COALITION SENATORS' ADDITIONAL COMMENTS
Introduction
1.1
Coalition Senators note from the outset their extreme disappointment
that the Senate Education, Employment and Workplace Relations Legislation Committee
was not allowed the time to fully investigate provisions of the Fair Work
(Registered Organisations) Amendment Bill 2012.
1.2
The bill was introduced into the House of Representatives on 31 May
2012. At the next available opportunity, the Coalition sought referral of the bill
to the committee. While the bill was referred, the committee was expected to
review the bill in just five working days.
1.3
A number of submissions expressed concerns with the committee’s
truncated ability to have a proper review. For example, the Australian Chamber
of Commerce and Industry observed:
It is regrettable that the timetable does not provide a more
fulsome opportunity to consider submissions of ROs who will be affected by the
Bill.[1]
1.4
Master Builders expressed similar concern, noting in its submission
that:
Master Builders reiterates its concerns about a truncated
timetable for the Committee’s processes in considering the Bills.[2]
1.5
The reason for the expedited inquiry and the bill being subject to a
Senate guillotine motion is because it is 'a budget bill or a key
appropriation', according to correspondence from the Leader of the Government
in the Senate, Senator the Hon. Chris Evans to Senator the Hon. Eric Abetz
dated 13 June 2012. The Department of Education, Employment and Workplace Relations
submitted that the bill is not a budget measure during the hearing on 22 June
2012:
Senator ABETZ: I would have thought you would give
that answer and that is, if I might say, the correct answer. We were provided
by the leader of the government in the Senate with a letter saying the
government has a number of key appropriation and budget related bills which
require passage before 1 July 2012, attached are attached a list of these bills
for consideration. One of those bills is the Fair Work (Registered
Organisations) Amendment Bill 2012. Reading through it as I did last night, I
found there is nothing that actually requires passage before 1 July 2012,
albeit it might be nice for certain people's timetables. But it is not a budget
related matter that requires passage by 1 July, is it?
Mr Kovacic: It is certainly not a budget related bill.[3]
1.6
The Coalition Senators note that Senate guillotine motions should only
be used in extreme circumstances. However, in this Parliament debate has been guillotined
125 times, whereas under the Coalition, it was only exercised 36 times over a
full three year period.
1.7
This rushed inquiry does not allow for good public policy making. Indeed
Labor Senators have recognised this in the past, previously rallying against
the rushing through of bills. For example, the now Leader of the Government in
the Senate, Senator the Hon Chris Evans, observed that:
We got better legislation when Bills were thoroughly
scrutinised by committees, the public had their input and governments were
forced to listen and respond.[4]
The Senate has both a right and a responsibility to debate
and review legislation – this legislation and all other legislation that comes
before the parliament. That is what Australians expect from this chamber.[5]
1.8
Unfortunately as a result of the Labor's party's tight time frame, a
number of people who were approached with expertise in this area were unable to
appear or prepare a submission in the short period of time that was available
to do so. Coalition Senators are disappointed not to have received the
opportunity to understand their concerns.
Recommendation 1
1.9
That the Fair Work (Registered Organisations) Amendment Bill 2012 be
removed from the Senate guillotine motion to allow for full and proper consideration
of the bill by the Senate through the Education, Employment and Workplace
Relations Legislation Committee.
1.10
Given the substantive impact that the proposed amendments will have,
this bill should be subject to a Regulatory Impact Statement in line with the
Office of Best Practice Regulation’s guidelines. It appears that neither a
Regulatory Impact Statement nor an exemption from the Prime Minister have been
undertaken or sought.
Recommendation 2
1.11
That the bill be subject to a Regulatory Impact Statement in line with
the Office of Best Practice Regulation guidelines.
1.12
Coalition Senators agree that the seemingly never-ending saga of the
Fair Work Australia investigations into the Health Services Union (HSU) have made
it absolutely clear that major reform is needed in this area. However, the
reform is needed in the management rather than the legislation. Coalition
Senators firmly believe that this bill is nothing more than a hasty attempt by
the Minister for Employment and Workplace Relations and the Australian Labor
Party to give the appearance that the problems with the HSU investigation lies
in the legislation.
1.13
Coalition Senators agree with the assessment of the former
Attorney-General, the Hon. Robert McClelland MP, that there are areas of this bill
that can be strengthened.[6]
However, Coalition Senators agree with the statement in the Institute of Public
Affairs submission:
The Bill is a step in the right direction. However, its
reforms are modest and do not go far enough.[7]
1.14
Coalition Senators also agree with the Department of Education,
Employment and Workplace Relations’ submission:
[That] recent events have demonstrated the need for stronger
penalties for any registered organisations and their office holders that do the
wrong thing.
...
Questions have been raised about the ability of FWA as the
regulator to effectively investigate and take action against organisations that
are alleged to have breached those obligations. [8]
1.15
Nevertheless, while Coalition Senators agree with the justification, we
firmly believe that this is a limp bill that will not achieve the intended
goals it seeks to address. Coalition Senators will explore the concerns in more
detail through these additional comments.
The Problem
1.16
Fair Work Australia’s investigations into the HSU Victoria Number 1
Branch and the HSU National Office, by Fair Work Australia’s own admission took
'an unreasonably long time'.[9]
1.17
Further, the Coalition have expressed real concerns over the conduct of
the investigation in a number of key areas:
- A long and protracted investigation;
- Failure to cooperate with police;
-
Alleged inability to prepare a brief of evidence for the
Commonwealth Director of Public Prosecutions; and
- The key personnel in Fair Work Australia and their background as
former union bosses.
1.18
While the process raises serious questions, the final reports were
substantiative and detailed bodies of work.
1.19
The report into the HSU National Office contained a litany of findings
against former Labor MP, Mr Craig Thomson. Chapter after chapter deals with
unauthorised expenditure of union funds for Mr Thomson’s personal benefit and
on his campaign to be a Member of Parliament for the New South Wales Central
Coast seat of Dobell, as well as contraventions by him in managing the HSU’s National
Office. The findings detail lavish expenditure of low-paid union members’ funds
on escort agencies, travel, restaurants and cash withdrawals. Indeed, Fair Work
Australia has gone as far as to suggest that substantive parts of Mr Thomson’s evidence
to it may have been 'false and misleading'.
1.20
What compounds this outrageous expenditure are the pages of the Fair
Work Australia report devoted to rejecting the stories put up by Mr Thomson in
an effort to deny his involvement.
The Straw Men
1.21
Fair Work Australia’s refusal to cooperate with police was
reprehensible. This is especially so, as the predecessor body believed the
issues should have been referred to police as early as 30 June 2009.
1.22
In correspondence obtained by the Coalition under the Freedom of
Information Act 1982, Fair Work Australia responded to a request for
information from Victoria Police in the following terms:
Naturally I wish to cooperate with your request to the extent
that would be appropriate, consistent with the powers and functions conferred
upon the General Manager of FWA by the RO Act.[10]
1.23
However, later in the same piece of correspondence, the General Manager
stated that:
...neither I, nor FWA, have power to inquire into or
investigate, nor reach conclusions about whether a reporting unit (or anybody)
may have contravened a Victorian criminal law...Accordingly, I regret to advise
that I do not consider it would be appropriate for me or for any of my staff,
to respond to the questions set out in your email...[11]
1.24
This bizarre argument was debunked by a Detective Sergeant Tyquin of the
Victorian Fraud and Extortion Squad, who responded in the following terms:
Your above-mentioned decision appears to have been based on
the mistaken belief that the Victoria Police were seeking to have the FWA
inquiry extended to include a consideration of whether or not Victorian
criminal law may have been contravened or to inquire into or investigate such
matters.
...
The determination as to whether or not that material advances
the investigation by Victoria Police into possible breaches of the criminal law
is a matter for Victoria Police.[12]
1.25
Further, advice obtained by the Coalition from eminent lawyer, Mr Stuart Wood
SC, states clearly that the refusals to cooperate with police 'appear to be based
on an erroneous analysis of the statute' and 'are inconsistent with the
intention of the Parliament' in enacting the Fair Work (Registered
Organisations) Act 2009 (Registered Organisations Act).
1.26
Coalition Senators believe that amendments should not be required to the
Registered Organisations Act to allow for the cooperation with police, as the
power to co-operate already exists under the current legislation and should
have happened in the first place.
1.27
Coalition Senators also note that an email sent from Mr Doug Williams,
the former Industrial Registrar to the lead investigator, Mr Terry Nassios, on
the day prior to Fair Work Australia coming into existence. In this email Mr
Williams stated that the investigation should be referred to police.[13]
The question begs, if Mr Williams was not constrained, why were Mr Lee and Ms Bernadette
O’Neill?
1.28
Nonetheless, as Fair Work Australia have placed themselves in this
absurd straight jacket, Coalition Senators believe the Government’s amendment
does not go far enough to make it expressly clear, how, when and on what basis
Fair Work Australia should cooperate with police and other law enforcement
bodies.
Recommendation 3
1.29
That the bill be amended to ensure absolute clarity in clause 335C
relating to cooperation with police and law enforcement agencies.
1.30
On 4 April 2012, Fair Work Australia provided the Commonwealth Director
of Public Prosecutions (CDPP) with a copy of its report into the Health
Services Union National Office. However, the CDPP made it clear in a press
release that 'the material forwarded is not a brief of evidence.'[14]
1.31
Former Chairman of the National Crime Authority, Peter Faris QC
described the report that was forwarded to the CDPP as 'just a report like a
report from a commission and yes, I’m sure it’s useless.'[15]
1.32
The Commonwealth Director of Public Prosecutions appeared to reach a
similar conclusion:
The report and related material forwarded is not a brief of
evidence and as a consequence could not be assessed against the tests for
prosecution that are contained in the Prosecution Policy of the Commonwealth.[16]
1.33
Fair Work Australia then concluded that they could not prepare a brief
of evidence. Ms O'Neill, General Manager, announced:
I have further considered whether I am able to provide a
brief of prosecution and concluded that I am unable to do so.[17]
1.34
The committee received evidence from Mr John Lloyd, Director, Institute of
Public Affairs. Mr Lloyd is a former Australian Building and Construction
Commissioner (ABCC), and observed that in his time at the ABCC, while not
having express powers to prepare a brief of evidence, there were no impediments
to doing so. The following exchange occurred during the hearing on 22 June
2012:
Senator ABETZ: So in preparing that brief of evidence
would you liaise with the Commonwealth Director of Public Prosecutions to
ensure that that which you provided the director of prosecutions was in fact in
a format that could be used and employed by the Director of Public
Prosecutions?
Mr Lloyd: Certainly. It was a fundamental requirement
that there be a brief of evidence prepared. It was quite explicit in any
electronic or written material that comes from the DPP. So, on the occasions
when we prepared a brief of evidence, my lawyers would liaise with the lawyers
of the DPP about what form and that type of thing was required. We would go
ahead and prepare the brief of evidence. I recall reading those very carefully
before I signed off on them and sent them to the DPP.
Senator ABETZ: As you read the Fair Work (Registered
Organisations) Act as it currently stands, there is nothing stopping the
general manager from doing exactly what you did in the Building and
Construction Commission.
Mr Lloyd: No. I was surprised that they did not
prepare a brief of evidence, and I suspect the quick response by the DPP shows
he was surprised as well.[18]
1.35
Coalition Senators contend that the Registered Organisations Act offers
no impediment in this regard, and could not need be clearer. Section 336
relevantly provides:
336 Action following an investigation
...
(c) refer the matter to the Director of Public Prosecutions
for action in relation to possible criminal offences.[19]
1.36
Coalition Senators note that other Commonwealth agencies do not have an express
power in their governing Acts to prepare briefs of evidence. While Coalition
Senators do not believe amendments are required in this regard as Fair Work
Australia was able to prepare a brief of evidence all along, Coalition Senators
believe Fair Work Australia should be expressly given the power to prepare a
brief of evidence to prevent Fair Work Australia placing themselves in an
absurd straight jacket again in the future.
Recommendation 4
1.37
The bill should be amended to ensure that Fair Work Australia is
provided with the express power to prepare a brief of evidence.
1.38
Coalition Senators note the statement issued by the General Manager of
Fair Work Australia:
It is unfortunate that the legislative scheme that has been
in place for many years and that I am required to act within, does not permit
me to conduct an investigation into whether criminal offences have been
committed, whilst at the same time it does not permit me to disclose
information concerning potential criminal offences to the appropriate
investigatory agency, namely state and federal police.[20]
1.39
Coalition Senators contend that Fair Work Australia’s statement was a
face-saving measure designed to deflect attention from the poor administration
of Fair Work Australia.
The Government’s proposed solution
1.40
The bill before the Parliament is a weak bill designed by a former union
boss to govern union bosses and will have the ‘cop on the beat’ as a former
union boss.
1.41
The bill will:
-
require that the rules of all registered organisations deal with
disclosure of remuneration, pecuniary and financial interests;
- increase the civil penalties under the Registered Organisations
Act;
-
enhance the investigative powers available to FWA under the
Registered Organisations Act; and
- require education and training to be provided to officials of
registered organisations about their governance and accounting obligations.
1.42
While it is a step in the right direction, it does not go far enough,
explained in these additional comments.
1.43
Coalition Senators fear that this bill has been rushed together to meet
a political end rather than dealing with the substantiative problems. Further,
the Government have flagged that further changes to the Act may be required. The
Minister in response to a Question on Notice said:
...the Government will consider the findings of the KPMG review
before deciding to comment publicly on this matter.[21]
1.44
The Department confirmed that more changes may come as a result of the
KPMG review during the hearing on 22 June 2012:
Senator ABETZ: Are we able to shed any light on whether or
not the government might consider further amendments to the Fair Work
(Registered Organisations) Act in light of recommendations that might come out
of the KPMG review?
...
Mr Kovacic: What I can say is that we will have a look at
the KPMG report once it is released or finalised and made available. I suppose
those judgments will be made by government in the light of having seen it.
Senator ABETZ: Yes, I know all that, but have the government
indicated to you at this stage ...
Mr Kovacic: My sense would be that, if there were issues in
there that were not addressed in the context of this bill and required further
response by the government, the government would be open to considering those
sorts of responses.[22]
1.45
Noting that Fair Work Australia have indicated that the HSU
investigations are the only investigations, Coalition Senators believe that the
bill should be delayed from further debate until the August 2012 sittings. This
would allow the Minister and the Parliament to benefit from the KPMG review
which is scheduled to be concluded by the end of July before making changes to
the Act. Coalition Senators believe that a one month delay, after three and a
half years of investigation will not negatively impact the membership of
registered organisations or Fair Work Australia.
Recommendation 5
1.46
Further debate on the bill be suspended until the August 2012
Parliamentary Sittings.
The Opposition’s Better Plan
1.47
The Leader of the Opposition announced a Better Plan for the
Accountability and Transparency of Registered Organisations on 28 April 2012. It
is notable that this announcement preceded Minister Shorten's rushed
announcement by ten days.
1.48
Coalition Senators believe that Australians who join trade unions or
employer associations deserve to have confidence in the conduct and
administration of those organisations. Registered organisations are a central
part of the Fair Work regime and they must operate to the highest of standards.
1.49
The worst aspect of the ongoing HSU scandal is that 70,000 low paid
workers have had their hard-earned money misspent by union officials on
political campaigns and escort services.
1.50
For example, the Fair Work Australia's investigation into the HSU found
that officials had used union members’ money for personal advantage, failed to
act in the best interest of members, and breached financial management rules.
Had these offences occurred in a company with directors, the officials would
have been subject to criminal penalties including personal fines of up to
$200,000 and up to five years imprisonment.[23]
1.51
However, under the Registered Organisations Act, registered
organisations and their officers are only exposed to civil penalties with the
potential for comparatively modest fines of up to $2,200.
1.52
The overwhelming majority of registered organisations already do the
right thing. But there is clear evidence that the money paid by members to some
registered organisations is being used for personal gain and inappropriate
purposes.
1.53
The Hon. Tony Abbott MP announced that, if elected, a Coalition
Government will:
- amend the laws to ensure that registered organisations and their
officials have to play by the same rules as companies and their directors;
- ensure that the penalties for breaking the rules are the same
that apply to companies and their directors, as set out in the Corporations Act
2001;
- reform financial disclosure and reporting guidelines under the
Registered Organisations laws so that they align more closely with those
applicable to companies; and
- establish a separate Registered Organisations Commission.
1.54
It is also clear that Fair Work Australia, which is responsible for
enforcing the laws governing registered organisations, has failed to do its
job. The three year FWA investigation into the Health Services Union is a model
of incompetence.
1.55
There needs to be a watchdog that works, to ensure that the members of
trade unions and other organisations are protected from malfeasance.
1.56
If elected, the Coalition will establish a new body, the Registered
Organisations Commission, that will:
- take on the role of registered organisations enforcer and
investigator, currently held by the General Manager of Fair Work Australia.
- 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.
1.57
The Registered Organisations Commission will be independent and will
operate within the office of the Fair Work Ombudsman. The Registered
Organisations Commission will also be required to cooperate with other law
enforcement bodies.
1.58
Coalition Senators believe that the members of registered organisations
deserve transparent and accountable representation. Australian workers who
join trade unions deserve to know that their membership fees are being used for
proper purposes.
1.59
The Coalition will consult with registered organisations on how best to
implement these reforms.
1.60
Coalition Senators note that a number of submissions suggest that
registered organisations should be covered by the Corporations Act 2001 and
governed by the Australian Securities Investment Commission.[24]
While Coalition Senators agree that the rules and disclosure requirements should
be essentially harmonised between the Fair Work (Registered Organisations) Act
2009 and the Corporations Act 2001, the Coalition recognises the importance of
having industrial organisations governed by a specialist agency focused on
industrial organisations.
1.61
Further, Coalition Senators note the evidence provided by Mr Tim Lyons,
Assistant Secretary, Australian Council of Trade Unions (ACTU), in relation to the
Coalition’s policy:
The more substantive point about the proposed bill that was
foreshadowed by Mr Abbott is: the core of it is to pick up union regulation and
to dump it into the corporations system. I have already dealt with a range of
aspects that. I might make one additional point—and, really, this is the reason
we oppose it.[25]
1.62
The ACTU’s new found basis for opposition to the Coalition’s policy is
false. The Coalition’s policy would have similar rules and penalties for
Registered Organisations. The Coalition believes that this would allow for
transparency for members and a sufficient deterrent for poor conduct.
1.63
It is of concern to the Coalition that a Member of a Trade Union who is
also a shareholder in a corporation cannot expect the same accountability and
transparency in both organisations.
1.64
Coalition Senators note that a number of provisions similar to the
Corporations Act, in relation to conduct, already exist in the Registered
Organisations Act, however the penalty provisions do not. The following table
outlines the contracts between the two legislative regimes:
Corporations Act
2001
|
Fair Work
(Registered Organisations) Act 2009
|
|
180 Care and
diligence—civil obligation only
Care
and diligence—directors and other officers
(1) A director or other officer of a corporation must exercise their
powers and discharge their duties with the degree of care and diligence that
a reasonable person would exercise if they:
(a) were a director or officer of a corporation in the corporation’s
circumstances; and
(b) occupied the office held by, and had the same responsibilities
within the corporation as, the director or officer.
Note: This subsection is a civil penalty provision (see section 1317E).
Business
judgment rule
(2) A director or other officer of a corporation who makes a business
judgment is taken to meet the requirements of subsection (1), and their
equivalent duties at common law and in equity, in respect of the judgment if
they:
(a) make the judgment in good faith for a proper purpose; and
(b) do not have a material personal interest in the subject matter of
the judgment; and
(c) inform themselves about the subject matter of the judgment to the
extent they reasonably believe to be appropriate; and
(d) rationally believe that the judgment is in the best interests of
the corporation.
The
director’s or officer’s belief that the judgment is in the best interests of
the corporation is a rational one unless the belief is one that no reasonable
person in their position would hold.
Note: This subsection only operates in relation to duties under this section and
their equivalent duties at common law or in equity (including the duty of
care that arises under the common law principles governing liability for
negligence)—it does not operate in relation to duties under any other
provision of this Act or under any other laws.
(3) In this section:
business
judgment
means any decision to take or not take action in respect of a matter relevant
to the business operations of the corporation.
|
285 Care and
diligence—civil obligation only
(1) An officer of an organisation or a branch must exercise his or her
powers and discharge his or her duties with the degree of care and diligence
that a reasonable person would exercise if he or she:
(a) were an officer of an organisation or a branch in the
organisation’s circumstances; and
(b) occupied the office held by, and had the same responsibilities
within the organisation or a branch as, the officer.
Note: This subsection is a civil penalty provision (see section 305).
(2) An officer of an organisation or a branch who makes a judgment to
take or not take action in respect of a matter relevant to the operations of
the organisation or branch is taken to meet the requirements of
subsection (1), and their equivalent duties at common law and in equity,
in respect of the judgment if he or she:
(a) makes the judgment in good faith for a proper purpose; and
(b) does not have a material personal interest in the subject matter of
the judgment; and
(c) informs himself or herself about the subject matter of the judgment
to the extent he or she reasonably believes to be appropriate; and
(d) rationally believes that the judgment is in the best interests of
the organisation.
The
officer’s belief that the judgment is in the best interests of the
organisation is a rational one unless the belief is one that no reasonable
person in his or her position would hold.
Note: This subsection only operates in relation to duties under this section and
their equivalents at common law or in equity (including the duty of care that
arises under the common law principles governing liability for negligence)—it
does not operate in relation to duties under any other provision of this Act
or under any other laws.
|
|
181 Good
faith—civil obligations
Good
faith—directors and other officers
(1) A director or other officer of a corporation must exercise their
powers and discharge their duties:
(a) in good faith in the best interests of the corporation; and
(b) for a proper purpose.
Note
1: This subsection is a civil penalty
provision (see section 1317E).
Note
2: Section 187 deals with the
situation of directors of wholly‑owned subsidiaries.
(2) A person who is involved in a contravention of subsection (1)
contravenes this subsection.
Note
1: Section 79 defines involved.
Note
2: This subsection is a civil penalty
provision (see section 1317E).
|
286 Good
faith—civil obligations
(1) An officer of an organisation or a branch must exercise his or her
powers and discharge his or her duties:
(a) in good faith in what he or she believes to be the best interests
of the organisation; and
(b) for a proper purpose.
Note: This subsection is a civil penalty provision (see section 305).
(2) A person who is involved in a contravention of subsection (1)
contravenes this subsection.
Note: This subsection is a civil penalty provision (see section 305).
|
|
182 Use of
position—civil obligations
Use
of position—directors, other officers and employees
(1) A director, secretary, other officer or employee of a corporation
must not improperly use their position to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
Note: This subsection is a civil penalty provision (see section 1317E).
(2) A person who is involved in a contravention of subsection (1)
contravenes this subsection.
Note
1: Section 79 defines involved.
Note
2: This subsection is a civil penalty
provision (see section 1317E).
|
287 Use of
position—civil obligations
(1) An officer or employee of an organisation or a branch must not
improperly use his or her position to:
(a) gain an advantage for himself or herself or someone else; or
(b) cause detriment to the organisation or to another person.
Note: This subsection is a civil penalty provision (see section 305).
(2) A person who is involved in a contravention of subsection (1)
contravenes this subsection.
Note:
This subsection is a civil penalty provision (see section 305).
|
|
183 Use of
information—civil obligations
Use
of information—directors, other officers and employees
(1) A person who obtains information because they are, or have been, a
director or other officer or employee of a corporation must not improperly
use the information to:
(a) gain an advantage for themselves or someone else; or
(b) cause detriment to the corporation.
Note
1: This duty continues after the person
stops being an officer or employee of the corporation.
Note
2: This subsection is a civil penalty
provision (see section 1317E).
(2) A person who is involved in a contravention of subsection (1)
contravenes this subsection.
Note
1: Section 79 defines involved.
Note
2: This subsection is a civil penalty
provision (see section 1317E).
|
288 Use of
information—civil obligations
(1) A person who obtains information because he or she is, or has been,
an officer or employee of an organisation or a branch must not improperly use
the information to:
(a) gain an advantage for himself or herself or someone else; or
(b) cause detriment to the organisation or to another person.
Note
1: This duty continues after the person
stops being an officer or employee of the organisation or branch.
Note
2: This subsection is a civil penalty provision
(see section 305).
(2) A person who is involved in a contravention of subsection (1)
contravenes this subsection.
Note:
This subsection is a civil penalty provision (see section 305).
|
|
184 Good
faith, use of position and use of information—criminal offences
Good
faith—directors and other officers
(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.
Note: Section 187 deals with the situation of directors of wholly‑owned
subsidiaries.
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.
|
PROPOSED
COALITION AMENDMENT
343B Disclosure of
information
(1)This
section applies to information acquired in the performance of functions or
exercise of powers under this Act.
Disclosure
that is necessary or appropriate, or likely to assist administration or
enforcement
(2) The
General Manager may disclose, or authorise the disclosure of, the information
if the General Manager reasonably believes:
(a) that
it is necessary or appropriate to do so in the course of performing
functions, or exercising powers, under this Act; or
(b) that
the disclosure is likely to assist in the administration or enforcement of a
law of the Commonwealth, a State or a Territory.
Obligation
to disclose information relevant to commission of offence
(3) If
a member of the staff of FWA reasonably believes that the information is
relevant to the commission, or possible commission, of an offence against a
law of the Commonwealth, a State or a Territory, the member of staff must
disclose the information to the General Manager.
(4) If
the General Manager reasonably believes that the information is relevant to
the commission, or possible commission, of an offence against a law of the
Commonwealth, a State or a Territory, the General Manager must disclose, or
authorise the disclosure of, the information:
(a) for
an offence against a law of the Commonwealth—to the Australian Federal
Police; or
(b) for
an offence against a law of a State or Territory—to the police force of the
State or Territory.
Information
may be disclosed despite inquiry or investigation under this Act
(5) To avoid doubt, if the information
relates to a matter that is the subject of an inquiry or investigation under
Part 4 of Chapter 11, a person need not wait until the conclusion
of the inquiry or investigation before disclosing, or authorising the
disclosure of, the information under subsection (2), (3) or (4) of this
section.
|
1.65
As noted in the above table, the Coalition has circulated amendments in
the House of Representatives to add the penalty provision to the bill.
1.66
While Coalition Senators note some concerns about enhanced penalties,
only those who have done the wrong thing need fear additional penalties.
1.67
Further, Coalition Senators note the contribution by the Member for
Chifley, Mr Ed Husic MP, in the House of Representatives:
When those opposite argue that the easiest thing to do in
this case in relation to legislation before the House is just to mirror
corporations law or the Corporations Act and basically ensure that the
penalties and approaches that are used in that law be mirrored entirely for
registered organisations, it flies against common sense and reality. I
explained the simple reason: look at any measure of the wealth of those
corporations—I am not talking generally; I am talking about the funds at hand
and the breadth of those organisations—or even at the pay differential between
those who are either directors or senior managers in those corporations and the
management committees of unions, made up of shop floor delegates who are
probably hundreds of times less remunerated and who have less control over the
shape, form and direction of an organisation than someone who is a director or
senior manager directing some of the biggest firms in this country, whose
operations may be based either here or internationally. This compares the types
of provisions that govern those individuals—directors or senior managers—and
looks at the pay differentials that exist there and the responsibilities they
have, and seeks to have the penalties and regime that apply to them then apply
to workplace delegates who sit on management committees of unions. This is
totally disproportionate and is prejudice masked by policy. This is more about
those opposite trying to make it difficult for anyone to even contemplate
sitting on the management committee of a union or an organisation that seeks to
represent working Australians. [26]
1.68
Evidence given by the ACTU during the hearing on 22 June 2012 further
adds to this myth:
Senator ABETZ: Do you accept that some of your
members have holdings of tens of millions of dollars worth of assets?
Mr Lyons: Some unions are quite large and are very
old and certainly do have assets. Those assets are held in property and other
investments.
Senator ABETZ: So why would you say that an
officeholder in a company that might hold less assets than some of your member
organisations who do not act in good faith should have a higher penalty regime
applied against them than officeholders in registered organisations that have a
bigger property and cash base to them?
Mr Lyons: I would say that even the largest union—or
employer association, for that matter—in terms of its turnover and assets,
would pale into insignificance and into even a modestly sized business which is
regulated by the Corporations Law which has to extend to the extent of being
able to regulate what are giant multinational companies. While you are correct
in suggesting that assets run into the millions of dollars, I do not think a
suggestion that that scale implies some parallel with large businesses is an
accurate one. The point is that, to have a specialist regulatory regime which
recognises that the accountability required in this case is to members and not
shareholders is a fundamentally different relationship.[27]
1.69
Both Mr Ed Husic MP and the Mr Lyons are mistaken. The Institute of
Public Affairs submission to this inquiry makes it clear that:
Unions are large financial entities. For example, the 2010
financial report of the Victorian Branch of the CFMEU Construction and General
Division reported net assets of $42 million. In 2011 the ANF Victorian Branch
held $22 million in net assets. The NSW division of United Voice reported $25
million in net assets in 2011. If these unions were classed as proprietary
companies they would be considered large corporations.[28]
1.70
Further, it is worth noting that the so-called ‘tax cuts for small
businesses’ as a part of the Government’s mining tax, required small businesses
to be corporations. On both counts, Mr Husic and Mr Lyons are seriously
mistaken.
Recommendation 6
1.71
The bill should be amended to implement the Coalition’s Better Plan for
Accountability and Transparency of Registered Organisations in full.
Recommendation 7
1.72
The bill should be amended to establish a Registered Organisations
Commission within the office of the Fair Work Ombudsman.
Recommendation 8
1.73
The bill should be amended to ensure that accountability and
transparency provisions as well as penalty provisions are brought in line with
the Corporations Act 2001.
The Member for Barton’s Intervention
1.74
Coalition Senators note the speech made by the Member for Barton, the
Hon. Mr Robert McClelland MP, in the House of Representatives, where it
was argued that the bill could be strengthened.
1.75
The former Attorney General also referred to the Prime Minister’s
involvement in a situation of union funds being misapplied some time ago.
1.76
The Australian Financial Review explored this on Friday, 22 June 2012:
Mr McClelland repeatedly referred to allegations made against
Mr Wilson that have been made several times in the Victorian Parliament, most
recently in 2001 when he was accused of misappropriating about $500,000 of
union funds, including $102,000 spent on a house in Kerr Street, Fitzroy.
The Prime Minister had no comment yesterday and has
repeatedly denied allegations she was linked to union corruption. Mr McClelland
made pointed references to the Prime Minister’s involvement.
[From page 1]"Indeed, I know the Prime Minister is quite
familiar with this area of the law, as lawyers in the mid-1990s, [we] were
involved in a matter representing opposing clients," Mr McClelland said in
Parliament.
"Indeed, my involvement in that matter has coloured much
of my thinking in this area and resulted in me moving amendments on 17
September 2002 to actually strengthen the powers of the Federal Court of
Australia." Ms Gillard, who was then a lawyer at Slater & Gordon, is
alleged to have given Mr Wilson legal advice.
Mr McClelland worked at law firm Turner Freeman before
entering Parliament.
He gave legal advice to another former union official, Ian
Cambridge, who pursued Mr Wilson.
The vast majority of trade unions were professionally managed
by highly competent and dedicated people, Mr McClelland said.
"But, regrettably, there have been exceptions to that.
"Officers have sought to obtain personal benefit or
benefit on behalf of others at the expense of members of their union. Reported
instances include not only misapplying funds and resources of the union but
also using the privileges of their office to attract and obtain services and
benefits from third parties." Mr McClelland highlighted that union
governance laws in the mid-1990s did not extend to union officials who had
retired, meaning Mr Wilson could not be pursued because he retired soon after
the allegations were made. [29]
Conclusion
1.77
Coalition Senators believe this is a poor bill that will not deal with
the substantiative issues borne out of Fair Work Australia’s investigation.
1.78
Coalition Senators agree with the Master Plumbers and Mechanical
Services Association of Australia submission that in terms of the:
...objectives of Fair Work Australia in relation to compliance
and education, the Bill will not achieve the objectives sought.[30]
1.79
Further, with an independent review presently being conducted by KPMG
this exercise could be superseded.
Recommendation 9
1.80
The bill be considered after the conclusion of the KPMG review and
further improved with substantiative amendments.
Senator Bridget
McKenzie
Senator for
Victoria |
Senator the Hon. Eric
Abetz
Leader of the Opposition in the
Senate |
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