Labor's plan for better union governance

The Australian union movement has been the driving force behind universal health care, superannuation, the eight hour day and the minimum wage among many other achievements.

Workers have fundamental democratic rights to representation in the workplace, to freedom of association, to collectively bargain, and to organise and be represented by their union.

For these reasons, Labor has zero tolerance for criminality or corruption in the union movement and has consistently argued that any criminal conduct in the union movement must be investigated by police and prosecuted in the Court.

Recent revelations of theft and the flagrant misuse of union members’ money by a small number of union officials requires a tough and effective response. We must ensure such conduct is detected and acted upon at the earliest opportunity.

As democratic institutions, unions must also be transparent in the conduct of their elections. Indeed election fundraising must be more transparent across all institutions in the Australian polity.

Improved response to criminal and corrupt behaviour

ASIC to investigate serious contraventions

In 2012 Labor enhanced the powers of the General Manager of the Fair Work Commission in relation to the conduct of investigations into registered organisations. Labor is confident that the powers of the regulator are proportionate to the civil breaches it is investigating.

Coercive powers of the type available to the Australian Securities and Investments Commission are appropriately reserved for detecting the most serious civil breaches.

A Shorten Labor Government would give ASIC power to investigate serious contraventions of the Fair Work (Registered Organisations) Act.

Under this proposal, the General Manager of the Fair Work Commission would retain its role as the regulator, with its current powers to conduct investigations and inquiries. This will preserve the ability for the regulator to work with registered organisations to resolve minor compliance issues. 

However under Labor, the General Manager of the Fair Work Commission will be able to share information with ASIC.

Labor will provide the General Manager of the Fair Work Commission with an additional $4.5 million over four years to monitor the 109 employer and employee organisations presently registered.

Tougher penalties

In Government, Labor tripled the penalties for breaches of rules governing registered organisations. We stand by those increases in penalties, however an even broader range of penalties would ensure that truly deplorable behaviour is punished with appropriate penalties.

Labor’s tougher penalties will focus on behaviour which is intended to deceive union members or the regulator. Labor will increase penalties from $10,800 to $18,000 for people who engage in false or misleading conduct, or don’t comply with requirements to provide information to members. Labor will also double the maximum penalties for all criminal offences under the Act.

Labor will also tackle the most egregious conduct by increasing fines from $10,800 to $216,000 for paid officials who act in a way that “materially prejudices” the interests of the union or its members.

These penalties will apply to breaches of the duties owed to the union and its members including the duty to act in good faith and to act with care and diligence. They will also apply to breaches of disclosure requirements like failure to disclose a material personal interest.

In addition, a court will also be able to disqualify an official for these serious contraventions. These are akin to penalties for publicly listed companies under the Corporations Act.

Unlike the Directors of these companies, however, officials of employer and employee organisations are primarily rank and file volunteers. Labor does not want to discourage people from volunteering in their communities, so only officials in paid positions who are responsible for decisions about the financial management of registered organisations, will be subject to these aggravated penalties. 

Officials who improperly take part in a decision of the union from which they will personally benefit will also be subject to a new civil penalty provision punishable by fines of up to $216,000 for serious contraventions and $18,000 otherwise.

Cracking down on dodgy auditors

It has become apparent that criminal conduct has occurred in some unions because auditors have been part of the scam or complicit by their silence.

Labor will require registered organisations to rotate their auditors every 5 years, consistent with the requirements under the Corporations Act. 

Auditors will also be required to be registered with the Fair Work Commission or be a registered company auditor. This will ensure auditors are not only qualified CPAs or CAs but also that they are of good character. These changes are similar to changes proposed as part of the Sarbanes-Oxley reforms in the wake of major corporate and accounting scandals.

It will be a criminal offence for an auditor to conduct an audit outside of these rules, punishable by up to 6 months in jail and a $4,500 fine. Auditors will also face up to 12 months jail if they knowingly or recklessly fail to report unlawful conduct to the regulator or police.

These changes are consistent with the requirements for publicly listed companies. 

Protecting and encouraging whistleblowers 

In recent times we have seen that in all sectors of our community whistleblowers are reluctant to come forward with revelations of misconduct within their organisations because of the fear of reprisals or other adverse consequences to their careers. 

This holds true in corporations and registered organisations. Labor will act to provide greater protection to encourage whistleblowers to come forward irrespective of where they work.

Current whistleblower protections under the Corporations Act are very narrow, with remedies for victimisation following disclosure of wrongdoing limited to civil action for reinstatement or compensation.

Under the Fair Work (Registered Organisations) Act, penalties for those taking adverse action against whistleblowers are limited to $4,500 fine or imprisonment for 6 months or both. 

Adapting the ground-breaking public interest disclosure laws for the Commonwealth public service introduced by Labor in 2013, a Shorten Labor Government will extend whistleblower protections to the private and not for profit sector.

Anyone who takes adverse action against whistleblowers will face 2 years jail and an $18,000 fine, and whistleblowers will be able to take civil action for reinstatement and compensation.

In the case of registered organisations, whistleblowers will be protected from adverse action if they disclose to any third party (including the media), as long as they first raised the matter with one of the Fair Work Regulators and the union itself. 

Transparency in election funding

Labor believes that all organisations in Australia should have the right to participate in our democracy, including through the provision of financial support to candidates running for elected office. This right to participate should, however, be transparent. 

This principle holds true, whether government, company, not for profit or union elections. With greater transparency comes greater accountability and the earlier identification of wrongdoing.

Transparent disclosure 

Labor will extend current electoral funding laws to donations and expenditure relating to all elections managed by the Australian Electoral Commission – whether they are union elections or the Federal election.

Any entity, however constituted, associated with candidates in such elections will be required to publicly disclose the total value of payments made, receipts and debts each year, and the particulars of debts and donations exceeding the disclosure threshold, presently $13,000.

Candidates for such elections will be required to disclose the total value and number of donations received, and the particulars of donations received exceeding the disclosure threshold, as well as electoral expenditure incurred over the period of the election.

Disclosure Thresholds

Labor has long advocated for lower disclosure thresholds, and if elected will reduce the current disclosure threshold in the Commonwealth Electoral Act for election funding from $13,000 to $1,000. Labor will work towards harmonisation of local, state territory and Federal election disclosure and funding laws.

Labor will also prohibit anonymous donations over $50 and introduce measures to end the practice of ‘donation splitting’ by related entities, which can be used to avoid disclosure thresholds and so undermine donation transparency. 

Labor’s record

In 2012, Labor passed legislation that ensured employer organisations, unions and their office holders would be subject to tougher financial and accountability obligations. This legislation was supported unanimously by employer and employee organisations. 

The legislation tripled penalties for breaches of the Fair Work (Registered Organisations) Act; required education and training to be provided to officials of registered organisations about their governance and accounting obligations; and required the disclosure of officials’ remuneration, and pecuniary and financial interests. 

It also enhanced the investigative powers available to Fair Work Australia including the power for the Fair Work Australia General Manager to provide information to bodies such as federal or state police and other regulatory agencies, correcting a serious flaw in the regulatory regime introduced by Tony Abbott when he was Minister for Workplace Relations.

Labor also introduced the first laws in Australia to regulate the disclosure of political donations and electoral expenditure in 1984, and has consistently argued for greater transparency and accountability in relation to political donations.

Abbott-Turnbull Government Record

The Abbott-Turnbull Government established an $80 million politically motivated royal commission. Their goal is not to support stronger unions, representing the interests of working people. Their goal is to destroy the link between trade unions and the only political party which acts in the interests of working people, the Australian Labor Party. Their goal is to destroy the capacity of trade unions to organise, and to bargain collectively.

This agenda is transparently demonstrated by the vicious circle of reinforcement evidenced by the Government’s legislative program, their conduct in the Parliament, and a Royal Commission conducted by the most partisan of Commissioners, Dyson Heydon. It is transparent by virtue of a Government pursuing former and current Labor leaders through an abuse of executive power.

The Abbott-Turnbull Government has monumentally failed to address concerns when it comes to political fundraising in the Liberal party. 

Financial Implications

Labor’s policy has been independently costed by the Parliamentary Budget Office at $4.5 million over four years.

Funding for this policy will be offset from existing announcements Labor has made in making sure multinational companies pay their fair share of tax in Australia, reducing superannuation tax concessions, and abolishing the Emissions Reduction Fund.

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