired of seeing those opposite suddenly discovering concern for the low paid in this country, suddenly discovering concern for the governance of the unions of this country and coming in here professing that concern and dressing it up in a way that masks what is really beneath what they have always sought to do and will always continue to do. When it comes to corporate Australia those opposite always rail against red tape, but when it comes to unions they are the first to step forward with a plethora of regulations and a maze of different hoops that need to be jumped through for those unions to operate. Clearly, what is being proposed through this amendment is nothing more than those opposite making life difficult for the operation of unions in this country.
I put it this way: those opposite never meaningfully engage with the union movement and they never meaningfully engage with its members. They are only there to ensure that they can extract political advantage for their own benefit against unions and those who are members of unions. Whenever they occupy this side of the House and there are big policy issues at stake, those opposite—and I know this for a fact—do not meaningfully engage with unions, do not work with them on the process of policy development, do not seek to accommodate alternative views and do nothing other than engage in tick-a-box consultation. So, when they come forward and propose what sounds like a plausible policy, you then need to contrast it with reality.
When those opposite argue that the easiest thing to do in this case in relation to legislation before the House is just to mirror corporations law or the Corporations Act and basically ensure that the penalties and approaches that are used in that law be mirrored entirely for registered organisations, it flies against common sense and reality. I explained the simple reason: look at any measure of the wealth of those corporations—I am not talking generally; I am talking about the funds at hand and the breadth of those organisations—or even at the pay differential between those who are either directors or senior managers in those corporations and the management committees of unions, made up of shop floor delegates who are probably hundreds of times less remunerated and who have less control over the shape, form and direction of an organisation than someone who is a director or senior manager directing some of the biggest firms in this country, whose operations may be based either here or internationally. This compares the types of provisions that govern those individuals—directors or senior managers—and looks at the pay differentials that exist there and the responsibilities they have, and seeks to have the penalties and regime that apply to them then apply to workplace delegates who sit on management committees of unions. This is totally disproportionate and is prejudice masked by policy. This is more about those opposite trying to make it difficult for anyone to even contemplate sitting on the management committee of a union or an organisation that seeks to represent working Australians.
Worse still, those opposite do that not only to make life difficult for those on management committees but also to cut their own nose off to spite their face, because, if they apply that to registered organisations, there would then be a requirement to ensure that those same provisions are complied with by industry associations. Industry associations find it difficult, given the nature of their members' businesses and operations, to find people to step up and sit on those boards of management. These are industry associations, not employee ones. So, with this registered organisations proposal put forward by those opposite, they would then seek to make it even more difficult to get those people to step forward and sit on management committees for industry associations as well. They seek to make a political point—'We'll just harmonise the corporations provisions that apply to directors and apply those to registered organisations'—not thinking that industry associations are also affected by what is being proposed.
No-one doubts for a moment the need to ensure accountability and transparency, and I have certainly said this publicly. Unions should welcome accountability and champion transparency in their operations, not just because—and I have said this elsewhere—this makes, for example, for a stronger bond between members and those people that run their organisations, because they have the confidence that those organisations are being run and operated correctly, but also simply because this is the right thing to do. In particular, as a former union official I was always conscious of the fact that people were giving membership fees from their own salaries and wages and rightly expected that the management of a union would be run properly, with due regard to fees being properly expended. Certainly no-one should dispute that, and my view has always been—I have certainly argued this in recent times—that unions should embrace this and effectively beat regulation by doing this themselves and lifting their own standards.
I certainly think that the proposals that are being put forward in the government's legislation go a long way on a number of fronts. I was particularly heartened to see, for instance, the provisions requiring a greater level of education on the responsibilities—including the financial responsibilities—of those people that sit on management committees of unions, because, as I indicated earlier, a lot of these people are drawn from the shop floor and have not necessarily had to engage in these types of issues previously, ranging from the way in which balance sheets and accounts should be read through to, for instance, the responsibilities of organisations to the people that they employ within unions. There are a whole range of different responsibilities required and I think it is good that we have in place that education process—even the orientation process that we members get when we are first elected to this place—so that we are able to walk people through those responsibilities and ensure that those responsibilities are adhered to by those that run unions and industry associations and that the management of those organisations actually lifts as a result of that.
I think these are good things that are contained in this legislation. I heard the member for Farrer suggest that, with the use of outside organisations for forensic accounting or other purposes, this is a move that would be bereft of accountability. In actual fact, I think that Fair Work Australia getting additional outside skills to infuse into the base of skills within Fair Work is a smart thing so that it can keep up to date with movements in broader industry and the broader economy the way other businesses and organisations are supposed to run, taking into account what may or may not be happening in the international space. Having those skills brought into Fair Work Australia and improving its operations is a good thing. Those opposite seek to pick the worst element of this and suggest that this will fail to improve accountability within Fair Work, as if the accountability mechanisms as they presently exist are not enough—for instance, having the head of Fair Work Australia appear before estimates committees to account for decisions made through that process. And that is just one off the top of my head. Not only that, they have to account for that in their own annual reporting, which is submitted to the parliament and is open for scrutiny for any of us here in the House of Representatives.
On top of that there are the improvements that are being proposed in here for registered organisations to ensure that they detail in their annual reports the types of financial issues that should be put squarely in an annual report to ensure that there is not a suggestion of a conflict of interest. These are good reforms put into this legislation. This is good work—for example, requiring remuneration and board fees to be disclosed to members, or that transactions with related parties, including family members, and transactions where an officer has a material personal interest be disclosed to members. Again, this is as a result of the legislation we are currently debating.
I have mentioned the financial accountability training and I also point to the other aspect of this legislation that I am particularly pleased to see: that organisations develop policies on financial accountability and management. A lot of organisations already have this but there would be others that might not. Again, it is worth bearing in mind that organisations such as unions vary in size. There are well-established organisations and unions—you might have the AMWU, the AWU or my former union, the CEPU—but there are other smaller organisations as well that do not have the membership base and the income that flows from that membership base and therefore the ability and the strength to engage outside assistance to help shape their policies and procedures. More often than not those smaller unions are fighting a daily battle to keep up with workload and to ensure that the representation they seek to provide is of a high quality. That is not an excuse but a reflection of reality. I think that this bill, in the way that it puts the onus on ensuring that these policies and procedures are in place, is a good thing and it will strengthen the operation of unions and industry associations.
As I said, these changes would apply at the federal level to federally registered trade unions and to federally registered employer organisations. By their breadth they are significant reforms. These have been done—and this is important to point out—in a very open way. The consultation itself has been conducted with industry associations and unions across the board. It has been done openly with peak employer bodies like the Business Council of Australia, ACCI—the Australian Chamber of Commerce and Industry—Master Builders Australia, Ai Group, the National Farmers Federation and the ACTU, all through the National Workplace Relations Consultative Council. This was a good approach, done openly and involving all groups; and again I make the point that those opposite cannot simply negotiate and consult one side of the equation and leave the others out. They cannot just talk to employers and fail to take into account employee concerns as well. We have tried to ensure that the breadth of consultation covers all views to try to balance those out. As the communique issued by the National Workplace Relations Consultative Council back on 25 May read:
… the changes proposed by the Minister will significantly improve the financial reporting framework, governance and accountability for registered organisations …
It is certainly good to see that this has been received well by those affected.
Finally, it is important to point out that as much as there have been movements to improve the operations of unions and industry associations by some of the measures I outlined earlier, where these are not observed or complied with the penalty regime is significantly increased. In fact, it is increased threefold for breaches of the Fair Work (Registered Organisations) Act by up to $6,600 for an individual for each contravention and $33,000 for organisations. It is certainly worth noting that when the member for Warringah was minister for industrial relations he saw fit to put penalties at only $2,200 and $11,000 respectively. So it is important to note that these penalties have been ramped up significantly.
We have also sought to ensure that these are done commensurate with the size of the organisations themselves. As I said earlier, there is no point in simply reaching for the types of penalties that are levied towards directors and senior managers of major corporations in this country, and just believing that it is appropriate to sheet those over to unions and industry associations, because the impact of that is significant and it is completely disproportionate to the size. I certainly commend this bill to the House and would have major problems supporting the amendments proposed by those opposite.
It is my great pleasure to rise and speak on the Fair Work (Registered Organisations) Amendment Bill 2012.
It is always very interesting to follow the member for Chifley. He started off his speech here today saying that you could not compare union leadership and office bearers with corporations who pay their CEOs and board members vast amounts of money, that it was an unfair playing field and that you simply could not compare the two. The member for Chifley says that corporations have huge wealth, but corporations covered by the Corporations Act are also small businesses—those very small businesses that, day after day in the previous months, he comes in here telling us would be subjected to the benefits of the mining tax. Many of those small businesses—those small business mums and dads that he keeps telling us about—are covered by the Corporations Act. So how can he say that those people have certain fiduciary responsibilities but that somehow the unions do not come into that category at all and should not be treated as such?
The bill that the government is responding to is a very sad and sorry saga. It is the result of the report into the Health Services Union and the member for Dobell. The 1,200-page report that detailed the financial misuse and inappropriate manner in which the hard-earned money of the Health Services Union members was spent by senior union officials has led many of us here in the chamber to be disgusted. It is ironic that an organisation that has purported for many, many years to represent hardworking workers and their rights has now been exposed as having zero regard and zero respect for those workers. The revelations that union members' money was spent by union officials on escort agencies, travel, restaurants and huge cash withdrawals are disturbing, to say the least, to many of us. The revelations involving the Health Services Union demonstrate that there is an urgent need to ensure that money paid by members to registered organisations is used responsibly, appropriately and in a transparent way. We know that some union organisations have used money for inappropriate purposes and they have breached existing rules, and this evidence shows that the existing laws need improvement. The penalties for breaches of these laws are also in line with what the community expects for such gross breaches of trust. We know that Fair Work Australia's investigation into the Health Services Union took an unacceptably long three years. We have seen a failure to cooperate with the police and Fair Work Australia claiming that it could not prepare a brief of evidence.
The coalition believes that this bill does not go far enough. It fails to deal with the very real issues that were brought up over the course of Fair Work Australia's three-year investigation. We will be moving amendments to this bill that will substantially improve it. However, if the Independents again decide to vote with the government and block our amendments then we will not oppose the bill. But it is interesting to note that, if individuals in a private corporation engaged in behaviour similar to what was outlined in the Fair Work Australia report, those individuals would face severe fines and penalties under the Corporations Act. The coalition believes that that should also be the standard for registered organisations. There need to be rules and, just as there are rules to ensure that companies and their boards of directors do the right thing, the same rules should also apply to registered organisations and their officers. The shadow minister, Senator Abetz, in a speech to the Australian Industry Group recently, said:
It isn't reasonable that someone can be a shareholder in a company and expect one level of transparency and accountability from the board—yet that same person who is a member of a union cannot expect that same level of accountability from their union or for that matter an employer organisation.
These sentiments have not been confined to the coalition. There are many people who have spoken on the record out there, and I notice that Dave Oliver, the now Secretary of the ACTU, said on 3 May 2012:
… every union member in this country has a right to know that when they pay their dues, that their money is going to be subject to good governance and good regulation.
He then went on to say:
… if union bosses are caught with their 'hand in the till'—
now, everybody knows what 'hand in the till means'—
then there should be 'significant penalties'.
We all agree and, in fairness, the government does to an extent as well. But the bill goes some of the way by requiring that the rules of all registered organisations deal with the disclosure of remuneration, particularly on pecuniary and financial interests; increasing the civil penalties under the Registered Organisations Act; enhancing the investigative powers available to Fair Work Australia under the Registered Organisations Act; and requiring education and training to be provided to officials of registered organisations about their governance and accounting obligations. However, these measures do not go far enough.
Funnily enough, Minister Shorten's announcement of the legislation that we are seeing came just 10 days after the Leader of the Opposition announced the coalition's better plan for accountability and transparency for registered organisations. But Labor's plan, as displayed in this bill, is sadly lacking on a number of fronts: it sees Fair Work Australia in control of investigating registered organisations; it does not explicitly provide Fair Work Australia with the ability to cooperate with the police; its requirements and penalties are still not in line with the Corporations Act; and it has no reporting mechanism on why the investigations are going over time.
There is a better way and the coalition's plan will make sure that members of registered organisations, mainly small businesses and workers, can be assured that their money is being used for the very right reasons. Just as there are rules to ensure that companies and their boards of directors do the right thing, the same rules should also apply to registered organisations and their officers. Our changes will ensure that registered organisations and their officers are as accountable and as transparent as companies and their directors and that they play by the very same rules.
It is also clear that Fair Work Australia is not up to the job of making sure that registered organisations do the right thing. They are either a model of incompetence or they are engaging in a deliberate go-slow to protect the government. We will make sure that there is a regulator that has real teeth, by removing the investigative and compliance powers over registered organisations from Fair Work Australia and give them instead to a new and genuinely independent body to be called the Registered Organisations Commission. The new regulator will have stronger powers, act more quickly, act more efficiently and be required to cooperate with other law enforcement agencies where it is in the public's best interest to do so. It will not just be a case of a union boss regulating a union boss.
Although the overwhelming majority of registered organisations do the right thing, the coalition will ensure that they are strongly deterred from doing the wrong thing and that, where inappropriate actions occur, they will be investigated and enforced by a genuinely independent regulator that has teeth. Our proposal also explicitly clarifies that Fair Work Australia does indeed have to cooperate with the police. Even though there is evidence from Stuart Wood SC to investigate that a provision to this effect does not indeed exist, we will ensure that it is expressly clarified in the legislation.
As I said before, we will be moving amendments at the completion of the second reading debate. These amendments need to be accepted by the crossbench and inserted into the bill, because there are 60,000 low-paid, hardworking members of the Health Services Union who did not deserve to have their trust and faith in the organisation breached in the way that it was. It is hard to take the Labor Party seriously on this because, when all of this was happening, the member for Charlton was the head of the ACTU and the Minister for Employment and Workplace Relations sat on the ACTU when the member for Dobell also sat on the ACTU. How can you take Labor seriously when this happened right under Labor's nose, while the member for Dobell was a member of parliament and Michael Williamson was the President of the Labor Party?
I was present in this House when the Howard government introduced the Workplace Relations Amendment (Registration and Accountability of Organisations) Bill 2002, and I well remember the deal that the Labor Party did with the Democrats at the time to water down some of the provisions in that bill that related directly to what we are talking about today. I am really glad that the member for Barton is in the chamber—though I do respect him enormously—because I hope that in his speech he might be able to assist the chamber in recalling his time as the shadow minister for workplace relations. He will recall, on 16 September 2002, coming into the chamber and speaking on the Workplace Relations Amendment (Registration and Accountability of Organisations) Bill 2002 and the negotiations that he made as shadow minister with the government of the day. The member for Barton, on behalf of the Australian Labor Party, will recall that they watered down the coalition's proposed legislation with the Democrats, and wound back what we as a government wanted to do to ensure accountability and transparency of registered organisations in Australia. The member for Barton should take some time today in his speech to explain to the chamber why the ALP watered down the bill in negotiations and how those changes have led to the place that we are in today.
In conclusion, the bill should be amended, and I urge the parliament to support the amendment.
Before addressing the matters that the honourable member raised, can I say on the record that in no way did I recommend the watering down of the legislation. In fact, I moved amendments on 17 September 2002 that significantly increased the powers of the Federal Court of Australia. I refer the honourable member to page 6,512 of the Hansard of 17 September 2002, which sets out the amendments moved by the opposition—which amendments were accepted by the government, following discussions that I had with the then minister for workplace relations, with a view, as the amendments will show, to very firmly strengthening the legislation. I will refer in my contribution, in part, to that.
In my experience, the vast majority of trade unions are professionally managed by highly competent and dedicated people who act on the basis of sound professional advice. But, regrettably, there have been exceptions to that. Officers have sought to obtain personal benefit, or benefit on behalf of others, at the expense of members of their union. Reported instances include not only misapplying funds and resources of the union but also using the privileges of their office to attract and obtain services and benefits from third parties.
Aside from issues of profiteering, secret commissions and tax avoidance, these undeclared benefits can compromise officials. Rather than diligently representing the interests of their members without fear or favour, they effectively 'run dead' as a result of these side deals. This is no less than graft and corruption in its most reprehensible form, and it occurs at the expense of vulnerable members whose interests they have been charged with representing.
To borrow the words of Prime Minister Gillard, speaking on ABC Radio on 9 May of this year:
Let me say I never want to see a dollar that a worker gives a union used for any purpose other than the proper purposes of representing that union member's best interests.
Indeed, I know the Prime Minister is quite familiar with this area of the law; as lawyers in the mid-1990s, we were involved in a matter representing opposing clients. Indeed, my involvement in that matter has coloured much of my thinking in this area and resulted in me moving amendments on 17 September 2002 to actually strengthen the powers of the Federal Court of Australia.
In short, this bill has merit and I support it. But, with my new freedom as a backbencher, I would like to suggest where I think the law can be further strengthened. My main focus is on enhancing the ability of members of organisations to seek orders compelling officers of their union to perform and observe the rules of the union and, in so doing, comply with their broader fiduciary and statutory obligations, and ultimately, if required, to compensate the organisation for loss arising from their misconduct.
I will briefly outline the scheme of the act and, in so doing, will highlight those areas where additional enhancements should be made. The foundation of the scheme is, essentially, the codification of law that has established what those fiduciary obligations are. In particular, part 2 of chapter 10 of the Fair Work (Registered Organisations) Act contains quite detailed provisions regarding the general duties of trade union officials in respect of the financial management of organisations and also in respect of the misuse of position.
Section 285, for instance, sets out the obligation to exercise care and diligence. This requires judgment to be made in good faith and for proper purpose. The section specifically provides that decisions cannot be made for the purpose of seeking a material personal interest. Section 286 sets out the obligation to act in good faith and for a proper purpose and, specifically, to act in the best interests of the organisation. Section 287 sets out the obligation not to obtain personal advantage for oneself or for another person, and section 288 sets out the obligation not to improperly use information for personal benefit or for the benefit of another.
As I mentioned, these principles arise from the common law, including case law concerning trade unions, such as the well known cases of Short v Wellings (1951), Allen v Townsend (1977), Cook v Crawford in the early 1980s, Saddington v Oliver (1983) and indeed the former member Lindsay Tanner v Darroch (1986). As I mentioned, these issues also arose in those matters that I was involved with in the mid-1990s, which were filed in both the then Industrial Court of Australia and the Federal Court of Australia. There are a number of matters, generally under the name of Ludwig v Harrison and others, but probably most relevantly matter No. 1032 of 1996.
It can be seen that the statutory provisions and legal principles impose obligations, not just in respect of financial management and proper administration, but also, more generally, with respect to conduct that seeks to benefit the individual or, as the legislation also emphasises, a third party. These principles are sound; it is with respect to the issue of remedies that I think more attention needs to be given.
Part 2 of chapter 10 sets out the mechanisms for enforcing the obligations of trade union officials, including by obtaining a civil penalty order and, potentially, an order for compensation. The relevant provisions include section 306, which provides for the imposition of a civil penalty order of up to 100 penalty units in the case of a corporation and 20 penalty units in the case of an individual. Section 307 specifies the circumstances in which a compensation order may be made for breach of a civil penalty provision and requires the court to have regard to the extent of any profits made by an individual. Section 308 gives the Federal Court wide power with respect to any orders that may be 'appropriate in all the circumstances', including the power to grant interim injunctions.
Section 310 gives standing to commence an action for a civil penalty and compensation order to either the general manager of Fair Work Australia or to the affected organisation itself. Subsection 310(2) specifies that the minister for workplace relations also has standing but only with respect to enforcement of matters arising under section 305(2)(zk) which relate to enforcing orders once made. The first point I would therefore make is with respect to that issue of standing. The restriction on the minister for workplace relations commencing enforcement proceedings should, in my view, be removed. Clearly, that ability would be desirable to cut through bureaucratic delay, intransigence or obstinacy.
In addition, section 330 provides that the general manager may undertake an inquiry with respect to possible contravention of a civil penalty provision. Section 331 empowers the general manager to conduct an investigation with respect to contraventions of the civil penalty provisions. That gives rise to my second and third points. That is, if those inquiries and investigations are to be both timely and effective then consideration should be given to imposing a time limit. This should be extendable only with the consent of the minister, who should report to the parliament on the granting of any such extension. My third point is with respect to amending subsection 330(3), which currently provides that the general manager does not have the ability to compel the giving of evidence.
My fourth point relates to section 333, which provides that members of an organisation may request an investigation. The section provides that, in the case of a trade union of in excess of 5,000 members, at least 250 members must make such a request. In the case of a smaller organisation, at least five per cent of members must make such a request. I believe that consideration should be given to reducing the number of members who can request such an investigation.
But my main recommendations are in the area of performance and observance of the rules. It is frequently overlooked that—despite including the detailed scheme in respect of the duties of trade union officials which are set out in chapters 9 and 10 of the Registered Organisations Act, and I have outlined those provisions—the act retains the right of an individual member of a trade union to apply to the Federal Court of Australia for orders requiring an official to perform and observe the rules of the organisation. These powers are set out in part 3 of chapter 5 of the Registered Organisations Act and, in particular, sections 164, 164A and 164B. Similar provisions have been found in the Commonwealth industrial relations legislation since the original Commonwealth Conciliation and Arbitration Act 1904. In fact, considerable case law has developed around this power, confirming that, in exercising powers under the rules of a trade union, officials owe a fiduciary obligation to the organisation and members of the organisation. Those cases include a number of the cases to which I have earlier referred.
Importantly—this is in response to the comments of the member for Brisbane—this power was expanded by amendments that the then opposition moved, to extend the Federal Court's power to making orders to rectify the consequences of the breach of rules of an organisation, including the fiduciary obligations that trade union officials owe. As I said, those orders are set out in the debate of 17 September 2002 at page 6,512. I should say that the debate proceeded in the Main Committee because the government and the opposition had reached a consensus. Indeed, I had a very productive and constructive relationship with the then minister for workplace relations, who agreed to accept the amendments moved by the opposition.
The honourable member for Brisbane will see that the amendments that I made relate to empowering the court to rectify breaches of the rules of organisations. There was one restriction that remained in the legislation, to which I will shortly refer, and that restriction was already in the government's legislation with respect to the Federal Court not, in that particular part of the act, being empowered to order the payment of compensation, because it was contained in the civil penalty provisions. It is my view that the scheme of the act, as it has been tried—I think the former minister would agree with me—and the consequence of delay in the investigation of the HSU matter indicate that those procedures are too cumbersome. Going back to the thrust of the amendments that I moved on 17 September 2002, those orders confirmed the Federal Court's power to make orders to rectify the consequences of the breach of the rules, including making an order against a former official. The argument was that perhaps the legislation did not extend to an official once they were no longer an official and hence not under a continuing obligation to conform with the rules. That was rectified so that former officials could be included. Significantly, it also significantly included the ability of the court to make an order against a third party who may have benefited from the breach of the rules or a breach of the fiduciary obligations. The motivation, as I have indicated, for my moving those amendments was the experience in that matter that I had involvement in in the mid-1990s.
As I have indicated, those amendments that I moved followed very constructive discussions with the government and were accepted by the government. Those amendments and the reasoning for those amendments are set out in the relevant parts of the Hansard to which I have referred. The remaining limitation on the Federal Court's power is that which is contained in section 164B(4). That specifically prevents the court from ordering a person to pay compensation to an organisation—it was already within the government's legislation. That includes circumstances where the loss is a consequence of that person's breach of the rules and specifically their fiduciary obligations to the organisation.
Therefore my fifth recommendation, returning to the point raised by the member for Brisbane, is that that restriction which was already in the then government's legislation should be removed. That would enable the Federal Court, in appropriate circumstances, not only to enforce the rules and fiduciary obligations but also to rectify the consequences, including the ability to compel a third party or the official themselves to compensate the organisation for the consequence of abuse of rules or the abuse of their fiduciary obligations. This would essentially give the Federal Court of Australia an overarching supervisory jurisdiction over the internal management of trade unions. That jurisdiction is consistent with the role that courts have traditionally played, virtually since Federation. I think that is a way of really giving practical strength to the operation of this act.
I rise to speak on the Fair Work (Registered Organisations) Amendment Bill 2012. There are some unions across Australia which have been engaging in shady practices for decades, without any regard for the consequences for and the interests of their members, and without oversight by the government. The reaction from the government with today's bill is not enough. For example, it does not adequately address the substantive issues that have been raised throughout Fair Work Australia's protracted three-year-long investigation into the Health Services Union. Nor does it provide for a regulatory structure that will actually be able to deal with serious transgressions. This is why the coalition is proposing a further eight amendments to the Fair Work (Registered Organisations) Amendment Bill 2012.
Before I became a member of this parliament, there was an investigation, commenced by Fair Work Australia, into allegations of misbehaviour that occurred at the Health Services Union. After 3½ years, Fair Work Australia produced a very substantive 1,200-page report, with chapter after chapter detailing allegations of unauthorised expenditure of union funds and union money inappropriately going to the personal expenditure and benefit of union officials. These findings highlighted that hundreds of thousands of dollars from some of the lowest paid workers in this country were being spent in contravention of the wishes and direction of Health Services Union members.
The necessity for greater oversight of registered organisations comes from Fair Work Australia itself. In its statement regarding its investigation into the member for Dobell and the HSU, Fair Work Australia said of the Health Services Union:
The investigation reveals an organisation that abjectly failed to have adequate governance arrangements in place to protect union members' funds against misuse. Substantial funds were, in my view, spent inappropriately including on escort services, spousal travel, and excessive travel and hospitality expenditure.
These revelations are a clear indicator that there is an urgent need to ensure that money paid by members to registered organisations is used for proper purposes.
I do not begrudge either the existence of unions or an employee's choice to exercise their right to voluntary association. There is the potential for unions to play a role in negotiations between an employer and an employee, if an employee chooses to be a part of that process. Nor do I believe that corruption and illegality are endemic to the union movement. One can point to many fine examples of people in the history of industrial relations in this country who have worked tirelessly to protect the rights of workers. But while lowly paid hospital workers may wish to join a union, they do not have any supervision over how that money is spent. The responsibility of the parliament, therefore, is to enact a regulatory system that protects those workers.
In Queensland today, Premier Campbell Newman announced amendments to the existing electoral laws so that unions would no longer be able to give money to political parties unless that donation is approved by a secret ballot of members. This is an initiative of the Queensland government which I strongly support. As Premier Newman said:
At a time when people are struggling to make ends meet, we think it is terrible that hard-working union members should have to be hit by a large increase in union fees to go to a political party.
Yes, we acknowledge there is a legitimate advocacy role that unions play in liaising with governments and political parties on behalf of their workers, and if we are to believe that they are truly working on behalf of their unions, then members should get a vote. However, what we do know is that some organisations have used their own members' money for inappropriate purposes and for purposes which may fall outside the law. The problem is the regulatory structure under which registered organisations operate. The existing laws need improvement and they need that improvement urgently.
The question is not about the fundamental nature of a union of employees. The question is: if something goes wrong, who is going to fix it? If something goes wrong, are there enough protections in place to ensure that transgressions are remedied and remedied quickly?
Today's bill will amend the Fair Work (Registered Organisations) Act 2009, which sets out the statutory obligations and privileges for so-called registered organisations. These include both federally registrable employee associations—trade unions—and federally registrable employer associations, which includes employer associations and industry associations.
Presently, the responsibility for administering obligations and responsibilities imposed on registered organisations goes to the general manager of Fair Work Australia. Such obligations include ensuring that financial statements and associated reporting requirements are met. Powers include the ability to conduct inquiries and investigations into registered organisations and pursue allegations of breaches. As mentioned, the current legislation does not include enough powers for the general manager to pursue such allegations to the fullest extent.
This bill does not go far enough and does not adequately address the real issues which have been brought up over the protracted three-year-long investigation. The coalition will not oppose this bill because, with this government, at least some action on this issue is better than nothing. The coalition is proposing today, however, eight amendments to improve the design of the bill and to improve outcomes for workers. Most importantly we will create a new organisation to oversee registered organisations. The coalition will seek to remove the responsibility of the general manager of Fair Work Australia to ensure compliance and shift that to a new, separate and independent body which will be called the Registered Organisations Commission. This commission will fall under the auspices of the office of the Fair Work Ombudsman. It will be able to use the Fair Work Ombudsman's network and resources where appropriate and will ultimately report and be answerable to the parliament.
The coalition amendments include provisions that, should a report be delayed, the commission must report to the parliament and inform parliament of why there is a delay. The commission will also be responsible for educating registered organisations about the new obligations and will be able to receive complaints from members and provide information about what they can do if there is a problem or complaint. Just as there are specific rules which apply to companies and boards of directors to ensure that they are doing the right thing, the same rules should apply to registered organisations and their officers. However, the rules and requirements in today's bill, as a result of the changes, are still significantly weaker than those expected of company directors. As such, the coalition will move amendments to ensure that the penalties are the same as those expected of company directors and ensure that the Registered Organisations Commission will have powers broadly in line with those provided to the Australian Securities and Investments Commission. One key amendment will seek to bring across section 184 of the Corporations Act into the Registered Organisations Act. This would make it a criminal offence if bosses of registered organisations do not act in good faith, if they use their position dishonestly or if they are reckless—to wit, the coalition's amendments will seek to further increase penalties in line with the Corporations Act.
The coalition's plan will make sure that members of registered organisations—mainly small businesses and workers—can be assured that their money is being used for the right purposes. Although the obligations in the Corporations Act 2001 and the Fair Work (Registered Organisations) Act 2009 are broadly similar, there are important differences. For example, the penalty provision for the offence of using information to advantage themselves, or someone else, or causing detriment to the organisation, gives rise to a potential criminal offence under section 184 of the Corporations Act 2001. Criminal offences attract the penalty of a fine of up to $200,000 for an individual and/or up to five years imprisonment.
Believe it or not, the penalties for comparable offences by officials in a registered organisation are almost nonexistent. Similar obligations under sections 287 and 288 of the Fair Work (Registered Organisations) Act 2009—'Using information for personal advantage or detriment of organisation'—are limited to a civil penalty of up to $2,200 for an individual. There are no criminal penalty provisions.
I must redress common myths spread by those on the opposite side of the House that the coalition will seek to reintroduce Work Choices. The Leader of the Opposition has declared time and time again that Work Choices is 'dead, buried and cremated'. Unlike the Prime Minister the Leader of the Opposition is a man of his word, and the people of Australia know that. They claim that the coalition's amendments today are an attack on unions. Again, this is not true. Under the coalition all registered organisations will be covered by the same rules. Trade unions, industry associations and employer associations will be covered by the legislation. We want to ensure that every single member of a registered organisation, whether that be a small business or a worker, can be confident that their money is being used appropriately and if there is something wrong they have an avenue through which they can lodge those concerns. This is a reasonable and rational approach to protect Australians from serious transgressions.
Today's bill and the proposed coalition amendments are necessary to protect Australians. For too long, unions have escaped proper scrutiny, and finally this has exploded with the investigation of the Health Services Union and the protracted investigation by Fair Work Australia. I commend this bill and the coalition's amendments to the House.
I rise to speak on the Fair Work (Registered Organisations) Amendment Bill 2012. I would like to pay tribute to the speech just delivered by my federal colleague the member for Ryan. She made some excellent points and I want to make some similar points. Before I commence, I must admit that I do find it a little surprising that, when the Prime Minister has boasted about a policy where she says she worked hard to get the balance right—and I believe that the Fair Work Act is right—we stand here yet again in this chamber to debate yet another amendment to the Prime Minister's Fair Work Act.
The purpose of the bill is to increase the financial and accountability obligations of registered organisations and their office holders, strengthen the investigative powers of Fair Work Australia and enhance remedies under the Registered Organisations Act. It will do this, according to the bill, by requiring rules of all registered organisations deal with disclosure of remuneration, pecuniary and financial interests, increasing the civil penalties under the Registered Organisations Act, enhancing the investigative powers available to Fair Work Australia under the Registered Organisations Act and requiring education and training to be provided to officials of registered organisations about their governance and accounting obligations. But of course it is not enough, as my colleague so rightly pointed out.
The question is: why has this bill come about? Why all of a sudden now does the political wing of the union movement feel as though a stronger stance against corruption and misappropriation must be taken? Is it because it is the right and honest thing to do? Is it a proactive step to stamp out cronyism within the union movement? Is it to finally put it on a level legislative playing field as its corporate equivalents are on, to impose the same kinds of punishments for infractions where there the only difference is where the money is coming from? No, it is not. This government lack the moral fortitude to do something like that. It is simply because they were shamed and embarrassed into some action through the scandals and disgraces of the Health Services Union that have plagued this government and in particular the member for Dobell. It is because they have been shamed by the strong leadership demonstrated by Tony Abbott on this issue and the strong stance that he has taken.
It does make one wonder, however, if the issues that arose out of the HSU scandal had not come to public attention, whether the Minister for Employment and Workplace Relations would even be proposing these amendments, as limited as they are. Of course not; the minister would never let a good, consistent, moral policy get in the way of the advantage of the union bosses. It is troubling and concerning that it takes what the minister himself has labelled as 'disturbing' behaviour to finally get some action from the government.
But will the legislation that is proposed and is before the House today actually fix the problems around accountability, reporting standards, misappropriation of members' funds and fraud? Will it address the issues around penalties, both civil and criminal? The resounding answer to those questions is no. To start with, under the proposed legislation Fair Work Australia will still be the regulatory body overseeing the union movement. This is a regulatory body that has been widely criticised for the time it has taken to carry out the investigation into the HSU—more than three years long and still there is no adequate conclusion.
But what would one expect when you have ex-union bosses investigating ex-union bosses? It is simply not possible. The coalition has long called for this role to be transferred to a registered organisation commission, and the investigation into the HSU is the perfect example of why this, in fact, is a necessary course of action. Yet there is nothing in this bill today that would allow for this registered organisation commission to be brought into effect.
Under the government's proposed legislation, the rules are too little too late. They are still weak and do not bring the unions and the registered organisations into line with company directors or their equivalents. Only under a Labor government does there always seem to be one set of rules for the masses and another one for their mates. In fact, in some parts, the reporting requirements for the union movement are less onerous than the rules that the government have more recently proposed to impose on charitable organisations, on not-for-profits. So we potentially have this quite farcical situation where a union would face less stringent reporting arrangements than those faced by, for instance, the local footy club or the local parents association or other not-for-profits. This, to me, makes no sense whatsoever.
But it is not only the provisions that are monumentally weak; it is also the punishments proposed, should a breach be found to have occurred. If a company director was found to have used $500,000, for instance, for his own personal use then he or she would face large fines, criminal charges and possibly years in jail. Why should it be any different for an official in the union movement? In both circumstances individuals would have been charged with the responsibility of managing other people's finances, and in both cases those funds would have been misappropriated for personal use. So why should the penalties differ so much? There is no commensurate justice in the changes being brought forward today for what are certainly morally commensurate offences.
This balance in justice strikes at the heart of those that have been transgressed against. How can an orderly in a hospital feel any sense of justice when the only reason justice has not been served is that they are a member of union and not a shareholder of a company? This is a very gross breach of faith. They deserve the same protections that apply to a shareholder in a company and the penalties that should apply should be the same.
There have been many farcical events throughout this whole sorry state of affairs; however, none more so the case of when Fair Work Australia refused to cooperate with police. A statutory regulatory body, set up by this government to be the overseer of the industrial relations system refused to cooperate with the requests of the nation's law enforcement agencies. If you heard rumours of something like that, you simply would not believe it, but that is what occurred. In this country, the basis of the justice system is to get to the bottom of the truth and punish those that have done wrong and seek justice for those who have been transgressed against—not to protect and prolong the fact that the truth is still hidden. The government's legislation does not adequately address this obvious flaw in the system and we insist it be addressed prior to the passage of the bill.
The coalition does offer a better way, which is why the coalition has brought forward amendments to strengthen the bill as it currently stands. The amendments ensure that requirements on registered organisation officials are in line with those of directors and companies under the Corporations Act and that the penalties are in line with the Corporations Act. Our amendments also give specific permission for Fair Work Australia to prepare a brief of evidence; ensure that the investigation is conducted by Fair Work Australia and not outsourced entirely, as this bill would allow; and ensure that the disclosure of how money is spent is provided to Fair Work Australia as well as to union members. Our amendments require that, when investigations last for more than a year, a report must be made to the parliament at that time and for every six months thereafter. The amendments make the provision relating to police cooperation very clear so that Fair Work Australia can cooperate with police at the commencement of, during and at the conclusion of an investigation. We will also ensure with our amendments that the penalty is increased for misusing members' funds, in line with the Corporations Act.
The reality is that this bill has been designed as window-dressing. It is a fig leaf for the minister and window-dressing for union bosses. It is so that they can declare to the Australian people that they have done something. We say that they have simply not done enough. It is little wonder that the public's trust and participation in the union movement is at historic lows. Far more transparency is required within the union movement for it to ever regain the relevance and trust that it once had. It should no longer be a boys' club—no more mates looking after mates, no more cronyism, no more political expediency and no more of union bosses looking after the interests only of themselves and not of their members.
This bill is a step in the right direction, which is why the coalition will support it, but the government needs to take a much stronger stand. They need to join with us in supporting our amendments, which will make this bill so much stronger. If they do not, the Australian public has the right to ask the question: are they serious about improving transparency and ensuring justice for members in the union movement who have been transgressed against? There should be an equal playing field here. Corporations and registered organisations and their officials, just as company directors, should all be treated the same. That is all that we are proposing. I commend the bill and its amendment to the House and I simply ask that those on the other side support the very good amendments.
I am very pleased to rise to speak on the Fair Work (Registered Organisations) Amendment Bill 2012. It is a matter of public record that we have seen extraordinary scandals, regrettably, in governance in the union movement in recent years. We have seen very disturbing reports of a culture in which corrupt union officials systematically rip off their low-paid members, extracting huge amounts of money for their personal benefit. The names Craig Thomson and Michael Williamson will remain infamous as people who have dealt with their members in a highly irresponsible and very disappointing fashion.
This culture in which union officials take advantage of low-paid and, in many cases, poorly educated members does not stop, regrettably, with the Health Services Union. We have seen plenty of other examples of this kind of conduct reported recently. For example, the Australian newspaper recently reported on a case involving the Meatworkers Union and its affiliated superannuation fund. Mr Wally Curran, an 80-year-old self-described communist, a strong man of the Meatworkers Union and also, until very recently, a trustee director of the Meat Industry Employees Superannuation Fund, is reported to have received payments associated with the fact that the superannuation fund invested $30 million in a highly risky investment in a construction company called Austcorp, which later collapsed. So it seems, unfortunately, that the conduct that we have seen in the case of the Health Services Union is by no means unique to that union. It is clear beyond any reasonable doubt that there is a pressing need for substantial reform of the governance of unions and registered organisations under the Fair Work (Registered Organisations) Act.
The bill before the House this afternoon purports to deliver the program of substantial reform which is so clearly needed if low-paid, vulnerable members of unions are to avoid being taken advantage of by the very officials who are supposedly there to advance their interests. There is a clear need for that major reform, and the government is claiming that the bill before the House this afternoon delivers that major reform. The bill before the House this afternoon does not deliver the major reform which is claimed. This bill is nothing but a minor piece of window-dressing produced by the minister and the government in a desperate attempt to try and divert and distract media and public scrutiny from the sorry state of governance in the union movement.
As other speakers have made clear, the coalition does not oppose the measures in this bill. As far as they go, they are of some value. But what is clear is that the measures in this bill do not go nearly far enough to deal with the fundamental, wide-ranging, serious problems of governance in the union movement which have come to light publicly in recent years. In the brief time available to me, I want to highlight just three points. The first is that we have seen, regrettably, scandal and mismanagement in union governance in recent times—scandal matched only by the scandal of the incompetent, leisurely response on the part of the supposed regulator, Fair Work Australia. The second point I want to make is that this bill is nothing more than window-dressing and, on any analysis, many of the provisions are minor, technical in nature and, to a surprising degree, quite ineffectual. The third obvious point to make is that the coalition has a better—more substantive, better thought out, more wide-ranging, more comprehensive and more effective—plan to deliver the reform of governance that is so sorely needed in the union sector if low-paid, vulnerable members of unions are to stop being ripped off by the very union officials who are supposedly there to advance their interests.
Let me turn to the proposition that we have seen not one but two scandals of governance in recent years. The first scandal of course is the extraordinary conduct which appears to have become normal behaviour at very senior levels of the Health Services Union for many, many years, according to a comprehensive—late but comprehensive, ultimately—investigation by Fair Work Australia. Let me just remind the House of a mere handful of the comprehensive list of deeply disturbing findings made by Fair Work Australia in its 1,100-page report. We are told, for example, of the use by Craig Thomson, then the National Secretary of the Health Services Union, of his union MasterCard to purchase $418 worth of escort services from Tiffany's in Surry Hills during his stay in Sydney for the ALP conference on 11 June 2005. We are told of his use of the card to purchase $660 worth of escort services from the Staff Calls escort agency, also in Surry Hills, on 26 August 2006.
These are findings by Fair Work Australia, not allegations. We constantly hear the word 'allegation' thrown around by members on the opposite side of the House, but I remind the House that these are findings by a statutory agency following a comprehensive investigation. That statutory agency has found that Mr Thomson, then the secretary of a union registered under the Fair Work (Registered Organisations) Act, spent nearly $6,000 on the services of escorts, using his union credit card. There is no possible basis on which that expenditure can be considered to be in the interests of the low-paid and vulnerable members of that union. There is no possible basis on which Mr Thomson could have persuaded himself that it was in the interests of the Health Services Union to do that.
Nor is there any possible basis on which Mr Thomson could have persuaded himself that it was in the interests of the union for him to take two months off in October and November 2007—fully paid, not on annual leave—so that he could campaign in Dobell to become the Labor Party's member for Dobell. There is no possible basis on which Mr Thomson could have persuaded himself that that was in the interests of the members of the Health Services Union. How could he possibly have persuaded himself of that?
The regulator, Fair Work Australia, found that on 14 separate occasions Mr Thomson used the union's money to pay for air tickets for his wife. How could that conduct possibly be considered to be in the best interests of the low-paid and vulnerable members of that union? The answer is obvious: it could not. It is clear from the Fair Work Australia report that there is a systematic governance scandal occurring in the Health Services Union.
But there is a second scandal, which is the scandal of the indolent, leisurely approach by the statutory regulator, Fair Work Australia, in investigating these very serious matters. It took some 3½ years before a report finally materialised. When the report finally did materialise, we were then told by the Commonwealth Director of Public Prosecutions that it was in an inadequate form for the Director of Public Prosecutions to be able to consider conducting criminal prosecutions against Mr Thomson, because, extraordinarily, Fair Work Australia, after all this time and all this effort, had failed to produce a brief of evidence.
It is very clear why this happened, to even the most casual observer. To anybody who has even the most passing acquaintance with the cosy relationship between senior union officials and the Rudd-Gillard Labor government, it is very clear why this happened. Fair Work Australia were on a go-slow because it did not suit the political interests of the Rudd-Gillard Labor government for this appalling scandal to become publicly known. They were prepared to put at risk the interests of the low-paid and vulnerable members of the Health Services Union. They were prepared to have that investigation go as slowly as possible to avoid political embarrassment.
The Minister for Employment and Workplace Relations was quoted as saying that he was appalled at the goings-on in the Health Services Union. Frankly, when I heard that, I could only summon to mind the scene in Casablanca where Captain Renault said, 'I'm shocked, shocked, to find that gambling is going on in here!' Later in that movie, we had the same corrupt policeman saying that he was going to 'round up the usual suspects'. That is about the nature of the exercise we got from Fair Work Australia and from the government. It has been about doing the bare minimum they can do to be seen to be tidying up a mess, but they really do not want to do it. They really do not want to tidy up this mess, because it does not suit their short-term political interests.
That brings me to the second point I wanted to highlight, that this bill is mere window-dressing. When you look at the substantive measures, they are empty and ineffectual to a very large extent. First of all, this bill leaves the discredited organisation Fair Work Australia in charge of investigations into registered organisations notwithstanding its demonstrated dismal performance in the case of the Health Services Union. Secondly, the bill sets extraordinarily low standards of performance for Fair Work Australia. For example, we are told that if the general manager of Fair Work Australia has notified a registered organisation of a contravention then the general manager must 'within 12 months' make inquiries as to whether the registered organisation is complying with rules that it previously contravened. 'Within 12 months'—what an extraordinary standard of urgency! Or I could refer the House to proposed section 335C in relation to the question of cooperation between Fair Work Australia and the police. We know that Fair Work Australia has performed dismally on this front, coming up with every possible excuse as to why it would just simply be inappropriate for them to cooperate with the police. What an appalling suggestion: for a statutory regulator to be engaged in cooperation with the police! We have had excuse after excuse and now we have a provision which apparently is going to solve that problem. But when you analyse that provision, proposed section 335C, you see it says the general manager 'may' disclose the information, being information in his or her possession, about the conduct of a registered organisation if the general manager reasonably believes that, amongst other things, it would facilitate a police investigation. You could drive a truck through the yawning gap in the elements of that provision. It leaves complete discretion in the hands of the general manager when there is absolutely no basis for confidence in the performance of the general manager and of Fair Work Australia given its indolent approach to investigating the Health Services Union scandal. There is absolutely no basis for confidence that the general manager is likely to bother to exercise that power.
Let us turn to the question of disclosure, because these reforms are trumpeted as delivering a magnificent new standard of disclosure for registered organisations. There is a very curious thing about the drafting of this bill, as I am sure you would have noticed, Mr Deputy Speaker, when you considered proposed section 148A. The disclosure regime is given effect to, not by saying that under the law of the Commonwealth registered organisations must disclose the following information but, instead, by saying 'registered organisations must include in their rules a requirement that information is disclosed'. That is a much weaker and much less binding and immediate approach. By contrast, section 300A of the Corporations Act imposes a positive obligation on listed companies to make disclosure of the remuneration of their five highest paid executives, and further details as to what must be disclosed are contained in the Corporations Regulations. That is a tough and binding approach—a very long way from the feather-light tap on the wrist which is proposed by these weak and ineffectual provisions. Indeed, if a registered organisation finds it all a bit too tough, it can always, under proposed section 148D, apply for an exemption from the general manager of Fair Work Australia—and how tough is that person likely to be? I think the answer to that question speaks for itself.
The third point I want to make very briefly is that the coalition has a much better plan. We will amend the laws to ensure that registered organisations and their officials have to play by the same rules as companies and their directors. We have a comprehensive set of measures which I commend to the House. We have seen a scandal of governance in the union movement and we have seen a scandal of indolence by the regulator, and this bill does very little more than window-dressing to improve the position.