Bills Digest no. 24 2013–14
PDF version [948KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Jaan Murphy, Law and Bills Digest Section
Anne Holmes, Economics Section
5 December 2013
Contents
The Bills Digest at a glance
Purpose of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Concluding comments
Appendix A
Appendix B
Appendix C
Appendix D
Appendix E
Appendix F
Appendix G
Date introduced: 14 November 2013
House: House of Representatives
Portfolio: Employment
Commencement: Schedule 1 commences on a day to be fixed by Proclamation, or immediately before Schedule 2 commences; Schedule 2 commences 1 July 2014.
Links: The links to the Bill, its Explanatory Memorandum and second reading speech can be found on the Bill’s home page, or through http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation
When Bills have been passed and have received Royal Assent, they become Acts, which can be found at the ComLaw website at http://www.comlaw.gov.au/.
The Bills Digest at a glance
What the Bill does
The Bill creates a Registered Organisations Commissioner, and a Registered Organisations Commission, within (but independent of) the Office of the Fair Work Ombudsman. The Commissioner will supervise the conduct of employer and employee organisations registered under the Fair Work Act 2009. It also provides for:
- increased disclosure requirements for both registered organisations and their officers (including new related party disclosure requirements)
- stronger coercive investigatory powers for the Commissioner (with fewer limitations on their use) and
- increased penalties, including criminal penalties.
Background
The Bill has been introduced partly in response to widely publicised misconduct by officers of the Health Services Union. That misconduct has been prosecuted in civil and criminal courts. In 2012, the Fair Work (Registered Organisations) Act 2009 was amended by the Fair Work (Registered Organisations) Amendment Act 2012 to improve the Fair Work Commission’s investigative function and to increase penalties for various offences. Notwithstanding this, the Bill seeks to provide for ‘…a suite of legislative measures designed to see governance of registered organisations lifted to a consistently high standard across the board.’[1]
Stakeholder concerns
Employer and employee organisations have expressed concerns that the Bill has been introduced too soon after the last amendments and will create an undue regulatory burden.
There are concerns that the powers of the Commissioner are not sufficiently constrained.
The penalties in the Bill have been criticised as too harsh.
Organisations fear that the provisions of the Bill will be a disincentive to members’ putting themselves forward for election as officers.
Key issues
The Bill is intended to impose on registered organisations a similar standard of accountability and disclosure to that for corporations.
A threshold issue is whether it is appropriate to have similar regulation for the two types of bodies. There is great diversity among the organisations: many (mainly employer) registered organisations are very small, whilst other (mainly employee) organisations are large.[2] All are not-for-profit organisations with democratically elected officials, many of whom are unpaid.
A further issue is whether the proposed introduction of criminal penalties is appropriate, given that criminal behaviour is already subject to the criminal law.
The purpose of the Fair Work (Registered Organisations) Amendment Bill 2013 (the Bill) is to amend the Fair Work (Registered Organisations) Act 2009 (the Registered Organisations Act)[3] to:
- create the Registered Organisations Commission within the Office of the Fair Work Ombudsman to monitor and regulate registered organisations
- strengthen requirements for financial accounting, transparency and disclosure by officers of registered organisations of material personal interests and
- increase civil penalties and introduce criminal offences for breaches of officers’ duties, and to create new offences in relation to the conduct of investigations under the Registered Organisations Act.
The Bill has two Schedules. Schedule 1 creates the Registered Organisations Commissioner, and deals with consequential amendments, including some to the Fair Work Act 2009 (Fair Work Act).[4] Schedule 2 deals with the increased disclosure requirements, investigation powers and penalties.
Section 5 of the Registered Organisations Act sets out the Parliament’s intention in enacting the Registered Organisations Act, stating amongst other things that its purpose is to provide for the registration of associations of employers and employees to ‘enhance relations within workplaces between … employers and … employees and to reduce the adverse effects of industrial disputation.’ It recognises that such associations have a role in workplace relations, and sets out standards that they are required to meet in order to gain certain rights and privileges under this Act and the Fair Work Act 2009.[5]
The Registered Organisations Act was amended in 2012 to strengthen financial accountability requirements and provide for disclosure of salaries of top officials, financial interests of officials, and transactions with related parties. Officials were also required to undertake training about their governance and accounting obligations. Penalties for breaches of the Registered Organisations Act were strengthened. Processes for investigations by the Fair Work Commission were improved and its investigative powers were strengthened.[6] No separate regulator was established. At the time, the Coalition described the reforms as:
… 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.[7]
Those amendments were prompted in part by the scandals surrounding the Health Services Union (HSU).[8] Officials were accused, among other things, of defrauding the union, paying large amounts to companies they had interests in for tasks that were not tendered, and otherwise mismanaging its funds.[9] However, the fact that officials have been charged with numerous criminal offences—at least one is likely to serve a custodial sentence—and prosecuted in civil proceedings suggest that what they were doing was already illegal.[10] Further, the HSU was placed under administration by the Federal Court.[11]
An issue that arose in the context of the HSU scandals was the inordinate length of time taken by the Fair Work Commission (FWC) (then Fair Work Australia) to investigate the original allegations. Fair Work Australia commissioned a report on the investigation from consulting firm KPMG. The report found that Fair Work Australia had not considered investigations to be part of its core business, and recommended that it develop a formal set of procedures for investigations, consistent with the Australian Government Investigation Standards. It did not recommend legislative changes.[12] The FWC has subsequently developed such procedures. It has created a separate branch to deal with registered organisations, and has shifted from a reactive to a proactive approach to supervision of registered organisations.[13]
This Bill creates a separate body to supervise registered organisations. The review of the Fair Work Act in 2012 explicitly did not consider registered organisations. However the final report of the review mentioned that it would be appropriate to consider changes to the law to make a clear separation between the FWC’s functions ‘as a tribunal and as an administrator overseeing registered organisations’. In doing so it referred to a similar view expressed by the President of the FWC, Justice Iain Ross.[14] Similarly, when Murray Wilcox reported on the best way to incorporate the Australian Building and Construction Commission in the Fair Work regime, he observed that the FWC was to be an adjudicative body and as such would not have an investigative function. For that reason, he proposed to locate the body charged with supervising the building and construction industry as a semi-autonomous division within the Office of the Fair Work Ombudsman – which is similar to the model proposed in this Bill.[15]
A registered organisation is established as a legal entity and governed under other legislation before it can be registered, so it is also subject to the laws governing the particular type of entity it is. For example, some employer organisations are themselves companies. Section 116 of the Corporations Act 2001 (Cth) prohibits trade unions from being companies.[16] Instead, most commence life as incorporated associations, governed by state and territory association incorporation legislation.
Regulation of registered organisations (especially after the 2012 amendments) is already fairly similar to regulation of corporations. The requirements in sections 180–183 of the Corporations Act that officers exercise care and diligence, that they operate in good faith, and that they not misuse their position or information are similar to those in sections 285–288 of the Registered Organisations Act, except that for registered organisations they apply only to financial management, and members can ratify a breach of those duties. The requirements for financial reporting are similar. Section 191 of the Corporations Act includes provisions to do with conflict of interest, which the Registered Organisations Act does not.
There are two main differences in the regulation of registered organisations and corporations. The first is in the provisions for criminal penalties in the Corporations Act. It has been argued that the anomaly is in the Corporations Act, since the criminal law would be sufficient to prosecute offences involving fraud or dishonesty.[17] The second is the level of penalties available: in general they are higher in the Corporations Act. However, registered organisations generally control only small levels of assets, in contrast to corporations: the total assets of all registered employee associations are less than one per cent of the shareholder capital of Australia’s biggest corporation.[18] It could be argued that lower penalties are appropriate.
In the context of the amendments to the Act in 2012 and of a Senate committee inquiry into a Private Member’s Bill later that year, there was some debate about whether it would be appropriate to regulate registered organisations in the same way as corporations.[19]
While it was agreed that transparency and accountability were desirable goals, several commentators suggested that the regulation of registered organisations was already sufficient, and that it was similar to that of corporations. One professor of law concluded:
We don’t need new laws. We just need better awareness of current legal obligations, and the political will to enforce the laws.[20]
The Department of Education, Employment and Workplace Relations (DEEWR) summarised what it saw as the differences between registered organisations and corporations as follows:
Corporations are designed to generate wealth and protect the financial interests of shareholders. In contrast, registered organisations are established to represent their members in the industrial relation system with special rights under the FW [Fair Work] Act, including in relation to collective bargaining and right of entry, and are an important element in ensuring the right to freedom of association.[21]
A similar view was put forward by the Independent Panel on Best Practice for Union Governance in its report to the Australian Council of Trade Unions:
The comparison of legislation [governing] registered organisations with the Corporations Act is not new.
A number of researchers have questioned the merit of drawing on a ‘corporate model’ of accountability, pointing out that trade unions and companies are very different types of organisations. Their rationales for formation, the purposes they serve, and the nature of their membership are key differences. Union members have a democratic interest in the organisation of a union, rather than a financial or proprietary interest. Unions should be viewed as membership-based mutual interest societies rather than businesses….
The function of unions is not to profit from dealings with the general public. They operate as non-profit organisations. Their potential to harm individuals with whom they have financial dealings is nowhere near as great as that of private or public companies. Unions do not have shareholders with significant financial investments at risk. Shareholders may have large financial exposure to a company by reason of the size of their shareholding; by contrast union members have necessarily invested only their generally fairly modest membership fees.[22]
In his second reading speech, the Minister for Education and Leader of the House, Christopher Pyne stated that:
Registered organisations have substantial economic, legal and political influence. It is clearly inconsistent with community expectations for such organisations to operate to lower standards than those that apply to corporations or other comparable bodies.[23]
The Government has referred at length to the HSU scandal as a motivator for this Bill, and has asserted that the heavier penalties will be a deterrent to wrongdoing.[24]
The Bill has been referred to the Senate Standing Committee on Education and Employment for inquiry and report by 2 December 2013. Details of the inquiry are at the inquiry’s web page.
The Committee’s report recommended changes to the material interest disclosure requirements so that only interests related to the financial management of the organisation need be disclosed; that exclusions from the requirements be included, along the lines of the exclusions in the Corporations Act; that there be a threshold for disclosure of payments; and that the Commissioner be able to grant exemptions from the training requirements where officers could demonstrate that they had the required knowledge. These changes respond to some of the issues raised in submissions to the inquiry, which are discussed below.[25]
Labor Senators, in a dissenting report, recommended that the Bill not be passed, essentially because it had been put together in haste and because the 2012 amendments had not yet been tested.[26] They suggested that ‘the legislation seeks to diminish rank and file participation within the unions, and discourage union activity.’[27]
At the time of writing, the Senate Standing Committee for the Scrutiny of Bills had not reported on the Bill.
The Shadow Minister for Employment and Workplace Relations has suggested that recent events have shown that the current civil and criminal processes had been sufficient to deal with the issues that had arisen.[28]
The Greens have announced that they will not support the legislation. Deputy Leader Mr Bandt said in a media release:
The registered organisations legislation will mean unions are tied up in red tape, while big companies are able to do what they want.[29]
Submissions to the inquiry into the Bill by the Senate Standing Committee on Education and Employment reveal a good deal of unease about the Bill.[30] Almost all the submissions agree that a high degree of accountability should be required of registered organisations, but many take issue with the specific provisions of the Bill and its timing.
The Australian Industry Group (AiG) notes that Registered Organisations Act was amended in 2012 and some of those amendments have not yet taken effect. Further, AiG had devoted considerable resources to complying with those amendments, and particularly to developing a training program, which has only just been registered. The current Bill would create a further regulatory burden, and there would be problems with the transition provisions. It appeared that the training program would at least require new registration.
AiG sets out a number of differences between registered organisations and corporations. For example, AIG is a not-for-profit organisation which has 78 elected councillors, unpaid and working in their own time. By contrast, a major company will have from seven to nine directors, who are paid hundreds of thousands of dollars for their services.
AiG notes that a number of the requirements of the Bill are in fact more onerous than those in the Corporations Act. In particular, the requirement to disclose all material interests, not only those that raise the possibility of a conflict of interest, was objectionable, as was the need for disclosure to all members, not just the committee. The requirements for disclosure of related party payments would be completely unworkable, as they did not have the limitations set out in the Corporations Act (for example, requiring disclosure only of payments above a threshold) that made them workable. In addition, a governing body of 78 councillors was bound to have a huge number of related parties, and this would create a huge administrative task.
AiG regards many of the proposed civil penalties as ‘massive’ and unwarranted, noting that the penalties had already been trebled in the 2012 amendments, and that in many cases they would be increased by a further two-thirds (and in some cases even more). It notes that some of the penalties are higher than those in the Corporations Act. It calls for the removal of all the criminal penalties, noting that criminal matters are dealt with in the criminal law.
AiG does not support changes to sections 297–303 in the Registered Organisations Act. Those sections deal with contraventions of orders under the Registered Organisations Act or the Fair Work Act. The amendments proposed in items 167, 172, 177, 182, 187, 192 and 197 of Schedule 2 of the Bill would remove the references to the Fair Work Act, but AiG believes the provisions constraining officers and employees of unions to respect orders under the Fair Work Act (as well as the Registered Organisations Act) have been a useful discipline on the behaviour of unions and should remain
AiG argues that the sanctions and the disclosure requirements which the Bill creates will present major disincentives to individual members and deter them from participation in the council of the organisation.[31]
In its submission to the Senate Committee inquiry, the Australian Chamber of Commerce and Industry (ACCI) supports the Bill in general terms.[32] It also attaches its submission to the inquiry on the 2012 Bill. At that time it did not support further changes until the 2012 amendments had been tested. It proposed a review of the changes at a later date and consideration of whether further amendments were required.[33] Recently, David Mammone of ACCI was quoted as having no in-principle objection to the current Bill, but noting that it was important to take account of the resources available to employer groups, many of which are small.[34]
The Australian Community Services Employers Association (ACSEA) and the Australian Public Transport Industrial Association both express disquiet about the regulatory burden the Bill would impose, noting that they are quite small organisations – although ACSEA supports the Bill in principle. In a similar vein Master Builders Australia, the Victorian Automobile Chamber of Commerce, the Timber Merchants Association of Victoria and the Master Plumbers’ and Mechanical Services Association of Australia suggest that the Bill is being rushed or that more time should be allowed for the last round of amendments to be bedded down.
ACSEA also believes that the requirement for the disclosure of all material interests exceeds the requirements of the Corporations Act, and could act as a disincentive to standing for office in an association.
The Master Builders Association calls for the inclusion of a ‘fit and proper person’ test for office holders. It believes that the remuneration only of elected office bearers, not of appointed managers, should be disclosed.[35]
The Australian Mines and Metals Association (AMMA) argues that registered organisations should have no special status but should be regulated in the same way as corporations. It welcomed the current Bill, but went on to say:
AMMA is at a loss as to why the government is proposing tougher accountability and transparency but still looks to ways of shielding registered employer and union organisations from the same processes and rules that apply to corporations.[36]
In its submission to the Senate Committee inquiry, the Australian Council of Trade Unions (ACTU) expresses the view that:
The Bill is poorly conceived, badly motivated, and entirely unnecessary…[and] transparently political in an area where there is no extant public policy problem.
The ACTU’s analysis of and conclusions about many of the requirements and penalties in the Bill are similar to the AiG’s. It regards the new civil penalties as excessive, and in many cases beyond those in the Corporations Act. It expresses similar concerns about the transition provisions, particularly the status of its newly registered training program.
The ACTU notes that there are elements of good governance that are universal, and in that respect it is proper to align governance of registered organisations with corporations law. It notes that the penalties in the Corporations Act are a recognition of the size and reach of corporations and their importance in the economy. It reviews the argument that in fact criminal penalties are not necessary in the Corporations Act, as the criminal law deals with criminal behaviour. It notes that the criminal penalties were included in the Corporations Act at a time of concern that control of corporations was in the hands of managers, not shareholders—unlike unions, which are democratically controlled by members. It concludes that there is no place for criminal penalties in the Registered Organisations Act.
The ACTU comments on several possible incentive effects of the Bill. Whereas for unions, registration under the Registered Organisations Act gives them protection for industrial action, employer associations do not need this as it is the individual employer who takes action. Therefore, employer associations are likely simply to de‑register. It also observes that there is a worrying incentive for the Registered Organisations Commission to raise money from penalties. Finally, it notes that some of the coercive powers apply to all members, and are therefore a disincentive to joining a union.
Another concern of the ACTU is that the powers of the Commission, to ‘do all things necessary or convenient’ for its purposes are too expansive for a regulatory body, and in particular are broader than the powers of the Australian Securities and Investments Commission. Further, the investigative functions, which might appropriately be a vehicle for improving management of not-for-profit bodies, are focused on prosecution and enforcement.
The ACTU also complains that the proposed reforms are an increased regulatory burden at a time when cutting red tape is regarded as desirable.
The ACTU observes that the regulatory environment for registered organisations that prevailed before the 2012 amendments was negotiated through the Parliament in 2002 and was essentially unchanged by the Work Choices or the Fair Work reforms. The current system represents a ‘sensible consensus’ and there is no reason to depart from it.[37]
Most of the other union submissions support the ACTU submission and expand on similar concerns. The Maritime Union of Australia and the Australian Nursing and Midwifery Federation express particular concern about the power of the Minister to direct the Commission. The Australian Manufacturing Workers Union believes that the best approach would be to find common ground among employer associations, unions and other interested parties, and that that has not happened with this Bill.[38]
The Regulation Impact Statement prepared by the Department of Employment asserts that the budgetary cost to the Government of the amendments proposed by the Bill is nil.[39]
As required under Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the Bill’s compatibility with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of that Act.[40] The Bill engages with the right to freedom of association, the right to the presumption of innocence, and the prohibition on arbitrary interference with privacy and reputation. The Government considers that the Bill is compatible because, to the extent that it may limit human rights, those limitations are reasonable, necessary and proportionate.
At the time of writing, the Parliamentary Joint Committee on Human Rights had not reported on the Bill.
Schedule 2 of the Bill contains a number of provisions that increase the disclosure requirements of registered organisations and their officers. The Coalition’s Policy for Better Transparency and Accountability of Registered Organisations’ (Policy) foreshadowed that these would be modelled on existing provisions in the Corporations Act.[41]
The new disclosure obligations imposed on registered organisations and their officers are created by item 166 of Schedule 2, which inserts a new Part 2A into Chapter 9 of the Registered Organisations Act. Division 2 of Part 2A (proposed sections 293B to 293H) contains provisions about new disclosure obligations regarding:
- remuneration paid to officers
- material personal interests of officers and their relatives and
- payments made by an organisation or branch
These are discussed below.
Proposed section 293B requires that each officer of an organisation or branch of an organisation must (either immediately or through a standing disclosure) disclose to the organisation any remuneration paid to them because they are a member of Board, where they are only a member of the Board because they:
- are an officer of the organisation or
- were nominated for the position on the Board by the organisation, a branch or a peak council.[42]
The Bill does not specify any minimum threshold amounts which trigger the disclosure requirement. In addition, an officer must also disclose any remuneration paid to them by a related party of the organisation that is connected with the performance of their duties as an officer.[43] A failure to comply with the disclosure requirements attracts a civil penalty for an individual of 100 penalty units (1200 for a serious contravention) – that is, $17,000, or $204,000 for a serious contravention. As a result of the amendment to paragraph 306(1)(a) of the Registered Organisations Act proposed by item 203 of Schedule 2, the penalty for a body corporate will be five times the amount specified for an individual (in this case, $85,000 or $1,020,000).
The Senate Standing Committee on Education and Employment (Committee) majority report into the Bill recommended that the obligation placed on officers to disclose every payment should be reduced with certain exclusions, including limiting disclosures to payments made above a certain threshold.[44]
Under the Corporations Act, the default position is that all financial reports for a financial year must comply with relevant accounting standards.[45] The relevant accounting standards impose requirements to disclose the:
- salary of all directors in the financial statements (small proprietary companies are excepted)[46] and
- the remuneration (which includes non-salary benefits) of all directors and at least five non-director executives with the greatest authority.[47]
Proposed section 293BC imposes a similar obligation on organisations (and branches of organisations) registered under the Registered Organisations Act, requiring them to disclose the identity of at least the five highest remunerated officers, their remuneration and the value (and form) of any non-cash benefits provided to them over the financial year. A failure to comply with the disclosure requirements attracts a civil penalty of 100 penalty units (1200 for a serious contravention).[48]
In his second reading speech, the Minister for Education and Leader of the House, Christopher Pyne stated that:
While the Corporations Act only requires directors to disclose conflicts of interest to their fellow directors, the government believes that officers of registered organisations should be required to disclose such matters to members, as they are elected by members to represent their interests. Members deserve to know who is in control of their money and where any conflicts might exist.[49]
Under the Corporations Act, the default position is that directors must disclose material personal interests in a matter that relates to the company’s affairs.[50] The term ‘personal interest’ has been interpreted by the courts as any situation where the director can derive a financial or other benefit.[51]
However, in the case of directors of public companies, the Corporations Act imposes additional disclosure requirements, requiring member approval before giving financial benefits to ‘related parties’.[52] Importantly, ‘related parties’ is defined as including the relatives and spouses of directors.[53]
In the case of incorporated associations, the level of disclosure required by officer holders varies depending on the jurisdiction. The table in Appendix A outlines the disclosure requirements of officer holders of incorporated associations, as a comparator to those proposed by the Bill for officers of registered organisations and provided for by the Corporations Act in relation to directors.
The comparison would suggest that whilst this type and level of disclosure is not new, it has previously been confined to public companies, which, generally speaking, include the companies listed on the Australian Stock Exchange.
Proposed section 293C will impose new disclosure requirements on officers of organisations akin to those imposed on directors of public companies. Officers of registered organisations (and branches) will be required to disclose to the organisation any material personal interest that:
- they have or acquire or
- that a relative has or acquires.[54]
Proposed subsection 293C(3) provides that such disclosure must be made as soon as practicable after the interest is acquired and must provide details of the nature and extent of the interest and how it relates to the affairs of the organisation (or branch). In addition, proposed section 293D allows officers to provide standing notice of ‘an interest’, as is also provided for under the Corporations Act.[55]
Proposed section 293D relates to both material and non-material interests. The nature and extent of interests disclosed must be ‘recorded in the minutes of the meeting of the committee of management’.[56] Proposed subsection 293D(6) provides that a standing notice of ‘an interest’ ceases to have effect when the particular interest ‘materially increases above that disclosed in the notice’. Importantly, disclosures made under proposed section 293C must be reported to members of the organisation or branch in the mandatory annual Officer and Related Party Disclosure Statement (ORPDS), as outlined in Division 3 of the Registered Organisations Act.[57] However, the interaction between proposed sections 293C and 293D is not entirely clear. For example, it is not clear if under proposed subsections 293C(4), (5) and (6) organisations must report in their ORPDS any interests disclosed by an officer under a standing notice provided in accordance with proposed section 293D. This is because, as noted above, as currently worded proposed section 293D appears to apply to both material and non-material interests.
Under proposed section 293F any officer with a material personal interest in a matter will be prevented from:
- being present during any deliberation by the organisation relating to the matter and
- taking part in any decision with respect to the matter.[58]
These are civil penalty provisions, which largely replicate section 195 of the Corporations Act, which prevents directors of public companies from taking part in discussions about (and voting on) matters in which they have a material personal interest. In contrast, section 194 of the Corporations Act allows directors of proprietary companies to take part in discussions about (and vote on) matters in which they have a material personal interest provided that they have complied with any disclosure requirements.
As a matter of practicality, these provisions (proposed sections 293B to 293E) impose on registered organisations, branches and their officers the higher disclosure requirements that directors of public companies are subject to under the Corporations Act and relevant accounting standards, for reasons outlined below. The Senate Standing Committee on Education and Employment majority report into the Bill noted that:
…the disclosure regime in relation to material personal interests proposed by the bill may create unnecessary administrative burdens for officers, some of whom are volunteers. The bill should be amended to ensure that the disclosure regime in the bill is consistent with the requirements in the Corporations Act 2001.[59]
Subsequently, the Committee recommended that a list of exclusions from the obligations to disclose material personal interests based on section 191(2) of the Corporations Act be inserted into the Bill, to narrow the obligation to disclose material personal interests of an officer’s relatives, so as to be consistent with the Corporations Act.[60]
Proposed section 293G provides that an organisation or branch must, through the ORPDS, disclose to its membership details of each payment made in the last financial year to:
- a related party of the organisation or a branch of the organisation or
- to a declared person or body.[61]
However, no disclosure needs to be made where the related party is an officer of the organisation or branch and the payment was remuneration paid to them or was for the reimbursement of reasonable expenses incurred in the performance of their duties.[62]
The definition of a ‘declared person or body’ relates back to the disclosure, by an officer of an organisation, of material personal interests under proposed sections 293C or 293D. If the disclosed interest relates to, or is in, a person or body then that person or body is a ‘declared person or body’, until such time as the officer notifies the organisation or branch that they no longer have the declared material personal interest.[63]
In effect, this disclosure requirement is similar to that imposed on public companies, with some differences. Public companies must, as discussed above, not only report related party benefits, they must also seek shareholder approval before giving a financial benefit to a related party.[64]
As such, whilst the related party disclosure and reporting requirements proposed by the Bill are broadly similar to those imposed on public companies, the level of member scrutiny and accountability arguably remains lower. Shareholders of public companies have, through the approval process provided by sections 217 to 227 of the Corporations Act, direct input into the approval of related party benefits before they are provided. In contrast, whilst the Bill provides members of registered organisations similar levels of disclosure, it does not provide a requirement that related party benefits be approved by members before they are provided. As such, it could be argued that directors of public companies remain subject to more onerous governance and disclosure requirements than officers of registered organisations.
On the other hand, the Corporations Act provides for a range of exceptions from the rule, including a value threshold, payments to closely held subsidiaries, and exceptions for obtaining member approval to provide a financial benefit to related parties.[65] The Bill does not contain any similar exclusions or monetary limits.
Proposed section 293H, which provides that an organisation or branch that considers that it is ‘too onerous’ for it to comply with section 293G disclosure requirements through the ORPDS may apply to the Registered Organisations Commissioner (Commissioner) for permission to use an alternative disclosure arrangement.[66] In effect, proposed section 293H provides that for any alternative disclosure arrangement to be granted the organisation must (though its application) satisfy the Commissioner that:
- special circumstances exist in relation to the organisation
- the proposed alternative disclosure arrangement in relation to payments made by the organisation (given the special circumstances) is appropriate, whilst providing appropriate transparency
- that the organisation has a history of high standards of financial accountability and control and
- the proposed alternative disclosure arrangement is not otherwise contrary to law.[67]
A decision by the Commissioner to grant the application remains in force for five years.[68] The Commissioner’s decision cannot be appealed by the organisation,[69] but the Commissioner can revoke the alternative disclosure arrangement in certain circumstances.[70]
The Corporations Act contains no provisions equivalent to proposed section 293H. Under the Corporations Act, the default position is that all companies must prepare annual financial reports which comply with relevant accounting standards.[71] The notable exception is that a small proprietary company need only prepare financial reports where it is directed to do so by Australian Securities and Investment Commission (ASIC), its shareholders or in other limited circumstances.[72] In relation to the financial disclosure and reporting of small proprietary companies, the relevant provisions of the Corporations Act operate as an opt-in mechanism, trigged by specific circumstances or events.
In contrast, proposed section 293H operates an opt-out mechanism in relation to the disclosure of payments made by an organisation or branch to related parties or declared persons that must be included in the ORPDS, triggered by an application made by the registered organisation and ultimately determined by the Commissioner. Even if the application is approved however, the organisation must still comply with proposed section 293J in relation to other elements of the ORPDS.
As neither the Bill, its Explanatory Memorandum or the Minister’s second reading speech provide a definition or description of the types of ‘special’ circumstances that would satisfy the criteria set out in proposed section 293H, it is difficult to foreshadow how the section would be applied or operate. However, given that:
- a large majority of members of registered organisations are members of large employee organisations and
- most employer organisations are (in terms of membership) small in comparison[73]
it is possible that one potential application of proposed section 293H would be to allow smaller registered organisations (mostly, but not always employer organisations) to use alternative disclosure arrangements in relation to payments made by an organisation or branch to related parties or declared persons, whilst requiring standard disclosure (in the ORPDS) by larger registered organisations.
This would reflect the general tenor of the reporting requirements contained in the Corporations Act which, generally speaking, place comparatively lighter reporting obligations on smaller proprietary companies and more onerous ones on public companies. However, the key difference remains that under the Corporations Act small proprietary companies are subject to an opt-in, rather than an opt-out reporting regime, such as applies to registered organisations under the Bill, at least in relation to the disclosure to members of payments to related parties or declared persons.
Under proposed section 293J, organisations and branches must produce an ORPDS, which must be provided to members of the organisation and a copy lodged with the Commissioner within six months of the end of the financial year.[74] Importantly, the report must include the disclosures provided by the officers of the organisation or branch.
A failure to produce the report, provide it to members or lodge it with the Commissioner attracts a civil penalty and may constitute a serious contravention.[75]
A large number of items in Schedule 2 of the Bill increase the existing civil penalty provisions contained in the Registered Organisations Act.[76] The table at Appendix B outlines each civil penalty offence, the old amount, new amount and any increase. In addition to the increase in civil penalties, item 4 of Schedule 2 of the Bill introduces the concept of ‘serious contraventions’. This concept is linked to the increased civil penalties. A serious contravention is defined as contravention of a civil penalty provision that:
- materially prejudices the interests of the organisation, branch or its members
- materially prejudices the ability of the organisation or branch to pay its creditors or
- is serious.
The wording of the definition of serious contravention contained in the Bill does not materially differ from those found in paragraphs 1317G(1)(b) and 1317G(1A)(c) of the Corporations Act.[77] The table titled ‘serious contraventions’ located in Appendix C outlines the civil penalties to which the increased penalties for serious contraventions apply.
Item 230 in Schedule 2 of the Bill introduces a number of new strict liability offences. These are set out in the table located in Appendix D of the Bills Digest. The offences relate to a person‘s failure to comply with a requirement made of them relating to the conduct of an investigation. Under strict liability, a defence of reasonable excuse is available, but the defendant will bear the evidentiary burden in establishing the reasonableness of their conduct.[78]
As noted above (under Committee Consideration) the Senate Scrutiny of Bills Committee has not considered this Bill. Generally the Senate Scrutiny of Bills Committee carefully considers whether an offence of strict liability is justified. According to the Explanatory Memorandum, strict liability offences are appropriate in this context as:
…it is more practical for the accused to prove that they are not in breach of the requirement than for the prosecution to disprove that the person does not have a reasonable excuse.[79]
Schedule 2 proposes a number of new criminal offence provisions. These are described below.
The table in Appendix E sets out the new criminal offences proposed by the Bill. Where an offence appears to be modelled on an existing provision in the Corporations Act or Australian Securities and Investment Commission Act 2001, for ease of comparison the two offences are set out alongside each other in the table in Appendix F.
Proposed section 290A, at item 163 of Schedule 2 creates new criminal offences related to breaches of an officer’s duty of good faith, and misuse of position or information by officers and employees. They closely resemble the offence in section 184 of the Corporations Act, which prohibits similar conduct by company directors. The new offence is punishable by a fine of up to 2000 penalty units ($340,000) and a term of up to five years imprisonment, or both.
Proposed section 337AB, at item 230 of Schedule 2 creates a new offence of obstructing or hindering an investigation or execution of a warrant. A defence of reasonable excuse is available, but the defendant will bear the evidentiary burden in establishing the reasonableness of their conduct.[80] The offence is punishable by a fine of up to 100 penalty units ($17,000) and a term of up to two years imprisonment, or both.[81] The offence is broadly similar to the offence created by section 65 of the Australian Securities and Investment Commission Act 2001 (ASIC Act), which provides the same penalty as that proposed in new section 337AB.[82]
Proposed subsection 337AB(3) creates a new offence that applies specifically to occupiers or persons in charge of a premises. Under the provision, a person commits an offence if they intentionally or recklessly fail to provide a person executing a warrant all ‘reasonable facilities and assistance’ whilst executing their powers under the warrant. The offence is punishable by a fine of up to 25 penalty units ($4,250) and a term of up to six months imprisonment, or both. This offence and penalty reflect those set out in subsection 65(2) of the ASIC Act.
Proposed section 337AC creates a new offence of concealing documents relevant to an investigation. An offence is not committed if it is established that the person did not intend to defeat the purposes of an investigation, or to delay or obstruct any investigation or proposed investigation. However, the defendant will bear the evidentiary burden in establishing that they did not intend to do so.[83] The offence is punishable by a fine of up to 200 penalty units ($34,000) and a term of up to five years imprisonment, or both.[84]
Proposed section 337AE creates an offence that relates only to lawyers. Under the provision, a lawyer may refuse to comply with a direction to provide information or produce a document where it would involve disclosing a privileged communication made by, to, or on behalf of the lawyer in their capacity as a lawyer.[85] However, where the lawyer refuses to provide the information or produce the document sought, they must ‘as soon as practicable’ provide to the Commissioner a written notice setting out:
- the name and address of the person to, by or on behalf of whom the privileged communication was made and
- sufficient particulars to identify the document (or part of the document) containing the privileged communication.[86]
A failure to provide the above is an offence and is punishable by a fine of up to 10 penalty units ($1,700) and a term of imprisonment up to three months, or both.[87] The provision largely replicates section 69 of the ASIC Act.[88] In its submission to the Senate Inquiry, the Department of Employment noted that whilst proposed section 337AE places additional statutory obligations on lawyers claiming privilege, it ‘is not intended to otherwise abrogate common law principles of legal professional privilege’.[89]
The Commissioner’s investigatory powers vis-à-vis the General Manager (GM) of the Fair Work Commission (FWC) was foreshadowed in the Government’s Policy:
The new watchdog will have greater powers than those available to the current enforcer and will adhere to a strict charter to ensure all members of registered organisations are protected.[90]
This policy commitment was reaffirmed by the Minister for Education and Leader of the House, Christopher Pyne in the second reading speech, where he stated:
The commission will have stronger investigation and information-gathering powers than those that currently apply. These will be modelled on those available to the Australian Securities and Investments Commission, which will further enhance the ability of the commissioner to provide strong and efficient regulation of unions and employer associations.[91]
The Bill contains a large number of items that significantly amend the Registered Organisations Act, and increase the scope and strength of the Commissioner’s investigatory powers compared to those possessed by the GM of the FWC under the FWBI.[92]
The investigatory powers of the GM are contained in Part 4 of Chapter 11 of Registered Organisations Act. In broad terms, as currently drafted the GM is able to conduct investigations and make inquiries in relation to the records, accounts and financial reporting by registered organisations, as well as into suspected breaches of civil penalty provisions.[93] Currently the GM can:
- require an officer, employee (or former officer or employee) of an organisation or an auditor, to provide certain information or documents[94]
- require an officer, employee (or former officer or employee) of an organisation or an auditor, to attend an interview and answer questions and provide documents[95] and
- during normal business hours, enter a premises an inspect any documents and interview any employee at the premises.[96]
The Registered Organisations Act also removes, in certain circumstances, the right of a person to refuse to give information, provide documents or answers questions on the basis it would be self-incriminatory.[97] However, as is relatively common with such types of coercive powers, the privilege against self-incrimination is exchanged for ‘use’ and ‘derivative use’ immunities.[98] Subsection 337AA(7) provides that:
- any information, documents or answers to questions given or
- any information, documents or answers to questions obtained as a direct or indirect consequence of the giving of information, documents or answers to questions
cannot be used against the person in criminal proceedings or civil penalty proceedings, other than those related to making false or misleading statements or providing false and misleading information or documents.[99]
Currently, a failure to comply with a requirement to attend an interview or provide documents can result in a civil penalty of up to 30 penalty units.[100] The Registered Organisations Act also currently contains whistleblower protections.[101]
While these powers are quite expansive, they apply only to current and former the officers, employees and auditors of registered organisations.
As noted previously, it is suggested that the proposed new coercive investigatory powers are modelled on those available to ASIC. Currently ASIC has coercive information gathering powers under both the Corporations Act[102] and the Australian Securities and Investments Commission Act 2001 (ASIC Act).[103] These include:
- requiring the production of books[104]
- conducting investigations into suspected breaches of the Corporations Act or any other commonwealth, state or territory law pertaining to the management or affairs of a body corporate, managed investment scheme or financial products.[105]
In relation to investigations, section 19 of the ASIC Act allows an ASIC inspector to require a person to appear before them for examination. A person may be required to take an oath or affirmation that the statements made by the person during the examination will be true.[106] In addition, subsection 19(2) provides that an ASIC examiner may require a person to answer questions put to them during an examination. A failure to comply with either requirement attracts a civil penalty. Examinations are to take place in private, and lawyers may attend but are subject to certain restrictions.[107]
In addition, like the Registered Organisations Act, the ASIC Act removes the privilege against self-incrimination. It is however, exchanged for a more limited form of ‘use’ immunity. Subsections 68(2) and (3) of the ASIC Act provide that where a person, prior to answering a question, giving information or signing a record claims that it might tend to incriminate them or make them liable for a penalty, that information or record cannot be used against them in criminal or civil proceedings other than those related to making false or misleading statements or records.
Importantly however, the ASIC Act does not specifically provide any derivative use immunity.[108] In addition, it does not extend use immunity in relation to the production of books.[109] As noted by the Administrative Review Council in 2008:
Enactment of more limited immunities for ASIC and APRA followed extensive research into the difficulties associated with corporate regulation. Such an approach had been recommended in reports by the Joint Standing Committee on Corporations and Securities and by John Kluver. The two reports found that derivative use immunities and, in some instances, use immunities would constitute an unacceptable fetter on the investigation and prosecution of corporate misconduct offences.[110] (emphasis added).
The Bill seeks to regulate registered organisations in the same manner as corporations.[111] It appears that the coercive powers proposed by the Bill have been drafted with the view that derivative use would be an unacceptable fetter on the investigation and prosecution of misconduct offences related to registered organisations. The proposed new coercive powers and immunities are detailed below.
The new coercive investigatory powers and related offences are set out in items 213-230 of Schedule 2 of the Bill. From a broad perspective the key changes are that the:
- coercive powers will no longer apply only to a current or former officer, employee or auditor of an organisation[112] but
- will be extended to any ‘person’ who, the Commissioner believes on reasonable grounds has information or documents (or is capable of giving evidence) relevant to an investigation[113] and
- the Commissioner can require a person to provide ‘reasonable assistance’ in connection with the investigation.[114]
These changes will significantly expand the scope of persons who are subject to the Commissioner’s coercive investigatory powers, as they are no longer confined to persons formally associated (or previously associated) with a registered organisation. There are also additional changes, including that an investigator can:
- require a person attending an interview to answer questions on oath or affirmation[115]
- require a person to identify property of an organisation[116]
- apply to a magistrate for a warrant to seize documents[117]
- execute a search warrant in conjunction with the Australian Federal Police[118]
- make copies of any documents produced or seized[119] and
- where documents are not produced in compliance with amended section 335, require a person to explain where they can be found or who last had possession, custody or control of the documents and where that person can be found.[120]
Proposed section 337AD, at item 230 of Schedule 2, removes the privilege against self-incrimination. However, like the ASIC Act it is exchanged for use immunity. Proposed subsection 337AD provides use immunity by providing that any information given, or the fact that the person produced a document or signed a record, is not admissible in evidence against the person, except in proceedings related to giving false or misleading statements, documents or records. Notably however, like the ASIC Act, to make use of the use immunity a person must, prior to giving the information, producing the document or signing a record, claim that it would tend to incriminate them or expose them to a penalty.[121] In addition, like the ASIC Act, no derivative use immunity is provided and a lawyer can be penalised for ‘trying to obstruct the questioning’.[122]
In relation to the ability of the Commissioner to seek, obtain and execute a warrant, the proposed provisions are similar to sections 35-39 of the ASIC Act. For ease of comparison, these are set out below in the table in Appendix G.
In addition to expanding the scope, application and strength of the Commissioner’s coercive investigatory powers, the Bill also contains important checks and balances and creates new offences related to investigations.
Item 229 provides a that a person is not required to give information, produce documents or attend an interview where they have a ‘reasonable excuse’ or have explained a matter ‘to the best of his or her knowledge’.[123] Importantly however, self-incrimination is not a reasonable excuse.[124] Item 208 provides that a person is not liable for more than one pecuniary penalty in relation to the same conduct. This ensures that a person who engages in a single course of conduct that constitutes more than one offence is not subject to multiple civil penalties.
Proposed sections 335H and 335G at item 223 provide that a person questioned during an investigation must comply with a direction to read the statement and/or sign it, and that failure to comply with the direction is an offence.[125]
The Bill also creates a number of offences in relation to investigations. These were discussed above under the heading ‘Civil and criminal penalty provisions’.
Schedule 1 of the Bill (and particularly item 88, which inserts new Part 3A into the Registered Organisations Act) contains provisions regarding the establishment of the Registered Organisation Commission (ROC) and the Registered Organisations Commissioner (Commissioner). Proposed section 329AA of the Registered Organisations Act establishes the Commissioner, whilst the ROC is established by proposed section 329DA. Item 6 inserts definitions of Commission and Commissioner, being the ROC and the Commissioner, into the Registered Organisations Act. These definitions point the reader to new Part 3A.
The Bill provides that the ROC will consist of the Commissioner and staff (not consultants) assisting the Commissioner.[126] The function of the ROC is to assist the Commissioner in the performance of the Commissioner’s functions.[127] As is usual with such entities, the ROC has the privileges and immunities of the Crown.[128]
Item 1 of Schedule 1 makes a consequential amendment to the Fair Work Act 2009 (Fair Work Act) reflecting the establishment of the Commissioner and the conferral of the administrative functions (in this instance, giving advice and assistance to registered organisations) from the FWC to the Commissioner.
Items 2 to 5 amend the Fair Work Act to provide the FWC and the Full Bench of the FWC jurisdiction to hear disputes and appeals related to decisions made by the Commissioner. However, as discussed previously, proposed subsection 293H(7) of the Registered Organisations Act, at item 166 of Schedule 2, prevents a decision by the Commissioner to make or refuse to make an order for an alternative disclosure regime from being appealed to the FWC.
Proposed sections 329BA to 329BJ of the Registered Organisations Act, inserted by item 88 of Schedule 1, deal with the appointment of the Commissioner, various terms and conditions, and termination of the appointment.
Proposed section 329BA provides that the Commissioner is appointed by the Minister through a written instrument. This appointment may only be made if the Minister is satisfied that the proposed Commissioner has suitable qualifications and experience and is of good character. Proposed section 329BB provides that a Commissioner is appointed for a period, not exceeding five years, specified in the instrument of appointment. The Minister may appoint an Acting Commissioner.[129]
Proposed section 329BD provides that the Commissioner’s remuneration is to be determined by the Remuneration Tribunal in accordance with the Remuneration Tribunal Act 1973.
Proposed section 329BJ provides that the Minister may terminate the appointment of the Commissioner for misbehaviour or where the Commissioner is unable to perform their duties because of physical or mental incapacity. However, where certain circumstances arise, the Minister must terminate the appointment of the Commissioner. These include where the Commissioner:
- becomes bankrupt
- engages in paid outside employment without the Minister’s approval[130] or
- fails (without reasonable excuse) to disclose any interest that does (or could) conflict with the performance of their duties.[131]
Proposed sections 329CA to 329CC deal with staff, consultants and other persons assisting the Commissioner. Staff assisting the Commissioner will be engaged under the Public Service Act 1999 and will be drawn from the Fair Work Ombudsman (FWO).[132] The Bill also provides that the Commissioner may be assisted by employees of other Commonwealth and state and territory authorities and agencies.[133] The Commissioner may also engage consultants, provided they have ‘suitable qualifications and experience’.[134]
The Policy outlined the intention that:
The first head of the Registered Organisations Commission will be appointed by the Minister, but will not be subject to Ministerial Direction. The Commission will be required to report to Parliament on a yearly basis.[135] (emphasis added).
Proposed section 329FA allows the Minister to give directions to the Commissioner, whilst proposed sections 329FB and 329FC relate to reporting requirements. These are discussed below.
In contrast to the stated policy position quoted above, proposed section 329FA provides that the Minister may give written directions to the Commissioner. In the second reading speech, the Minister for Education and Leader of the House, Christopher Pyne stated:
As is common with statutory office holders, the minister will be able to give directions of a general nature to the commissioner. These directions must be in writing and will be disallowable instruments. For the avoidance of any doubt, I want to be absolutely clear that the minister will not have any powers to give directions as to a particular matter or investigation.[136] (emphasis added).
In the Bill’s Explanatory Memorandum it states:
New subsection 329FA(1) provides that written directions given by the Minister are legislative instruments for the purposes of the [Legislative Instruments Act 2003] LI Act. This provision has substantive operation as such directions would not ordinarily be legislative instruments. This provision gives greater oversight by Parliament in relation to directions by the Minister and ensures transparency. The effect of this provision is that any such directions will be required to be lodged with the Federal Register of Legislative Instruments and tabled in Parliament. However, as explained in the note to this provision, the directions will not be subject to disallowance or the sunsetting provisions of the LI Act. This mirrors section 684 of the FW Act, which applies to directions from the Minister to the FWO.[137]
Proposed section 329FA provides that:
(1) The Minister may, by legislative instrument, give written directions to the Commissioner about the performance of the Commissioner’s functions.
Note: Section 42 (disallowance) and Part 6 (sunsetting) of the Legislative Instruments Act 2003 do not apply to the direction (see sections 44 and 54 of that Act).
(2) The direction must be of a general nature only.
(3) The Commissioner must comply with the direction.
(emphasis added)
Of critical importance here is table item 41 of subsection 44(2) of the Legislative Instruments Act 2003, which provides that ‘Ministerial directions to a person or body’ are not subject to disallowance.[138] As a result, the correct interpretation of proposed section 329FA accords with that contained in the Bill’s Explanatory Memorandum rather than the Minister’s second reading speech.
The Minister is able to give written directions to the Commissioner to provide specific reports relating to the Commissioner’s functions.[139] The Commissioner must comply with the direction, which is not a legislative instrument and hence is not disallowable.[140]
In addition, the Commissioner must prepare annual reports for the Minister, which are to be tabled in Parliament.[141] The report must include:
- details the number and types of investigations conducted[142]
- details of any applications to the Federal Court for orders under proposed paragraph 310(1)(a)[143]
- details of any education activities provided to registered employer or employee organisations or their members[144] and
- any other matters prescribed by regulations.[145]
Currently the FWC has dual roles as a both a tribunal and also an administrator.[146] The Policy outlined the intention to establish the ROC that would:
- take on the role of registered organisations enforcer and investigator, currently held by the General Manager of the Fair Work Commission
- provide information to members of registered organisations about their rights and act as the body to receive complaints from their members and
- educate registered organisations about the obligations that apply to them.[147]
Proposed section 329AB provides that the functions of the Commissioner are to promote:
- efficient management of organisations and high standards of accountability of organisations and their office holders to their members and
- compliance with financial reporting and accountability requirements of the Registered Organisations Act
including by providing education, assistance and advice to organisations and their members.[148]
The Commissioner has additional functions including:
- monitoring acts and practices to ensure they comply with the provisions of the Registered Organisations Act providing for the democratic functioning and control of organisations and
- any other functions conferred on the Commissioner by the Registered Organisations Act or by another Act.[149]
The Bill is consistent with the Policy, and transfers the majority of functions pertaining to registered organisations from the FWC to the Commissioner. This includes, but is not limited to:
- the registration and cancellation of new organisations
- approval of amalgamations (and related ballots)
- making orders allowing a member of an organisation to inspect financial records and
- approving alterations to an organisation’s member eligibility rules or name.
The specific functions that have been transferred from the FWC or the GM of the FWC to the Commissioner are detailed below.
Items 9 and 10 of Schedule 1 amend the functions of the FWC in relation to registered organisations. Reflecting the transfer of most administrative functions to the Commissioner, the FWC will be limited to keeping a register of organisations. Items 11, 14-17, and 21-26 make consequential amendments related to the items that must be recorded in the register by the GM.
Currently the GM is able to apply to the Federal Court for an order cancelling the registration of an organisation where it has failed to comply with an order of the Federal Court made under subsection 336(5) of the Registered Organisations Act (for example, an order to rectify a contravention of the reporting guidelines). Items 12 and 13 of Schedule 1 of the Bill would transfer that power to the Commissioner, reflecting the transfer of administrative functions from the FWC to the Commissioner.
Currently, section 94 of the Registered Organisations Act allows certain persons to make an application to the FWC for a ballot to decide whether a constituent part of an amalgamated organisation should withdraw from the organisation. Such an application must be accompanied by a written proposal.[150] Where the applicant has insufficient information to prepare a written proposal, the GM may either give the applicant certain information, or direct the amalgamated organisation to do so.[151] Items 18-20 transfer these powers to the Commissioner. Item 12 of Schedule 2 of the Bill increases the civil penalty for failure to comply with such directions from 60 to 100 penalty units (from 300 to 500 in the case of a body corporate).
Items 27 to 29 of Schedule 1 transfer responsibility for hearing applications (and objections to applications) for an organisation or branch to be exempted from the requirement that elections be conducted by the AEC from the GM to the Commissioner, reflecting the transfer of administrative functions from the FWC to the Commissioner.
Item 7 of Schedule 1 of the Bill defines a directions contravention as contravention of one of the listed subsections. In effect, a directions contravention is where:
- an order is made by the Federal Court or FWC order or
- directions are provided by the Federal Court or FWC and
- that order or direction applies to:
- a registered organisation or
- an officer, employee or member of a registered organisation and
- that order or direction is contravened or otherwise not complied with.
As provided for by item 85 of Schedule 1, only the Minister (or a person authorised in writing by the Minister) may apply for a civil penalty order in under Chapter 10, Part 2 in relation to a directions contravention.
Under the Registered Organisations Act, the GM has a number of powers and functions related to the conduct of, and investigation into, elections for office holders of registered organisations.[152] Items 30-54 of Schedule 1 transfer these responsibilities and powers from the GM and/or FWC to the Commissioner. The items do not make any other amendments to the powers or responsibilities beyond their transfer.
Under the Registered Organisations Act, registered organisations must comply with a number of financial record keeping, auditing and reporting obligations. This includes lodging various statements with the GM,[153] and details of certain types of loans, grants or donations made by the organisation.[154]
The Registered Organisations Act also provides that members must be provided copies of operating, general purpose financial and auditors’ reports, and that they are also able to access other financial records of an organisation in certain circumstances.[155] Items 56-65 and 71-84 of Schedule 1 transfer the responsibility to receive (and where necessary scrutinise) and disclose (upon application in certain circumstances) financial reports prepared by registered organisations, from the GM and/or FWC to the Commissioner. They do not make any other amendments to the powers or responsibilities beyond their transfer.
Many of the accounting, auditing and financial reporting obligations are imposed on organisations on a reporting unit basis. The Registered Organisations Act provides that a reporting unit is:
- where the organisation is not divided into branches, the whole of the organisation[156] or
- where the organisation is divided into branches, each branch.[157]
However, the Registered Organisations Act allows for alternative reporting units. This can include where the organisation is divided into branches, the whole of the organisation or reporting units comprised of two or more branches of the organisation.[158]
Whilst the GM retains certain powers related to the determination of reporting units within an organisation, items 67-70 of Schedule 1 provide that the GM must consult with the Commissioner in relation to the obligation to be satisfied in relation to certain matters.[159]
Chapter 11 of the Registered Organisations Act provides that the GM is responsible for various compliance matters, including conducting inquiries and investigations into organisations’ compliance with their financial reporting obligations. Items 87, 89-115, and 117-123 of Schedule 1 of the Bill transfer these responsibilities and powers to the Commissioner, make other technical amendments and (in conjunction with proposed section 343B at item 124 of Schedule 1) clarify the Commissioner’s ability to delegate certain functions and powers. They do not make any other amendments to the powers or responsibilities beyond their transfer.
Item 116 of Schedule 1 extends the potential application of whistleblower protection by allowing protected disclosures to be made to the Commissioner or staff members of the ROC.
Proposed section 343B establishes that the Commissioner may, in writing, delegate any function or power to a staff member of the ROC other than those listed in proposed subsection 343B(2). The powers that cannot be delegated include:
- applying to the Federal Court to have the registration of an organisation cancelled[160]
- making arrangements for the conduct of elections where the Federal Court makes an order under paragraph 206(4)(c)[161] and
- applying to the Federal Court for pecuniary penalty, compensation or other orders under section 310, as amended by item 85 of Schedule 1.[162]
However, proposed subsection 343B(3) provides that the Commissioner’s functions and powers in relation to making inquiries or conducting investigations in relation to financial reporting compliance by organisations can be delegated not only to staff members of the ROC, but also to ‘any other person or body’ that the Commissioner is satisfied has significant experience or knowledge in accounting, auditing, financial reporting or conducting compliance investigations and audits.[163]
The effect of proposed subsection 343B(3) is to allow the Commissioner to delegate certain investigatory powers and functions to consultants or other relevant bodies with particular expertise. However, proposed subsection 343B(4), inserted by item 237 of Schedule 2 ensures that functions and powers under Division 3, Part 3B of Chapter 11 (questioning an attendee on oath or affirmation, inserted by item 212 of Schedule 2) can only be delegated to a member of the staff assisting the Commissioner, and not to consultants or other relevant bodies.[164]
The Registered Organisations Act provides that persons convicted of certain offences (mostly related to dishonesty and fraud) are disqualified from holding office in an organisation.[165] Item 55 of Schedule 1 amends subsection 215(5) to allow the organisation, a member of the organisation or the Commissioner (rather than the GM) to apply to the Federal Court for a declaration that a person is not eligible to be a candidate for election or to be appointed to an office in the organisation. It does not make any other amendments beyond the transfer of standing before the Federal Court in relation to such applications.
Item 209 of Schedule 2 inserts proposed section 307A which allows the Federal Court to make an order disqualifying a person who contravenes a civil penalty provision from holding office in a registered organisation, if the Court is satisfied that the disqualification is justified. According to the Bill’s Explanatory Memorandum, it was ‘broadly modelled’ on section 206C of the Corporations Act.[166] For ease of comparison, the two provisions are set out in the table in Appendix F.
Proposed sections 293K and 293L (item 166, Schedule 2) provide that officers whose duties include duties relating to financial management of the organisation or branch must undertake approved training that relates to and covers the officer’s financial duties. That training can be provided by the organisation, a peak council or other body or person approved by the Commissioner.
A large number of items make technical amendments to the Registered Organisations Act’s existing civil penalty provisions.[167] They replace all occurrences of the phrase ‘Maximum penalty’ with ‘Penalty’. This does not however, result in the imposition of fixed mandatory penalties, as section 4D of the Crimes Act 1914 provides that any offence set out in the manner provided in the Bill is ‘is punishable on conviction by a penalty not exceeding the penalty so set out’ (emphasis added).[168]
Item 212 in Schedule 2 inserts proposed section 329G into the Registered Organisations Act, to provide for information sharing. It sets out the circumstances under which information acquired by persons in the course of performing their duties with the Commission or FWC may be disclosed and for what purposes.
Proposed sections 337AF to 337AL and 337N (item 230 Schedule 2) clarify the application of the Evidence Act 1995 (Cth) to questioning during an investigation and the admissibility of certain types of evidence in proceedings against persons who have attended interviews as part of an investigation. Briefly, statements made under oath or affirmation during an investigation are admissible unless:
· by virtue of the use immunity provided by proposed subsection 337AD(3), the evidence is inadmissible in proceedings against the person who provided it
- the evidence is not relevant and the person objects to the admission of the evidence of the statement
- the statement is qualified or explained by another statement made by the person during the investigation, which is not tendered in the proceedings and the person objects or
- the statement discloses matters in respect of which the person could claim legal professional privilege, and the person objects to its admission.[169]
Proposed sections 329EA to 329EC (item 88 Schedule 1) provide that the ROC will have, for the purposes of the Financial Management and Accountability Act 1997 (FMA Act), a Special Account. The Bill’s explanatory memorandum notes that whilst the ROC will be financially independent from the FWO, for the purposes of the FMA Act, the Fair Work Ombudsman will be the Chief Executive responsible for the Special Account.[170]
Items 125 to 128 of Schedule 1 transfer various administrative functions pertaining to the lodgement of records and issuing of certificates stating that a person was a member or officer of an organisation at particular time from the GM to FWC. They do not make any other amendments to the powers or responsibilities beyond their transfer.
Items 129 to 137 in Schedule 1 and items 242 to 246 in Schedule 2 are transitional in nature and provide that any processes and proceedings commenced but not finalised by the GM are transferred to the Commissioner. Item 137 provides that the Minister may, by legislative instrument, make rules relating to transitional matters. Item 245 provides that during the 12 months after the commencement of the Registered Organisations Act, prior to approving an alternative disclosure arrangement under proposed section 293H (at item 166 of Schedule 2), the Commissioner must take into account any exemption provided to the organisation under section 148D of the Registered Organisations Act as in force prior to commencement of the amendments made by the Bill.
The Bill has attracted significant attention and interest from key stakeholders and interest groups. A key issue raised by the Bill is the appropriateness of regulating registered organisations in the same manner as corporations. As discussed in this Digest, if passed, the Bill would arguably require higher levels of disclosure by registered organisations than is required from public companies. In addition, officers of registered organisations would be subject to higher levels of scrutiny than some directors and all officers or committee members of incorporated associations, which it may be argued are, in some instances, a closer analogue to registered organisations than corporations.
The Bill also introduces significant new coercive powers. The abrogation of the right against self-incrimination is exchanged only for use immunity, and no derivative use immunity is provided.
In addition, the Bill significantly increases the penalties for misconduct offences and introduces new criminal penalties, the appropriateness of which has, and is likely to continue to, attract attention and debate.
The table below compares the disclosure requirements of officers/committee members of incorporated associations in each Australian jurisdiction. As noted in the Background section of the paper, most trade unions (which represent 45 of the 112 organisations registered under the Registered Organisations Act[171]) are (or started as) incorporated associations governed by the laws of a particular state or territory. As incorporated associations are not-for-profit body corporates that exist to advance the interests of their members (rather than to make profit) they make for a useful comparator in terms of the disclosure requirements imposed on the officers of registered organisations.
Table 1: comparison of officer disclosure
| ACT |
NSW |
NT |
QLD |
SA |
TAS |
VIC |
WA |
| Officers must disclose any direct/indirect pecuniary interest in a contract. Penalty: 20 penalty units.[172] |
Officers must disclosure any direct or indirect personal interests. Penalty: 60 penalty units.[173] |
Officers must disclose direct/indirect pecuniary interest in a contract. Penalty: 200 penalty units.[174] |
No requirements for officers to act in good faith or disclose personal interests etc.[175] |
Committee members must disclose direct or indirect pecuniary interest in a contract or proposed contract with the association. Penalty: up to $5,000.[176] |
No requirements for officers to act in good faith or disclose personal interests etc.[177] |
Committee members must disclose any ‘material personal interest’ in a matter being considered by the committee. Penalty: 10 penalty units.[178] |
Committee members must disclose direct/indirect pecuniary interest in a contract. Penalty: $500.[179] |
This table outlines civil penalty offences contained in the Registered Organisations Act. It outlines both the previous and new penalties, expressed in penalty units with the amount applicable to a person listed first, then a body corporate second (for example: 60/300). The table also notes any increase in the penalty amount.
Table 2 civil penalty provisions
| Offence |
Provision in Act |
Old penalty (PU) |
New penalty (PU) |
Increase (in PU) |
| Failure to lodge membership agreement |
151(2) |
60/300 |
60/300 |
None |
| Failure to lodge assets and liabilities agreement |
152(3) |
60/300 |
60/300 |
None |
| Failure to remove non-financial members from the register |
172(1) |
60/300 |
60/300 |
None |
| Failure to lodge election related information |
189(2) |
60/300 |
60/300 |
None |
| Failure to keep and lodge records |
230(1), (2) |
60/300 |
60/300 |
None |
| Failure to keep records for 7 years |
231 |
60/300 |
60/300 |
None |
| Failure to lodge information with ROC |
233(1), (2) |
60/300 |
60/300 |
None |
| Failure to provide access to records |
235(2) |
60/300 |
60/300 |
None |
| Failure to deliver records |
236(1), (2) |
60/300 |
60/300 |
None |
| Prohibited appointment of auditor |
256(3)-(6) |
60/300 |
60/300 |
None |
| Prohibited removal or auditor |
263(2)-(5) |
60/300 |
60/300 |
None |
| Failure to distribute auditors reasons for resignation |
264(3) |
60/300 |
60/300 |
None |
| Failure to present full report to members |
266(1) |
60/300 |
60/300 |
None |
| Failure to provide information to members |
272(3), (5) |
60/300 |
60/300 |
None |
| Making frivolous of vexatious applications for orders for inspection of financial records |
274(1) |
60/300 |
60/300 |
None |
| Disclosing information acquired during an inspection |
276(1), (2) |
60/300 |
60/300 |
None |
| Failure to provide a copy of rules or lists of officers to a member |
347(1) |
60/300 |
60/300 |
None |
| Failure to lodge/enter into register termination of membership agreement |
151(11), (11A). |
60/300 |
60/300 |
None |
| False declarations about register |
52(1) |
60/300 |
100/500 |
40/200 |
| False statement in relation to register |
52(3) |
60/300 |
100/500 |
40/200 |
| Failure to comply with direction to provide information |
95(3C) |
60/300 |
100/500 |
40/200 |
| Failure to make declarations (or making false statements) about ballots to withdraw from amalgamated organisations |
104(1), (3) |
60/300 |
100/500 |
40/200 |
| Failure to provide statement of membership |
169 |
60/300 |
100/500 |
40/200 |
| False representation of membership (or resignation of membership) of an organisation |
175, 176 |
60/300 |
100/500 |
40/200 |
| Failure to make declarations (or making false statements about) elections |
192(1), (3). |
60/300 |
100/500 |
40/200 |
| Failure to respond to the AEC regarding an adverse post-election report |
198(1) |
60/300 |
100/500 |
40/200 |
| Failure to make adverse post-election report response (or an extract) available to members |
198(4), (5) |
60/300 |
100/500 |
40/200 |
| False statements in relation to adverse post-election report response (or an extract) |
198(8) |
60/300 |
100/500 |
40/200 |
| False statements in relation to information lodged with the FWC/ROC |
233(3) |
60/300 |
100/500 |
40/200 |
| Failure to notify (or making false statements about) particulars of loans, grants and donations to ROC |
237(1), (3) |
60/300 |
100/500 |
40/200 |
| Failure of financial statements to give a fair and true view of the reporting units financial position and performance |
253(3), (4) |
60/300 |
100/500 |
40/200 |
| Failure to prepare operating report |
254(3), (4) |
60/300 |
100/500 |
40/200 |
| Failure to have auditor engaged |
256(1) |
60/300 |
100/500 |
40/200 |
| False statement by auditor |
257(10) |
60/300 |
100/500 |
40/200 |
| Failure of auditor to report suspected breach of the Registered Organisations Act or reporting guidelines |
257(11) |
60/300 |
100/500 |
40/200 |
| Failure of reporting unit to forward notices to auditor |
259 |
60/300 |
100/500 |
40/200 |
| Failure to provide full or concise report, or auditors report to members |
265(1), (4), (5) |
60/300 |
100/500 |
40/200 |
| Making false or misleading statements in relation to reports, accounts or statements |
267 |
60/300 |
100/500 |
40/200 |
| Failure to lodge reports with ROC |
268 |
60/300 |
100/500 |
40/200 |
| Failure to prepare and lodge financial reports and auditors reports within specified timeframes |
270(4), (5), (7) |
60/300 |
100/500 |
40/200 |
| Failure to provide member copies of financial and auditors reports within specified timeframes |
270(6) |
60/300 |
100/500 |
40/200 |
Source: Fair Work (Registered Organisations) Amendment Bill 2013.
This table outlines the civil penalty offences contained in the Registered Organisations Act which attract an increased penalty for a serious contravention. A serious contravention attracts a civil penalty of 1200 penalty units (6000 for a body corporate). The table outlines both the previous and new penalties, expressed in penalty units with the amount applicable to a person listed first, then a body corporate second (for example: 60/300). The table also notes any increase in the penalty amount.
Table 3: serious contravention civil offence provisions
| Offence |
Provision |
Old Amount (PU) |
New Amount (PU) |
Increase |
| Breach of officers duties |
285(1), 286(1), (2) |
60/300 |
100/500 |
40/200 |
| Improper use of position or information by an officer or employee |
287, 288. |
60/300 |
100/500 |
40/200 |
| Contravening a direction or order |
Various[180] |
60/300 |
100/500 |
40/200 |
| Failure of officers to disclose certain remuneration |
293B |
N/A |
100/500 |
New |
| Failure of organisation or branch to disclosure remuneration and benefits |
293BC |
N/A |
100/500 |
New |
| Failure to disclose material personal interest of officers of relatives |
293C |
N/A |
100/500 |
New |
| Officer taking part in making a decision related to a material personal interest |
293F |
N/A |
100/500 |
New |
| Failure to disclose payments made by a branch or organisation to a related party or declared person or body of the organisation |
293G |
N/A |
100/500 |
New |
| Failure to prepare, lodge or provide to members an officer and related party disclosure statement |
293J |
N/A |
100/500 |
New |
| Failure of officer to undertake approved training |
293K |
N/A |
100/500 |
New |
Source: Fair Work (Registered Organisations) Amendment Bill 2013.
This table outlines the strict liability civil penalty offences proposed by the Bill. The table outlines the penalties, expressed in penalty units with the amount applicable to a person.
Table 4: strict liability civil offence provisions
| Offence |
Provision |
Amount (PU) |
| Failing to take an oath or affirmation |
337AA(1)(a) |
60 |
| Prohibited person attending questioning |
337AA(1)(b) |
60 |
| Failure of person to read and/or sign a record of statements made during questioning |
337AA(1)(c) |
60 |
| Failure to comply with conditions associated with provision of record of statements made during questioning |
337AA(1)(d) |
60 |
| Failure of lawyers to comply with direction to stop addressing an investigator or questioning a person being interviewed |
337AA(2) |
60 |
Source: Fair Work (Registered Organisations) Amendment Bill 2013.
This table outlines each of the new criminal offences contained in the Bill. The table outlines both the penalties (in penalty units) and the maximum term of imprisonment.
Table 5: criminal offence provisions
| Offence |
Provision |
Amount (PU) |
Term |
| Breach of good faith, improper use of position and improper use of information |
290A |
2000 |
5 years |
| Obstructing an investigation or execution of a warrant |
337AB(1) |
100 |
2 years |
| Failing to provide reasonable facilities and assistance to a person executing a warrant |
337AB(3) |
25 |
6 months |
| Concealing documents relevant to an investigation |
337AC |
200 |
5 years |
| Failure of lawyer to provide required written notice when claiming legal professional privilege |
337AE(3) |
10 |
3 months |
| Making false misleading statements, or providing false or misleading documents or information |
337(1) |
100 |
2 years |
Source: Fair Work (Registered Organisations) Amendment Bill 2013.
The table below provides the new criminal offence provisions contained in the Bill alongside their equivalents in the Corporations Act 2001 and Australian and Securities and Investment Commission Act 2001.
Table 6: comparison of criminal offences
|
Proposed section in the Bill
|
Equivalent section in the Corporations Act 2001 or Australian Securities and Investment Commission Act 2001
|
|
290A Good faith—officers of organisations and branches
(1) An officer of an organisation or a branch commits an offence if he or she:
(a) is reckless; or
(b) is intentionally dishonest;
and fails to exercise his or her powers or discharge his or her duties:
(c) in good faith in the best interests of the organisation; or
(d) for a proper purpose.
Use of position—officers and employees of organisations and branches
(2) An officer or employee of an organisation or a branch commits an offence if the officer or employee uses his or her position dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for himself or herself, or someone else, or causing detriment to the organisation; or
(b) reckless as to whether the use may result in himself or herself or someone else directly or indirectly gaining an advantage, or causing detriment to the organisation.
Penalty: 2,000 penalty units or imprisonment for 5 years, or both.
Use of information—officers and employees of organisations and branches
(3) A person who obtains information because he or she is, or has been, an officer or employee of an organisation or a branch commits an offence if he or she uses the information dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for himself or herself, or someone else, or causing detriment to the organisation; or
(b) reckless as to whether the use may result in himself or herself or someone else directly or indirectly gaining an advantage, or causing detriment to the organisation.
Penalty: 2,000 penalty units or imprisonment for 5 years, or both.
|
184 Good faith--directors and other officers[181]
(1) A director or other officer of a corporation commits an offence if they:
(a) are reckless; or
(b) are intentionally dishonest;
and fail to exercise their powers and discharge their duties:
(c) in good faith in the best interests of the corporation; or
(d) for a proper purpose.
Use of position--directors, other officers and employees
(2) A director, other officer or employee of a corporation commits an offence if they use their position dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
Use of information--directors, other officers and employees
(3) A person who obtains information because they are, or have been, a director or other officer or employee of a corporation commits an offence if they use the information dishonestly:
(a) with the intention of directly or indirectly gaining an advantage for themselves, or someone else, or causing detriment to the corporation; or
(b) recklessly as to whether the use may result in themselves or someone else directly or indirectly gaining an advantage, or in causing detriment to the corporation.
|
|
307A Disqualification orders
(1) The Federal Court may make an order disqualifying a person from holding office in an organisation for a period that the Court considers appropriate if:
(a) the person has contravened a civil penalty provision; and
(b) the Court is satisfied that the disqualification is justified.
(2) In determining whether the disqualification is justified, the Court may have regard to:
(a) the person’s conduct in relation to the management, business and property of any organisation; and
(b) any other matter that the Court considers appropriate.
|
206C Court power of disqualification--contravention of civil penalty provision[182]
(1) On application by ASIC, the Court may disqualify a person from managing corporations for a period that the Court considers appropriate if:
(a) a declaration is made under:
(i) section 1317E (civil penalty provision) that the person has contravened a corporation/scheme civil penalty provision; or
(ii) section 386- 1 (civil penalty provision) of the Corporations (Aboriginal and Torres Strait Islander) Act 2006 that the person has contravened a civil penalty provision (within the meaning of that Act); and
(b) the Court is satisfied that the disqualification is justified.
(2) In determining whether the disqualification is justified, the Court may have regard to:
(a) the person's conduct in relation to the management, business or property of any corporation; and
(b) any other matters that the Court considers appropriate.
(3) To avoid doubt, the reference in paragraph (2)(a) to a corporation includes a reference to an Aboriginal and Torres Strait Islander corporation.
|
|
337AB Obstructing person acting under this Part
(1) A person must not:
(a) engage in conduct that results in the obstruction or hindering of a person in the exercise of a power under this Part; or
(b) engage in conduct that results in the obstruction or hindering 10 of a person who is executing a warrant issued under section 335L.
Penalty: 100 penalty units or imprisonment for 2 years, or both.
(2) Subsection (1) does not apply to the extent that the person has a reasonable excuse.
Note: A defendant bears an evidential burden in relation to the matters in this subsection (see subsection 13.3(3) of the Criminal Code).
(3) The occupier, or person in charge, of premises that a person enters under a warrant issued under section 335L must not intentionally or recklessly fail to provide to that person all reasonable facilities and assistance for the effective exercise of his or her powers under the warrant.
Penalty: 25 penalty units or imprisonment for 6 months, or both.
|
65 Obstructing person acting under this Part[183]
(1) A person must not:
(a) engage in conduct that results in the obstruction or hindering of a person in the exercise of a power under this Part; or
(b) engage in conduct that results in the obstruction or hindering of a person who is executing a warrant issued under section 36.
Penalty: 100 penalty units or imprisonment for 2 years, or both.
(1A) Subsection (1) does not apply to the extent that the person has a reasonable excuse.
Note: A defendant bears an evidential burden in relation to the matters in this subsection, see subsection 13.3(3) of the Criminal Code.
(2) The occupier, or person in charge, of premises that a person enters under a warrant issued under section 36 must not intentionally or recklessly fail to provide to that person all reasonable facilities and assistance for the effective exercise of his or her powers under the warrant.
Penalty: 25 penalty units or imprisonment for 6 months, or both.
|
|
337AC Concealing documents relevant to investigation
(1) If the Commissioner, or a person or body to whom the Commissioner has delegated the conduct of an investigation, is investigating, or is about to investigate, a matter, a person must not:
(a) in any case—engage in conduct that results in the concealment, destruction, mutilation or alteration of a document relating to that matter; or
(b) if a document relating to that matter is in a particular State or Territory—engage in conduct that results in the taking or sending of the document out of that State or Territory or out of Australia.
Penalty: 200 penalty units or imprisonment for 5 years, or both.
(2) It is a defence to a prosecution for a contravention of subsection (1) if it is proved that the defendant intended neither to defeat the purposes of the investigation, nor to delay or obstruct the investigation, or any proposed investigation under this Part.
Note: A defendant bears a legal burden in relation to a matter mentioned in subsection (2) (see section 13.4 of the Criminal Code).
|
67 Concealing books relevant to investigation[184]
(1) Where ASIC is investigating, or is about to investigate, a matter, a person must not:
(a) in any case--engage in conduct that results in the concealment, destruction, mutilation or alteration of a book relating to that matter; or
(b) if a book relating to that matter is in a particular State or Territory--engage in conduct that results in the taking or sending of the book out of that State or Territory or out of Australia.
Penalty: 200 penalty units or imprisonment for 5 years, or both.
(2) It is a defence to a prosecution for a contravention of subsection (1) if it is proved that the defendant intended neither to defeat the purposes of the corporations legislation, nor to delay or obstruct an investigation, or a proposed investigation, by ASIC.
Note: A defendant bears a legal burden in relation to a matter mentioned in subsection (2), see section 13.4 of the Criminal Code.
|
|
337AE Legal professional privilege
(1) This section applies if:
(a) under this Part, a person requires a lawyer:
(i) to give information; or
(ii) to produce a document; and
(b) giving the information would involve disclosing, or the document contains, a privileged communication made by, on behalf of or to the lawyer in his or her capacity as a lawyer.
(2) The lawyer is entitled to refuse to comply with the requirement unless the person to whom, or by or on behalf of whom, the communication was made, consents to the lawyer complying with the requirement.
(3) If the lawyer so refuses, he or she must, as soon as practicable, give to the person who made the requirement a written notice setting out:
(a) if the lawyer knows the name and address of the person to whom, or by or on behalf of whom, the communication was made—that name and address; and
(b) if subparagraph (1)(a)(i) applies and the communication was made in writing—sufficient particulars to identify the document containing the communication; and
(c) if subparagraph (1)(a)(ii) applies—sufficient particulars to identify the document, or the part of the document, containing the communication.
Penalty: 10 penalty units or imprisonment for 3 months, or both.
|
69 Legal professional privilege[185]
(1) This section applies where:
(a) under this Part, Division 3 of Part 10, or Division 2 of Part 11, a person requires a lawyer:
(i) to give information; or
(ii) to produce a book; and
(b) giving the information would involve disclosing, or the book contains, as the case may be, a privileged communication made by, on behalf of or to the lawyer in his or her capacity as a lawyer.
(2) The lawyer is entitled to refuse to comply with the requirement unless:
(a) if the person to whom, or by or on behalf of whom, the communication was made is a body corporate that is being wound up--the liquidator of the body; or
(b) otherwise--the person to whom, or by or on behalf of whom, the communication was made;
consents to the lawyer complying with the requirement.
(3) If the lawyer so refuses, he or she must, as soon as practicable, give to the person who made the requirement a written notice setting out:
(a) if the lawyer knows the name and address of the person to whom, or by or on behalf of whom, the communication was made--that name and address; and
(b) if subparagraph (1)(a)(i) applies and the communication was made in writing--sufficient particulars to identify the document containing the communication; and
(c) if subparagraph (1)(a)(ii) applies--sufficient particulars to identify the book, or the part of the book, containing the communication.
Penalty: 10 penalty units or imprisonment for 3 months, or both.
|
|
337 Offences in relation to investigation by Commissioner[186]
(1) A person commits an offence if:
…
(b) the person gives information, or produces a document, in purported compliance with a requirement under subsection 335(2), and the person knows, or is reckless as to whether, the information or document is false or misleading; or
(c) when attending before the Commissioner or delegate in accordance with a requirement under subsection 335(2), the person makes a statement, whether orally or in writing, and the person knows, or is reckless as to whether, the statement is false or misleading ; or
…
Penalty: 100 penalty units or imprisonment for 2 years, or both.
…
(2) Paragraphs (1)(a) and (d) do not apply to the extent that the person has a reasonable excuse.
Note: A defendant bears an evidential burden in relation to the matters in subsections (2) to (4) (see subsection 13.3(3) of the Criminal Code).
|
64 False information[187]
(1) A person must not:
(a) in purported compliance with a requirement made under this Part; or
(b) in the course of an examination of the person;
give information, or make a statement, that is false or misleading in a material particular.
Penalty: 100 penalty units or imprisonment for 2 years, or both.
(2) A person must not, at a hearing, give evidence that is false or misleading in a material particular.
Penalty: 10 penalty units or imprisonment for 3 months, or both.
(3) It is a defence to a prosecution for a contravention of subsection (1) or (2) if it is proved that the defendant, when giving the information or evidence or making the statement, believed on reasonable grounds that it was true and not misleading.
Note: A defendant bears a legal burden in relation to the matter in subsection (3), see section 13.4 of the Criminal Code.
|
Source: Fair Work (Registered Organisations) Amendment Bill 2013, Corporations Act 2001, Australian and Securities Investment Commission Act 2001.
The table below provides some of the new coercive power provisions in the Bill alongside their equivalents in the Australian Securities and Investment Commission Act 2001.
| Proposed section in the Bill |
Equivalent section in the Australian Securities and Investment Commission Act 2001 |
|
335K Application for warrant to seize documents
(1) If the Commissioner has reasonable grounds to suspect that there are, or may be within the next 3 days, on particular premises in Australia, documents whose production could be required under section 335, he or she may: 2
(a) lay before a magistrate an information on oath or affirmation setting out those grounds; and
(b) apply for the issue of a warrant to search the premises for those documents.
(2) On an application under this section, the magistrate may require further information to be given, either orally or by affidavit, in connection with the application.
|
35 Application for warrant to seize books
(1) Where a member or staff member has reasonable grounds to suspect that there are, or may be within the next 3 days, on particular premises in Australia, books whose production could be required under this Division, he or she may:
(a) lay before a magistrate an information on oath or affirmation setting out those grounds; and
(b) apply for the issue of a warrant to search the premises for those books.
(2) On an application under this section, the magistrate may require further information to be given, either orally or by affidavit, in connection with the application.
|
|
335L Grant of warrant
(1) This section applies if, on an application under section 335K, the magistrate is satisfied that there are reasonable grounds to suspect that there are, or may be within the next 3 days, on particular premises, particular documents whose production could be required under section 335.
(2) The magistrate may issue a warrant authorising a member of the Australian Federal Police, whether or not named in the warrant, together with any person so named, with such assistance, and by such force, as is necessary and reasonable:
(a) to enter on or into the premises; and
(b) to search the premises; and
(c) to break open and search anything, whether a fixture or not, in or on the premises; and
(d) to take possession of, or secure against interference, documents that appear to be any or all of those documents.
(3) If the magistrate issues such a warrant, he or she must set out on the information laid before him or her under section 335K for the purposes of the application:
(a) which of the grounds set out in the information; and
(b) particulars of any other grounds;
he or she has relied on to justify the issue of the warrant.
(4) A warrant under this section must: 32(a) specify the premises and documents referred to in subsection (1); and
(b) state whether entry is authorised to be made at any time of the day or night or only during specified hours; and
(c) state that the warrant ceases to have effect on a specified day 3 that is not more than 7 days after the day of issue of the warrant.
|
36 Grant of warrant
(1) This section applies where, on an application under section 35, the magistrate is satisfied that there are reasonable grounds to suspect that there are, or may be within the next 3 days, on particular premises, particular books whose production could be required under this Division.
(2) The magistrate may issue a warrant authorising a member of the Australian Federal Police, whether or not named in the warrant, together with any person so named, with such assistance, and by such force, as is necessary and reasonable:
(a) to enter on or into the premises; and
(b) to search the premises; and
(c) to break open and search anything, whether a fixture or not, in or on the premises; and
(d) to take possession of, or secure against interference, books that appear to be any or all of those books.
(3) If the magistrate issues such a warrant, he or she must set out on the information laid before him or her under subsection 35(2) for the purposes of the application:
(a) which of the grounds set out in the information; and
(b) particulars of any other grounds;
he or she has relied on to justify the issue of the warrant.
(4) A warrant under this section must:
(a) specify the premises and books referred to in subsection (1); and
(b) state whether entry is authorised to be made at any time of the day or night or only during specified hours; and
(c) state that the warrant ceases to have effect on a specified day that is not more than 7 days after the day of issue of the warrant.
|
|
335M Execution of warrant
(1) Before any person enters premises under a search warrant issued under section 335L, a member of the Australian Federal Police must:
(a) announce that the member is authorised to enter the premises; and
(b) give any person at the premises an opportunity to allow entry to the premises.
(2) However, the member of the Australian Federal Police is not required to comply with subsection (1) if he or she believes on reasonable grounds that immediate entry to the premises is required to ensure that the effective execution of the warrant is not frustrated.
(3) If the occupier of the premises is present at the premises:
(a) the member of the Australian Federal Police must make available to the occupier a copy of the warrant; and
(b) the occupier is entitled to observe the search being conducted.
(4) The occupier’s right to observe the search being conducted ends if the occupier impedes the search.
(5) This section does not prevent 2 or more areas of the premises being searched at the same time.
(6) If documents are seized under the warrant, the member of the Australian Federal Police or a person assisting the member must provide a receipt for the documents.
(7) If 2 or more documents are seized, they may be covered in the one receipt.
|
36A Execution of warrant
(1) Before any person enters premises under a search warrant issued under section 36, a member of the Australian Federal Police must:
(a) announce that the member is authorised to enter the premises; and
(b) give any person at the premises an opportunity to allow entry to the premises.
(2) However, the member of the Australian Federal Police is not required to comply with subsection (1) if he or she believes on reasonable grounds that immediate entry to the premises is required to ensure that the effective execution of the warrant is not frustrated.
(3) If the occupier of the premises is present at the premises:
(a) the member of the Australian Federal Police must make available to the occupier a copy of the warrant; and
(b) the occupier is entitled to observe the search being conducted.
(4) The occupier's right to observe the search being conducted ends if the occupier impedes the search.
(5) This section does not prevent 2 or more areas of the premises being searched at the same time.
(6) If books are seized under the warrant, the member of the Australian Federal Police or a person assisting the member must provide a receipt for the books.
(7) If 2 or more books are seized, they may be covered in the one receipt.
|
|
335N Powers in relation to documents produced or seized
(1) This section applies if:
(a) documents are produced to a person under a requirement made under section 335; or
(b) under a warrant issued under section 335L, a person:
(i) takes possession of documents; or
(ii) secures documents against interference; or
(c) by virtue of a previous application of subsection (8) of this section, documents are delivered into a person’s possession.
(2) If paragraph (1)(a) applies, the person may take possession of any of the documents.
(3) The person may inspect, and may make copies of, or take extracts from, any of the documents.
(4) The person may use, or permit the use of, any of the documents for the purposes of a proceeding.
(5) The person may retain possession of any of the documents for so long as is necessary:
(a) for the purposes of exercising a power conferred by this section (other than this subsection and subsection (7)); or
(b) for the purposes of conducting the investigation concerned; or
(c) for a decision to be made about whether or not a proceeding to which the documents would be relevant should be begun; or
(d) for such a proceeding to be begun and carried on.
(6) No-one is entitled, as against the person, to claim a lien on any of the documents, but such a lien is not otherwise prejudiced.
(7) While the documents are in the person’s possession, the person:
(a) must permit another person to inspect at all reasonable times such (if any) of the documents as the other person would be entitled to inspect if they were not in the first-mentioned person’s possession; and
(b) may permit another person to inspect any of the documents.
(8) Unless subparagraph (1)(b)(ii) applies, the person may deliver any of the documents into the possession of the Commissioner or of a person authorised by the Commissioner to receive them.
(9) If paragraph (1)(a) or (b) applies, the person, or a person into whose possession the person delivers any of the documents under subsection (8), may require:
(a) if paragraph (1)(a) applies—a person who so produced any of the documents; or
(b) in any case—a person who was a party to the compilation of any of the documents;
to explain any matter about the content of any of the documents or to which any of the documents relate.
Note: Failure to comply with a requirement made under this subsection is an offence (see section 337).
|
37 Powers where books produced or seized
(1) This section applies where:
(a) books are produced to a person under a requirement made under this Division; or
(b) under a warrant issued under section 36, a person:
(i) takes possession of books; or
(ii) secures books against interference; or
(c) by virtue of a previous application of subsection (8) of this section, books are delivered into a person's possession.
(2) If paragraph (1)(a) applies, the person may take possession of any of the books.
(3) The person may inspect, and may make copies of, or take extracts from, any of the books.
(4) The person may use, or permit the use of, any of the books for the purposes of a proceeding.
(5) The person may retain possession of any of the books for so long as is necessary:
(a) for the purposes of exercising a power conferred by this section (other than this subsection and subsection (7)); or
(b) for any of the purposes referred to in paragraphs 28(a), (b) and (d) or 30A(2)(a), (b) and (d), as the case requires; or
(c) except in the case of books required to be produced for a purpose specified in subparagraph 30A(2)(a)(ii) or 30A(2)(b)(ii)--for a decision to be made about whether or not a proceeding to which the books concerned would be relevant should be begun; or
(d) for such a proceeding to be begun and carried on.
(6) No-one is entitled, as against the person, to claim a lien on any of the books, but such a lien is not otherwise prejudiced.
(7) While the books are in the person's possession, the person:
(a) must permit another person to inspect at all reasonable times such (if any) of the books as the other person would be entitled to inspect if they were not in the first-mentioned person's possession; and
(b) may permit another person to inspect any of the books.
(8) Unless subparagraph (1)(b)(ii) applies, the person may deliver any of the books into the possession of ASIC or of a person authorised by it to receive them.
(9) If paragraph (1)(a) or (b) applies, the person, or a person into whose possession the person delivers any of the books under subsection (8), may require:
(a) if paragraph (1)(a) applies--a person who so produced any of the books; or
(b) in any case--a person who was a party to the compilation of any of the books;
to explain any matter about the compilation of any of the books or to which any of the books relate.
Note: Failure to comply with a requirement made under this subsection is an offence (see section 63).
(10) In this section:
"proceeding" includes:
(a) in relation to a contravention of Division 2 of Part 2--a proceeding under a law of the Commonwealth, a State or a Territory; and
(b) otherwise--a proceeding under a law of the Commonwealth, or of a State or Territory in this jurisdiction.
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