On 4 July 2019 the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2019 (the bill) was introduced into the House of Representative by the Hon Christian Porter MP, Minister for Industrial Relations.
Following the recommendation of the Senate Selection of Bills Committee, the Senate referred the provisions of the bill to the Senate Education and Employment Legislation Committee (the committee) for inquiry and report by 25 October 2019.
Conduct of the inquiry
Details of the inquiry were made available on the committee's website. The committee also contacted a number of organisations inviting submissions to the inquiry. Submissions were received from 67 organisations and individuals, as listed at Appendix 1. Submissions are available on the committee's website.
In addition, the committee received 1116 pieces of correspondence expressing opposition to the bill. This included a document complied by the Australian Council of Trade Unions that consisted of 1111 pieces of correspondence from its members.
The committee held five public hearings in the following locations—Canberra, Brisbane, Melbourne, Sydney and Hobart. The witness list for these hearings can be found at Appendix 2.
Structure of the report
Chapter 2 outlines the background to the bill, recent reviews undertaken and the key provisions contained in the bill.
Chapter 3 outlines the key issues as raised by submitters and witnesses and sets out the committee view.
References in this report to Hansard are to the Proof Hansard. Please note that page numbers may vary between the proof and official transcripts.
Reports of other committees
Senate Standing Committee for the Scrutiny of Bills
The Senate Standing Committee for the Scrutiny of Bills (Scrutiny of Bills Committee) noted the similarities between this bill and the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2017 (the 2017 bill), and referred to its comments raised in relation to the 2017 bill. When reviewing the 2017 bill the Scrutiny of Bills Committee raised concerns and sought further information from the Minister about the following matters:
insufficiently defined disqualification powers with respect to new paragraph 223(3)(b) (Schedule 1, item 11);
the introduction of strict liability offences, which would be punishable by imprisonment and/or subject to a fine of greater than 60 penalty units;
reversing the evidential burden of proof for the offence relating to a failure to provide an organisation's books when required to do so (Schedule 3, item 4, proposed subsection 323H(6)); and
providing administrators immunity from civil prosecution (Schedule 3, item 4, proposed section 323K).
In response to the concerns raised, Senator the Hon Michaelia Cash wrote to the Scrutiny of Bills Committee and addressed the matters, with the exception of the introduction of strict liability offences. The Scrutiny of Bills Committee requested that the additional information provided by the Minister be included in the explanatory memorandum and made no further comments. It is noted that the current explanatory memorandum includes the additional information.
In its recent report, the Scrutiny of Bills Committee reiterated its concerns in relation to the introduction of strict liability offences. The Scrutiny of Bills Committee acknowledged that the explanatory memorandum provided some justification for the imposition of strict liability. However, it was noted that the Guide to Framing Commonwealth Offences, Infringement Notices and Enforcement Powers (the Guide) states that the application of strict liability is generally only considered appropriate where the offence is not punishable by imprisonment and only punishable by a fine of up to 60 penalty units. In contrast, the bill introduces strict liability offences that are subject to either 100 penalty units and two years imprisonment, or 120 penalty units.
The Scrutiny of Bills Committee requested additional information from the Minister for Industrial Relations. On 7 August 2019, Minister Porter advised that in relation to the strict liability offence in schedule 1, proposed section 226, the penalty was specifically recommended by the Royal Commission into Trade Union Governance and Corruption. As observed by Commissioner Heydon, under section 206A(1) of the Corporations Act 2001 (Corporations Act) a person commits a criminal offence of strict liability where they have been disqualified from managing corporations and continues to do so.
Minister Porter also reiterated advice provided by his department, that elements of offences that provide for strict liability can be justified where they are necessary to provide the required deterrent effect. Additionally, Minister Porter confirmed that the defence of honest and reasonable mistake of fact will remain available and noted that strict liability will not apply where a person is automatically disqualified. Having regard to Commissioner Heydon's findings, and the 'extensive evidence and testimony', Minister Porter indicated that a departure from this recommendation would unnecessarily weaken the policy objective of the provision, being to deter law-breaking.
Concerning the strict liability offences in schedule 3, proposed sections 323G and 323H, Minister Porter noted that the use of strict liability for these offences is consistent with the principles relating to strict liability in the Guide so far as strict liability is required to ensure the integrity of the regulatory regime. Minister Porter reiterated the information provided in the explanatory memorandum, that the offence of honest and reasonable mistake of fact will be available and that the penalties are modelled on similar strict liability offences in the Corporations Act.
The Scrutiny of Bills Committee concluded that it does not consider consistency with existing penalties to be a sufficient justification for applying strict liability and drew its scrutiny concerns to the attention of Senators.
Parliamentary Joint Committee on Human Rights
The Parliamentary Joint Committee on Human Rights (PJCHR) also reported on the 2017 bill. The report raised questions as to whether the 2017 bill would limit the right to freedom of association and the right to just and favourable conditions at work in the following areas:
The proposed disqualification regime as it would limit the right of workers' organisations to freely elect their own representatives as well as introducing provisions that would disqualify a person from holding office in a registered organisation on the basis of less serious contraventions of industrial law.
The proposed cancellation of registration of organisations regime as the registration of an organisation is an essential first step to enable an organisation to function efficiently and represent their members adequately. Additionally, the grounds for cancellation of an organisation include less serious contraventions of industrial law as well as taking industrial action.
Schedule 3 would allow the Federal Court (the court) to make an order placing an organisation into administration, which could have significant consequences for the representational rights of employees and any current campaigns or disputes.
Schedule 4 provides that the Fair Work Commission must determine that the amalgamation of organisations to be in the public interest for an amalgamation to proceed, which would limit the ability of trade unions to amalgamate.
The PJCHR concluded that, in relation to all four areas, the measures would 'likely to be incompatible with the right of freedom of association' but did not conclude that any areas of the bill would be incompatible with the right to just and favourable conditions at work.
Additionally, the PJCHR recommended that to improve the human rights compatibility of two of the measures, the following amendments be made:
In relation to the cancellation of registration of organisations, that the court's proposed powers of cancellation be amended so that it can only be exercised by the court as a matter of last resort and where it is in the best interest of the members.
In relation to the Federal Court's power to place an organisation into administration, that the court's power be amended so that prior to placing an organisation into administration, the court must be satisfied that it would be in the best interest of its members.
The current bill was not explicitly amended to implement these recommendations. However, the explanatory memorandum to the bill at page xi makes clear that the design of schedule 2 to the bill ensures cancellation of registration remains a measure of last resort, while paragraph 158 of the explanatory memorandum to the bill notes that the administration provisions in the bill ensure governance issues within an organisation, or individual branches or divisions, can be addressed promptly and transparently to ensure the interests of members are protected.
In its recent report, Report 3 of 2019, the PJCHR reiterated the views it previously expressed. It further noted, 'that while there have been a number of changes to the bill including relating to matters the committee previously commented on, these do not fully address the committee's initial concerns'.
The committee thanks those individuals and organisations who contributed to this inquiry by preparing written submissions and giving evidence at the public hearing.