Trade union governance

The Royal Commission into Trade Union Governance and Corruption has released its final report and the Federal Government has announced a joint operation taskforce acting on the recommendations from the royal commission will continue until the end of 2016.

The report has revealed instances of serious corruption, notably bribery and misappropriation of members’ money. The Commission referred 45 individuals and companies to various authorities, including police, directors of public prosecutions, the Australian Securities and Investments Commission and the Fair Work Commission on a range of matters ranging from alleged criminality such as corruption offences and perjury to alleged civil breaches such as industrial coercion and breach of trade union officials’ duties.

The Commission’s report recommends law reform proposals designed to improve governance, including stricter audit processes, intended to address conflicts of interest, and increased penalties for taking reprisals against union whistleblowers, as well as disqualification of officials who do so from holding union office.

However, concern has been raised about other recommendations in the report, including proposed limits on members’ choice of who runs their unions and establishing a new union regulator that could apply to the federal court to disqualify union officials for breaches of industrial law by them or their union if they ‘failed to take reasonable steps to prevent the contravention’. The latter has raised concern that this would make the organising of an unprotected strike, even where it is potentially in members’ interests, reason for disqualification of the union officials.

The Commission’s report will also turn the spotlight on the governance review and development of a best practice code of conduct commissioned by the Australian Institute of Superannuation Trustees (AIST) and Industry Super Australia (ISA) in December of last year, following the failure of the Federal Government’s superannuation governance bill to pass in the Senate. Led by former RBA Governor and Treasury Secretary Bernie Fraser, a panel of governance experts will develop a best practice governance code of conduct for not-for-profit super funds by 30 April 2016. The code of conduct will be mandatory for AIST and ISA member funds and complement APRA prudential standards and guidance.

The unions have up to 50 per cent representation on the trustee boards of industry super funds, and the ties between a sponsoring union and an industry super fund will inevitably form part of the governance review. Given the imperative to protect the industry super fund movement and its membership, expectations of high standards of governance will attend the review and subsequent code of conduct.

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