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From the Desk of the Executive Director

Ken Phillips is co-founder and Executive Director of Independent Contractors of Australia. He is a published authority on independent contractor issues and directs research on related commercial and trade practices issues. Through his numerous articles in newspapers and think-tank and academic journals, Ken is known for approaching issues from outside normal perspectives and is frequently sought out for media comment.

How Turnbull can push through corruption reforms

Wednesday, January 06, 2016

On current form, the Turnbull Government won’t have the numbers in the Senate to pass the reforms recommended by the Heydon Royal Commission into union corruption. This predicted failure is of the government’s own making.

The cause is as I’ve explained in articles over the last two days (here and here). The government is presenting the Heydon report as a union condemnation report. It is not. It is a report exposing corruption in Australian unions and businesses and recommends reforms to fix this.

The Turnbull Government’s insistence on just union-bashing will backfire. Here’s why.

Independent South Australian Senator Nick Xenophon has publicly said he will support a broad reform package to cut down on white-collar crime as well as corruption within the trade union movement. My private discussions with other independent senators suggest key senators will not support legislation that appears only as a union attack exercise. They will support moves against all corruption.

The fact is that Justice Heydon’s recommendations do just that. There are some 79 recommendations and they are balanced.

Heydon recommends the establishment of a new Registered Organisations Commission (ROC) with similar powers to the Australian Securities and Investments Commission. Unions and employer bodies under the ROC would both have new disclosure and accountability requirements pretty much similar to that required of companies under ASIC.

The ROC would have powers to investigate criminal offences of unions and employers. New civil penalties would be applied to unions and employer bodies concerning financial management and accountability. Increased civil and criminal penalties would apply against union officials and union funds could not be used to pay union officials’ fines. This would align union officials’ responsibilities to corporate executive responsibilities under the Corporations Act.

Recommendation 41 calls for laws “ … making it a criminal offence for an employer to provide, offer or promise to provide any payment or benefit to an employee organisation or its officials … An equivalent criminal offence should apply to any person soliciting, receiving or agreeing to receive a prohibited payment or benefit.” That is, Heydon is calling for it to be a criminal offence for an employer to make a payment to a union or for a union to receive a payment from an employer. Both unions and employers would face criminal sanction.

Recommendation 45 seeks to bring ‘worker entitlement’ (union) funds under ASIC regulation. This would make union controlled funds subject to the same governance, financial reporting and disclosure requirements imposed on the commercial sector. Parallel ‘pecuniary benefits’ disclosure requirements would be imposed on employee insurance products (Recommendation 47).

The Heydon reform recommendations continue with this theme. It’s about bringing unions up to the standard required of the private sector. It’s about requiring both unions and employers to equally comply with new standards that close legal loopholes that have allowed corruption to flourish.

What’s quite staggering is that the Turnbull Government has chosen to seemingly ignore this balance.

Politics is about moral positioning. The current crop of Coalition leaders still seem obsessed with the view that their moral high ground is achieved by targeting ‘bad’ unions. Hence the government’s contortion of what Justice Heydon has actually said and recommended in his report.  

But this is not what the great bulk of the swinging voter population in Australia think. Now making up some 40 per cent of voters, these voters are suspicious of Coalition union-bashing. The Senate independents reflect this middle ground. Labor and the unions know this. And they are deftly playing to this middle-ground suspicion.

Steadily and persistently, Labor and the unions will develop in swinging voter and independent Senator minds that the Turnbull Government is union bashing because of a secret agenda, to weaken worker protections. Turnbull is currently doing everything to aid this Labor/union agenda.

That is, the Turnbull Government is laying the foundations for failure over the Heydon reforms just as they failed on WorkChoices. It’s a failure of moral positioning.

Yet Justice Heydon has given Turnbull the perfect positioning. The problem is not union corruption but the broader issue of corruption within the business/union sector. It is all corruption that has to be tackled, not just union corruption.

If Turnbull pushes this line, swinging voters will support the reforms. Independent senators will support the reforms. Labor and the unions will look like protectors of corruption if they oppose the reforms. Subsequent Labor governments will have difficulty undoing the reforms.

If the Turnbull Government grasps this moral positioning, it can win the reforms. This is vital. Australia needs a clean-out of the cesspit of union and business corruption exposed by Justice Heydon. 
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