Brothers Keepers

Corrupt union leader Derrick Belan

Some union bosses think they shouldn’t be encumbered by the rules that apply to other office bearers. Legislative reform is overdue.

Submission to Senate Education and Employment Committee, Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2019.

In 2018 the MRC began publishing research reports into aspects of union activity. The Unions Inc series consisted of three reports: From Industrial Strength to Financial Muscle, Casual Lies and Strikes Unlimited.
These reports confirmed that Australians expect lawful, reasonable and honourable conduct from our corporations, not-for-profits and other institutions, and that we expect the same of our registered organisations and those who lead them. The special rights and privileges given to unionists, including tax exemptions and the right to lawfully trespass on private land, should come with a level of accountability which does not currently exist.

The intent of the Bill in the current form has ensured that the provisions apply equally to both employer and employee organisations and aligns largely with the offences and penalties that apply to companies and directors under the Corporations Act.

The problem is that some union bosses think they shouldn't be encumbered by the rules that apply to other types of office bearers. The union movement's record of either corruption or relentless striving for more power, usually at the expense of business efficiency and transparency, is a long one:

• National Union of Workers boss Derrick Belan spent $650,000 of members' money on tattoos, botox, P&O cruises, divorce lawyers, weight-loss surgery, an indoor skydiving centre and a subscription to a dating site between 2011 and 2015. He was convicted of 60 charges and sentenced in June last year to four years in prison.

• The Heydon Royal Commission into Trade Union governance and corruption which exposed Belan’s behaviour, also caught out a litany of similar conduct from other officials, including James McGiveron and Richard Burton. The two TWU officials parted with over $300,000 of union member funds for “luxury” utes.

• An inspector in the Queensland Government’s Office of Industrial Relations is alleged to have assisted the CFMEU in a “campaign of harassment” against a concrete manufacturer.

• A deal done between the ACT Government and UnionsACT three years ago gives unions the power to deny or cancel contracts. The ACT Government is to provide a list of tenderers for each contract, and gives unions the right to tell the Government whether applicants meet criteria. It remains current and continues to raise concerns about transparency and accountability.

The Bill represents the culmination of the Australian community demanding a certain standard of acceptable behaviour and conduct of officials. It goes a long way to restoring integrity to our registered organisations. The MRC supports the passage of this legislation.

Current framework not acting as a proper deterrent

Research conducted by the MRC found that between 2003 and 2016/17, Australia’s 15 largest trade unions increased their combined yearly revenue from approximately $394.4 million to $748.4 million. This equates to an increase of 89 per cent or an average of $26.27 million per union each year.

Over the same period, the total asset wealth of these 15 major unions nearly trebled, growing from $572.57 million to a staggering $1.55 billion. This equates to an increase of 170 per cent, or $65 million per union.

The asset wealth of nine of Australia’s 15 largest unions has outpaced the growth of the ASX All Ords Price Index since 2003, some by a significant margin and the CFMEU’s 2017 income (prior to merging with the MUA) was greater than that of Greyhound Australia and Fuji Xerox Asia Pacific., among other major enterprises.

The Bill is necessary to properly deter unions and their officials from breaking the law as their financial power continues to grow. It will counter the ‘just pay the fine’ mentality.

Justice Flick who presided over the Construction Mining and Forestry Union vs Parker (No 2) [2017] FCA 182 said in his judgement:

• An inference is inescapably drawn that the penalties which have been imposed in the past, and the penalties to be imposed in the present proceeding, have simply been regarded as the “costs of doing business”.

• It is unlikely that deterrence can be achieved by the imposition of penalties comparable to those that have been imposed in the past. Such penalties have proven to be ineffectual.

• Whatever further steps may be taken by the Legislature to prescribe a meaningful sanction to achieve an acknowledged existing purpose of deterrence is a matter for the Legislature to pursue.

Further, on 15 March 2017, the Secretary of the ACTU Sally McManus said the following statements in an interview with the ABC’s 7.30 report: "It might be illegal industrial action according to our current laws, and our current laws are wrong. I believe in the rule of law when the law is fair and the law is right. But when it's unjust I don't think there's a problem with breaking it."

In the case of Director of the Fair Work Building Industry Inspectorate v Construction, Forestry, Mining and Energy Union & Ors (Perth International Airport) Justices Dowsett and Rares of the Federal Court said:

"In a liberal democracy, it is assumed that citizens, corporations and other organisations will comply with the law. Such compliance is not a matter of choice. The community does not accept that a citizen, corporation or other organisation may choose to break the law and simply pay the penalty.

"The courts certainly do not accept that proposition. Such acceptance would pose a serious threat to the rule of law upon which our society is based. It would undermine the authority of Parliament and could lead to the public perception that the judiciary is involved in a process which is pointless, if not ridiculous."

With the tools available to it, the court handed down a verdict against the CFMEU to fine it and 6 of its officials a combined $242,000.

This case provides clear evidence that despite having lawful ways to resolve the dispute, the Union took the avenue prescribed by Ms McManus that resulted in a fine. In the last ten years the CFMEU alone has accrued more than $16 million worth of fines and penalties imposed by the court. The MRC submits that the exponential growth in union wealth and income means that these penalties no longer act as a deterrent.

In late 2017 Federal Circuit Court Judge Vasta made clear in handing down another conviction against the CFMEU that "the Court can do no more with the tools available to it to ensure compliance with the industrial regime....If the community at large are not satisfied with the actions of the Court to ensure compliance with the Fair Work Act, then the next step is a matter for the Parliament."

The MRC submits that the evidence is in, the community has spoken and that the Bill as presented serves the community at large and national interest.

The MRC urges the passage of the Bill.