Fair Work Amendment (Corrupting Benefits) Bill 2017

I am pleased to rise and to speak on the Fair Work Amendment (Corrupting Benefits) Bill 2017.

It is quite a simple principle: secret payments are corrosive to institutions that ultimately require public confidence to function effectively. This bill basically deals with the secret payments made to unions and to union officials. The corrosive influence of these payments has been laid bare time and time again by numerous current and former union officials. We have seen evidence before the Heydon royal commission uncovering a raft of payments between unions and employers that were designed specifically to ensure that companies received favourable treatment from the unions.

Our government is committed to restoring integrity, fairness and transparency into the workplace in relation to these deals. It starts with requiring employers, union officials and unions to act with integrity, with fairness and with transparency in their dealings—especially for the workers to know exactly what those deals are.

We learnt a great deal from the Heydon royal commission about the secret side of these union deals. For example, the AWU received half a million dollars from the glass manufacturer ACI, which was laying off workers at its factory in western Melbourne. The employer undertook these redundancies without any response at all from the union. Another example revealed by the royal commission was the $300,000 that Thiess John Holland paid in relation to the EastLink freeway in Melbourne. This was an agreement between the AWU and Thiess John Holland, and according to the royal commission it involved false invoices.

A common thread throughout these deals is that the union involved was the Australian Workers’ Union, and its leader at the time that these deals were done was of course none other than the Leader of the Opposition. Why was the AWU negotiating for workers building a freeway? You would think that the CFMEU would be working in the interests of those workers. However, we do know that the AWU basically muscled onto the CFMEU’s turf, to build up its membership in order to bolster the influence of the member for Maribyrnong.

But that was not the last deal we heard about during the trade union royal commission. There is a wealth of information and documentation as part of that royal commission. As the Prime Minister referred to in his second reading speech, ACI operations paid the AWU in Victoria around $500,000 while they laid off workers at their Spotswood glass manufacturing factory. And what was that payment for? Well, the royal commission discovered that the invoice issued by the AWU was for ‘paid education leave’. But actually, predominantly, it was used to offset a loan to renovate the union’s Victorian office and other general union costs. It was not quite paid education leave.

What we do see here is a pattern of behaviour, which is why this legislation is so important. What we did see was yet another example of the AWU making shady deals. Another important one was the one they made with Clean Event. This was a deal where Clean Event paid the AWU $75,000 to maintain an enterprise agreement that paid their cleaning workers well below award wages and actually stripped them of their penalty rates. Now, penalty rates are something that we have heard a lot about, including from the previous speaker. Of course these are low-paid workers initially, and yet their penalty rates were traded away without their knowledge.

The Heydon royal commission basically said that there were savings to Clean Event. And of course the AWU did not just receive their $25,000 per annum payment. Probably what they wanted most was what they got in exchange: Clean Event provided lists of 100 purported members. We have heard so much from the Leader of the Opposition about penalty rates in the past that this particular case is extremely ironic. The payments were detailed in a secret letter—not one shared with the workers or the cleaners—between the AWU and Clean Event, and this letter was never disclosed to the cleaning workers. That is a prime example of a secret payment.

This is clearly a pattern; that is what the Heydon royal commission found. It was a pattern of behaviour. That is why the legislation before the House is so important for those workers and for the issues around transparency and fairness. This pattern of behaviour has very serious implications for unions and their members’ confidence in their leadership. How could those Clean Event workers trust their union leaders when this is the deal they did without their knowledge, without transparency?

Figures show that just one in nine employees in the private sector are union members, so how can anyone in this House be surprised when we and employees hear about these types of deals? They would ask, ‘Why should we join a union when we see what happened to those Clean Event workers?’ They were some of the lowest-paid workers in the nation and they were literally sold out by the union that they were members of and by the leader of that union. The ACTU may wonder why membership is so low; well, there is a prime example.

The royal commission uncovered even more evidence of secret payments, and of course the AWU was involved in these again. As I said, it is a perpetuation of the pattern. Winslow Constructors was caught in the AWU’s web of secret payments. In his final report, in a chapter entitled ‘AWU and Winslow Constructors’, Justice Heydon sets out in great detail the payments made and what they were for. And this actually was an arrangement that went from back in the 1990s right up to 2000. Justice Heydon set out the false invoices stated by the AWU as ‘training’ but entered into the AWU’s own accounting system as ‘membership income’. Evidence given by witnesses from Winslow Constructors indicated that no training was provided during the time in line with the information in the invoices.

The former state secretary of the AWU and the chosen successor of the Leader of the Opposition gave evidence that there was ‘no sound basis for concluding that no training was provided’ and asserted that, because the AWU provided training, ‘one would not conclude that it was not provided to Winslow’. In other words, because the AWU provided training, it was provided to Winslow as a matter of course. That is a very interesting hypothesis!

The royal commissioner found:

These submissions are all unpersuasive. They are at odds with the contemporaneous evidence …

‘Unpersuasive’—that is very strong language for a former High Court judge. The commission found that the successor of the Leader of the Opposition was instrumental in creating the false invoices. The evidence was accepted by Justice Heydon that Mr Melham was involved in the secret payments from Winslow to the AWU. He personally directed the creation of knowingly false invoices and maintained this practice from the time he was secretary of the Victorian branch.

This legislation will make these types of deals illegal. Given the history, it is not before time. It is not before time for the workers at Clean Event. It is not before time for each of the workers in the cases I have mentioned. The Winslow Constructors payment incident and others are clearly a pattern of behaviour. That is why the legislation is so important. It is to break that pattern and to give the employees and the union members confidence.

Employers participated in these arrangements, and the commission clearly draws the inference that companies participated for a number of potential reasons: because they expected to gain more flexible or cheaper employee pay or conditions, to win jobs or perhaps to avoid strikes and other industrial disputes. I think this is what in the movies is termed a ‘shakedown’. Companies pay these secret deals to get either a cheaper workforce or industrial peace. Clearly, in light of what we saw in the royal commission, there is an urgent need of reform, which is why this bill is so important.

This legislation is a direct outcome of the royal commission. In volume 5 of the report, chapter 4 is entitled ‘Corrupting benefits’ and sets out what it believes should be reformed to ensure that these practices are eradicated. The commission said: ‘The problems are longstanding. They are inherently intractable. There is every incentive to preserve secrecy.’ The report summarised the targeted reforms: ‘(1) that registered organisations and branches be required to disclose certain payments made to them; (2) that a Commonwealth corrupting benefits offence in relation to officers of registered organisations be enacted; and (3) that employers be prohibited from making any payments to an employee organisation, including certain classes of payment.’ This is precisely what the legislation we are debating here does, along with the Registered Organisations act.

These laws will equally apply to employers. Whether you are offering or paying a benefit, or soliciting or receiving it, all participants will be accountable, as they should be. It is about fairness. It is about transparency. The penalties in this bill are certainly part of what we need to achieve. The legislation will help clean up the unfair, secretive and often corrupt payments that we have seen come to light in the Heydon royal commission. It will go to restoring integrity and fairness to workplaces. It is going to give some confidence to a whole lot of workers, which is what this is about and should be about. As I said at the start of my speech, it is quite a simple principle: secret payments are corrosive to institutions that ultimately require public confidence to function effectively. Our government wants to restore that public confidence in these institutions and ensure that they are run fairly and in accordance with the rule of law.