Labor Senators are extremely concerned about the implications of the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill.
Accountability and transparency, good governance, are important. However, we must be vigilant to ensure that this government doesn’t, in the name of these principles, impose such a heavy regulatory burden that worker entitlement funds are not able to function. History shows that this government is prepared, in its pursuit of unions, to sacrifice working men and women.
As Protect noted in their submission:
The second reading speech from Mr Pitt, MP, stated in support of the Bill, that “there is little governance of these funds.” This is a tired, outdated view, formed around the time of the Cole Royal Commission in 2003, some 14 years ago.
Worker entitlement funds, which are jointly established by unions and employers, operate firstly to ensure that workers entitlements are protected, and secondly, to provide important services to workers—including training, counselling support, suicide prevention and funding OH&S officers. In bringing in legislation based on recommendations of the flawed and political Heydon Royal Commission, this government is perpetuating the fundamental misunderstanding of the role of unions which that Commission suffered from.
Labor Senators share the concern of Protect that the provisions of this bill prevent worker entitlement funds (WEF) from being able “to distribute excess capital and/or income to the Sponsors is punitive and political rather than fair and logical” and that “a large part of the intent of the legislation is premised not for good governance nor to protect members’ benefits but to stop funds flowing to our Sponsors. In doing so, it restricts legitimate uses of income and imposes additional costs that far exceed what is expected in other regulatory or corporate environments.”
This government established the Registered Organisations Commission (ROC) as a political tool, and it is clear that that is how it is using it. The recent scandal surrounding the ROC investigation of the Australian Workers' Union (AWU) illustrates the level of Ministerial interference. There is more to uncover about the role of Minister Cash and her office, including details of who knew what and when about the execution of a search warrant on AWU offices and Minister Cash’s staff leaking information to the media. The general public, stakeholders and Labor Senators are rightly concerned about this government’s bona fides when it comes to any legislation it introduces concerning registered organisations or giving the ROC more powers.
Labor Senators share the concerns raised regarding the broad powers granted to the Minster; which include intervention in Worker Entitlement Funds Rules and change the scope of coverage of the legislation.
The so-called consultation process engaged in before this bill was introduced into the House was tokenistic and inadequate. This bill has 5 Schedules, and runs to 80 pages. It amends 5 pieces of legislation: Fair Work Act 2009; Fair Work (Registered Organisations) Act 2009; Fringe Benefits Tax Assessment Act 1986; Income Tax Assessment Act 1997; and Taxation Administration Act 1953. Yet, in addition to insufficient consultation, the government rushed the bill through the House and then, with support from the Xenophon Team, set such a short time frame for this inquiry that we had little capacity to consider the provisions of the bill in detail.
The positions taken by the Australian Industry Group (Ai Group) and the Australian Chamber of Commerce and Industry (ACCI) are purely political and ill informed.
Labor Senators are concerned about many provisions of the bill (and note that because of the short time frame of this inquiry, witnesses were not able to comprehensively assess every provision). Evidence received by the committee raised serious issues, such as:
The limits on how surplus funds can be distributed mean services such as MATES in Construction will lose funding.
The uncertainty that this bill will give rise to, and the “unintended consequence of shifting the core purpose of Registered Worker Entitlement Funds away from capital preservation in order to generate income to meet beneficiary expectations”.
Many of the regulatory requirements and limits go beyond what is applied to directors under the Corporations Act. As the Australian Council of Trade Unions (ACTU) submitted: “The bill will effectively shut down worker-run funds, while allowing employers to set up and run their own funds. It creates one set of rules for working people and another for corporations.”
The large number of concerns with the bill which might be described as technical issues raised in submissions.
The wide range of concerns is well outlined by Incolink in their submission:
This Bill…would prevent us (Incolink) investing in key OH&S initiatives. It is also unclear whether Incolink could continue to subsidise members’ insurances, such as funeral cover, accident, dental, ambulance, portable sick leave and income protection.
The Bill also creates significant uncertainty about whether we can continue to provide safety training and wellbeing services such as suicide prevention support, mental health and drug & alcohol counselling.
The risk that a current or future Minister could unilaterally create new rules to prevent us providing key health and wellbeing services is also unnecessary.
The Parliament should not legislate to put at risk a model that is an example of how industry parties can work together to solve industry problems.
Labor Senators are also concerned with the effects that this bill will have on the operation of welfare activities run or funded by workers entitlements funds.
As Mates in Constructed noted in their submission:
Redundancy Funds will be prohibited from distributing any income to the MIC Group as it does currently, including by making a tax-deductible donation.
Recommendation
Labor Senators recommend that the Senate reject the bill.
Senator Gavin Marshall
Deputy Chair