CHAPTER 2
Key issues
Amendments since the previous report
2.1
The bill is largely identical to its predecessors and its underlying
purpose remains unchanged. However, there have been four notable changes to the
bill since the committee's previous report, each of which was made in response
to the recommendations in that report.
Recommendation 1
2.2
The committee recommended that the requirement to disclose material
personal interests under proposed new section 293C of the RO Act apply only to
officers whose duties are financial in nature.[1]
The application of proposed section 293C is now restricted to an officer of an
organisation or branch 'whose duties include duties that relate to the
financial management of the organisation or branch'.[2]
2.3
The committee further recommended that such disclosures be recorded in
the minutes of relevant meetings and be made available to members on request.
This replaces the requirement that disclosures be made to all members of an
organisation.[3]
Recommendation 2
2.4
The committee recommended that a list of exclusions from the obligation
to disclose material personal interests, based on subsection 191(2) of the
Corporations Act, be inserted into the bill.[4]
Proposed new paragraph 293C(4)(a) of the RO Act provides that disclosures need
not be made in respect of certain categories of interest, such as those held in
common with the other members of an organisation or branch and those arising
in relation to an officer's remuneration.[5]
In addition, the bill no longer imposes an express obligation on officers to
disclose any material personal interest in relation to that officer's
relatives.[6]
Recommendation 3
2.5
The committee recommended that the obligation to disclose payments made
by a registered organisation be subject to certain exclusions and limitations,
including a minimum payment threshold.[7]
Proposed new section 293G of the RO Act now includes additional exceptions to
the obligation to disclose these payments. These exceptions, modelled on
similar exceptions in the Corporations Act, include payments made to related
parties on 'arm's length' terms or that are less than an amount to be specified
in regulations.[8]
Recommendation 4
2.6
The committee recommended that the Commissioner be given authority to
grant exemptions from training requirements.[9]
Proposed new section 293M of the RO Act provides for an exemption to mandatory
financial management training where the Commissioner is satisfied that an
officer has 'a proper understanding' of their financial duties based on
relevant experience or qualifications.[10]
Responses to the bill
2.7 The majority of submitters reiterated or expanded on their submissions
to the previous inquiry. Responses to the bill remain mixed, with supporters
and opponents of the bill divided on the necessity for greater oversight of
registered organisations, and in particular, oversight of trade unions.
Support for the
bill
2.8
Supporters of the bill accept the need for greater oversight and
improved governance of registered organisations to provide members with similar
protections to those enjoyed by company shareholders.
2.9
The Australian Mines and Metals Association stated that 'more effective
regulation of registered organisations and increased penalties are
warranted to ensure members' interests are protected to the same extent as are
those of shareholders of companies'.[11]
2.10
The Chamber of Commerce and Industry of Western Australia (CCIWA)
emphasised the importance of enshrining the requirement for organisations to
act in their members' best interests, noting 'this is especially important
given the level of trust members place in these organisations, particularly in
the case of trade unions where members are limited in their ability to choose
the organisation that suits them'.[12]
2.11
In relation to increased penalties, the Department of Employment noted that
the Interim Report of the Royal Commission into Trade Union Governance and
Corruption (the Royal Commission) found that the current maximum penalties for
breaches of financial management duties are too low.[13]
This finding was echoed in Justice North's comment, while hearing General
Manager of Fair Work Australia v Health Services Union,[14]
that the penalties are so low as to be 'beneficial to wrongdoers'.[15]
By increasing penalties, 'the interests of members of registered organisations
are protected in a similar way as the interest of shareholders of companies'.[16]
Criticism of the bill
2.12
Opponents of the bill generally reject the underlying premise that
mismanagement and poor governance are widespread amongst registered
organisations.
2.13
The Australian Council of Trade Unions (ACTU) contended that the current
RO Act provides appropriate regulatory oversight of registered organisations
and need not be amended. Similarly, Unions NSW found no evidence to justify
changes to the RO Act.[17]
2.14
The Victorian Automobile Chamber of Commerce (VACC) was not opposed to
increased oversight of registered organisations, but expressed concern that the
bill was 'financially costly and administratively unworkable without achieving
[its] purported aim'.[18]
Responses to the amendments
2.15
Not all submissions directly addressed the amendments, but those that
did were generally positive. The CCIWA welcomed the government's willingness to
respond to stakeholder concerns,[19]
while the Australian Industry Group was pleased that many of its own suggestions
had been taken up.[20]
The Australian Chamber of Commerce and Industry was encouraged that the
amendments showed 'a commitment to reducing red tape while strengthening
governance and transparency'.[21]
2.16
The Master Plumbers Association of NSW noted that aligning requirements
under the RO Act with those in the Corporations Act would succeed in
'[creating] transparency and reducing red tape without introducing additional
and potentially overlapping requirements'.[22]
2.17
However, some submitters expressed reservations about the nature and
extent of the changes. The VACC was 'concerned that the current Bill has failed
to account for concerns previously raised by VACC and others'.[23]
The ACTU, noting the value of 'a uniform minimum standard of knowledge',
suggested that exemptions from training requirements 'may dilute the content of
the care and diligence duty'.[24]
Committee view
2.18
Based on the weight of evidence in this and the previous inquiry, the
committee is of the view that current arrangements are manifestly inadequate to
ensure proper governance of registered organisations and deter improper
behaviour by officials. The committee is persuaded that the bill is both
necessary and appropriate to ensure the fair representation and protection of
members' rights by the organisations to which they belong.
2.19
The committee is pleased to note that its recommendations have been
acted upon. The committee is particularly reassured by the closer alignment of
the reporting and disclosure obligations with those in the Corporations Act,
fulfilling the committee's desire to see 'consistent language and jurisprudence
be applied to new legislation'.[25]
The committee is satisfied that the amendments to the bill have addressed its
previous concerns.
Recommendation 1
2.20
The committee recommends that the Senate pass the bill.
Senator Bridget
McKenzie
Chair
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