Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

The Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill is designed to protect—for the workers—the hundreds of millions of dollars held in these funds for workers' redundancy pay, sick leave and other employee benefits and to ensure these funds are spent for the benefit of workers and not for other purposes.

In 2015, the Royal Commission into Trade Union Governance and Corruption estimated that worker entitlement funds hold close to $2 billion. Since that time they will have grown.

The Heydon royal commission, and the Cole royal commission before that, found that, while on the face of it these funds look like they are run for the benefit of workers, these funds in fact funnel millions of dollars back to the unions and employer groups which make up their boards.

Given there is little governance of these funds, Commissioner Heydon found that there was a 'compelling case' for reform and that new laws were needed to comprehensively deal with governance, financial reporting and disclosure in worker entitlement funds.

That is what this bill does.

Given the amount of money in these funds, and that the money in these funds is meant to be for the benefit of the workers, it is crucial that the moneys in these funds are managed transparently and responsibly and spent on genuine benefits for workers.

Currently, basic rules of good governance that apply to other managed investment schemes do not apply to worker entitlement funds. In fact, Commissioner Heydon found that this multi-billion-dollar industry is currently subject to virtually no regulation at all. This bill will change that.

Workers' money will need to be responsibly invested and transparently managed by trained professionals.

Funds will need to have at least one independent voting director on their boards.

They will have to be run by people of good character.

They will have to be managed at arm's length.

They will be required to treat union members the same as nonmembers. And they will be required to be transparent by providing information to workers, to employers and to the Registered Organisations Commission, which will register and monitor the funds and ensure they comply with the law and manage workers' money responsibly.

In short, this bill will ensure worker entitlement funds are run for workers, not for anyone else. These are basic standards that should apply to people who manage other people's money.

The funds will still be able to spend money on training and welfare services for the benefit of workers, such as crisis counselling or health checks, but the arrangements will have to be reasonable, transparent, and made at arm's length.

The bill makes a number of other crucial changes recommended by the Heydon royal commission. In total, the bill implements 10 recommendations of the royal commission aimed at stopping corruption, coercion and financial mismanagement.

The bill ensures that registered unions and employer organisations have written and binding policies on such things as financial decision making, credit card use, procurement, hospitality and gifts. The royal commission found that some unions did not have policies on these basic matters. Sometimes if there was a policy, it wasn't even written down. This is hardly a recipe for good financial management of other people's money and is certainly not in the interests of union members.

The bill provides that enterprise agreements and employment contracts cannot include terms that require people to contribute to 'election funds' that are set up to fund the campaigns of people running for office in a union or employer group. These contributions should only be voluntary and not a condition of working for a union or employer group.

The bill also prohibits people coercing employers to contribute to particular superannuation funds, welfare funds and other worker benefit funds. The royal commission heard cases of union officials placing extraordinary pressure on employers to pay into particular worker benefit funds, basically because the union stood to gain from the arrangement. There is no place for this sort of bullying and coercion in the workplace.

Finally, the bill requires unions, employer groups and employers to disclose any financial benefit they will receive from promoting or arranging insurance products, or payments to worker entitlement, training or welfare funds. This will ensure that employers who make these payments and employees who are supposed to be receiving a benefit are made aware of any conflicts of interest, similar to the arrangements the government introduced in regard to transparency in enterprise bargaining.

This bill is about transparency, good governance and the proper use of money that is there to help other people and should be used only for the benefit of those people.

Debate adjourned.