Australia: Important releases by the Federal Government into the Royal Commission into Trade Union Governance and Corruption and the Productivity Commission Review of the Federal Workplace Relations Framework

Two important announcements were made by the Federal Government on 19 December 2014:

• Firstly, two volumes of the interim report of Honourable John Dyson Heydon AC QC in relation to the Royal Commission into Trade Union Governance and Corruption were released. A third volume of the interim report that deals with threats to witnesses has been kept confidential and has been referred to regulatory authorities for further investigation.
• Secondly, Joe Hockey, Treasurer, released the terms of reference for the 2015 Productivity Commission Review of the Federal Workplace Relations Framework. The Productivity Commission will provide a final report to the Government by November 2015. 

Royal Commission into Trade Union Governance and Corruption Interim Report

In March this year, the Governor General issued Letters Patent to the Honourable John Dyson Heydon AC QC to establish the Royal Commission into Trade Union Governance and Corruption. The Letters Patent contained broad terms of reference that required the Royal Commission to investigate:

• the governance arrangements of separate entities established by unions or their officers,
• whether those entities have been used for any unlawful purpose,
• the use of funds solicited in the name of those entities, and
• other related matters specified in the Letters Patent.

During the course of this year, the Royal Commission conducted more than 70 public and private hearings involving more than 220 witnesses in Sydney, Melbourne, Perth and Brisbane.

On 15 December 2014, Commissioner Heydon handed the Royal Commission into Trade Union Governance and Corruption interim report to the Governor General. The interim report was released to the public on 19 December 2014.¹

The interim report contains three volumes. The first two volumes do not make final recommendations as to law reform, nor do they make findings that particular unions or union officials have breached laws or regulations. However in the report, Commissioner Heydon has made a number of recommendations for referral to regulatory authorities to further investigate whether civil or criminal proceedings should be brought against unions and union officials.

The third volume of the interim report has not been released. It deals with threats to witnesses and has been kept confidential to protect the safety of the witnesses involved and their families. Commissioner Heydon has recommended that the confidential volume be passed on to regulatory authorities for further investigation.

Further public hearings will be held in 2015. The final report and recommendations of the Royal Commission are due to be handed down by 31 December 2015.

Set out below is a broad summary of the key issues addressed in the interim report.

1. Generic slush funds, fighting funds and income protection and redundancy funds

The interim report reviewed a number of different types of funds involving unions. These include generic slush funds (such as the AWU – Workplace Reform Association fund), fighting funds (which are most commonly used for election purposes) and income protection and redundancy funds (such as the BERT fund and the Protect scheme).

In the interim report, Commissioner Heydon found that funds used by unions for a variety of purposes posed significant governance issues, including issues with:

• the fiduciary duties of union officials;
• actual or potential conflicts of interest; and
• inadequate or no record keeping.

Commissioner Heydon has also observed that problems arise when unions are too closely connected with the governance income protection and redundancy funds (which are a significant source of union revenue).

As part of the review, Commissioner Heydon considered statements made pursuant to section 237 of the Fair Work (Registered Organisations) Act 2009 (FWRO Act), which show loans, grants or donations made by unions that exceed $1000. As these statements have only been available by attending the Fair Work Commission, Commissioner Heydon has noted in the report, that it would be desirable that the FWRO Act be amended to make the section 237 statements publicly available on the Fair Work Commission website.

2. CFMEU

A large part of the interim report relates to the CFMEU, and includes a number of case studies. Commissioner Heydon found that the case studies raise ‘fundamental issues about the regulation of the building and construction industry, and the culture of wilful defiance of the law which appears to lie at the core of the CFMEU.’

One of the key case studies relates to the ‘black ban’ imposed by the CFMEU against Boral. Commissioner Heydon considered that evidence of the conduct of the CFMEU and its officers towards Boral and its customers raised various issues requiring investigation including possible blackmail and contraventions of the Competition and Consumer Act 2010 (Cth) (CC Act).

As a result of the Boral case study, Commissioner Heydon outlined a number of deficiencies with the existing legal and regulatory framework in relation to secondary boycotts, the enforcement of court orders, the regulation of trade unions generally, and the regulation of, and the duties owed by, trade union officers.

Commissioner Heydon considered that the CFMEU’s conduct suggested that:

• the current secondary boycott provisions in the CC Act were ineffective to deter illegal secondary boycotts by trade unions;
• there was an inability or unwillingness by regulatory authorities to investigate and prosecute breaches of the secondary boycott provisions by trade unions speedily; and
• there was no single statutory regulator dedicated to the regulation of trade unions with sufficient legal power to investigate and prosecute breaches of the secondary boycott provisions.

3. Recommendations for referral to regulatory authorities

Commissioner Heydon has made a number of recommendations to refer matters to regulatory authorities for consideration to be given as to whether unions and union officials should be charged with offences, or proceedings commenced against them. A summary of Commissioner Heydon’s recommendations for referral is available here.

Productivity Commission Review of the Workplace Relations Framework Terms of Reference

Also, on 19 December 2014, Joe Hockey, Treasurer, released the terms of reference for the Productivity Commission to assess the performance of the Federal Workplace Relations Framework, including the Fair Work Act 2009 (Cth) and the Independent Contractors Act 2006 (Cth).² A key consideration for the Productivity Commission will be the capacity for the workplace relations framework to adapt over the longer term to issues arising due to structural adjustments and changes in the global economy.

The broad terms of reference for the Productivity Commission’s review include assessing the impact of:

• unemployment, underemployment and job creation,
• fair and equitable pay conditions for employees, including the maintenance of a relevant safety net,
• small businesses,
• productivity, competitiveness and business investment,
• the ability of business and the labour market to respond appropriately to changing economic conditions,
• patterns of engagement in the labour market,
• the ability for employers to flexibly manage and engage with their employees,
• barriers to bargaining,
• red tape and the compliance burden for employers,
• industrial conflict and days lost due to industrial action, and
• appropriate scope for independent contracting.

In 2015, the Productivity Commission will hold hearings, invite public submissions and release a draft report to the public. The Productivity Commission will provide a final report to the Government by November 2015.

This article was written by John Cooper, Partner, Wendy Fauvel, Senior Associate, Kate Joffe, Solicitor, Rachel Loughland, Solicitor, Alex Lorenzi, Solicitor, Priya Parghi, Graduate, Melbourne.

Endnotes

1. The interim report is available here.
2. The terms of reference are available here.