Government Announces Royal Commission into Trade Union Governance and Corruption

In recent posts, we have reported on the prospect of the government going further than the reintroduction of the Australian Building Construction Commission (ABCC) by also setting up a Royal Commission to investigate alleged corruption and malpractice in the building industry. Yesterday (10 February 2014) the government actually went even further by announcing a wide ranging Royal Commission to inquire not only into specific allegations of corruption in the building industry but into the operation of five major unions, some of which are not connected to the building industry with the potential to take inquiries further.

What is to be investigated?

In broad terms the Royal Commission is given by Clause 1 of its Terms of Reference the powers to investigate the "governance arrangements of any separate entities established by registered employee associations or their officers, purportedly for industrial purposes or for the welfare of their members" in doing so the Commission is to have "particular regard" to the:

• financial management of such entities;
•  adequacy of existing laws as they relate to such entities with respect to the:
• integrity of financial management; and
• accountability of officers of registered employee associations to their members in respect of the use of funds and other assets in relation to such entities;
• whether such entities are used, or have been used for any form of unlawful purpose;
• the use of funds solicited in the name of any such entities, for the purpose of furthering the interests of:
• a registered employee association;
• officers of a registered employee association;
• members of a registered employee association; or
• any other person, association or organisation.

For the purposes of the Royal Commission:

•  A registered employee association is to mean an organisation registered under the Fair Work (Registered Organisations) Act 2009, its predecessor legislation or equivalent State legislation, and as defined by section 12 of the Fair Work Act 2009.
• A law means a law of the Commonwealth, a State or Territory.
• An officer of a registered employee association means any employee or elected officer holder of such an organisation while a organisation includes any registered industrial organisation, corporate entity or association, whether incorporated or not.
• A separate entity means a fund, organisation, account or other financial arrangement that is either a separate legal entity to a registered industrial organisation and/or is not covered by the statutory financial reporting obligations that the organisation is subject to under the Fair Work (Registered Organisations) Act 2009, its predecessor legislation or equivalent State legislation.

The above indicates clearly the wide breadth of power the Government intends to give the Royal Commission and the fact that its investigations could extend well beyond particular or specific unions and even reach into the business sector as is evidenced, for example, by the definition of "organisation" in the terms and its inclusion of a "corporate entity or association" as being included as organisations that can be investigated.

Further indication of the far reaching nature of the proposed commission is in the media release  announcing it where it states:

Extent of the Investigation

According to the media release published jointly by the Prime Minister, the Minister for Employment and the Attorney-General, the five unions to be investigated are the:

• Australian Workers Union (AWU)
• Construction Forestry Mining and Energy Union (CFMEU)
• Electrical Trades Union (ETU)
• Health Services Union (HSU)
• Transport Workers Union (TWU)

However, the investigation has the potential to extend much more broadly and as Clause 2 of the Terms of Reference further states, the Commission will be able to investigate: "any other person, association or organisation in which in respect of which credible allegations of involvement in such activities are made".

This last phrase leaves a very wide open door for the Commission to go much deeper, leaving open the plausible investigation of organisations who are not unions but have dealt with unions in a corrupt or illegal manner.

Who Will be in Charge of the Commission?

The Government has appointed former High Court Judge the Honourable John Dyson Heydon AC QC as the Commissioner to lead the inquiry saying in the media release: "the former High Court Judge . . . has a distinguished legal career" and was willing to accept the appointment.

In the press his honour has been referred to as "a black-letter law conservative known during his time on the bench for his dissenting judgments and criticism of judicial activism . . ." Qualities that will no doubt assist in such a difficult and very likely to be controversial inquiry.

The Attorney-General and the Minister for Employment are to be responsible for the co-ordination of any Government work associated with the Royal Commission's inquiry and work.

Duration of the Commissions Reference

The Commission is expected to run for 12 months but given the breadth of its power and the expectation that politically the government will not be rushing to wind it up the final date of reporting may be a lot further off.

Reaction to the Announcement

The opposition leader Bill Shorten is reported as saying "any royal commission into the unions should also focus on dodgy employers . . ." and that "corruption claims should be investigated by police". The opposition leader points to the previous Howard Government Royal Commission into unions that led to the establishment of the first ABCC and claims that no prosecution followed from that investigation saying that a Royal Commission is not the best way to deal with the issue of union corruption given that while it can investigate and compel testimony it cannot actually prosecute or enforce its findings. 

The Australian Council of Trade Unions (ACTU) has reacted by saying through a media release, as would be expected, that:

The ACTU focused its response on the closure of Toyota pointing out the government was focusing on unions when it should be focused on jobs.

Business and business organisations in the main are reported as having responded favourably to the governments announcement.

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• Royal Commission into trade union governance and corruption (Federal AG's Media Release - 10 Feb 2014)
• Former High Court judge to head probe into slush funds, bribes (Telegraph - 9 Feb 2014)
• Royal commission a witch-hunt: unions (Herald Sun - 9 Feb 2014)
• Royal Commission shows this is a Government only interested in political point-scoring (ACTU Media Release - 10 Feb 2014)