'Inappropriate' revenue streams to unions to be investigated

17 March, 2014

"The Australian Industry Group (Ai Group) welcomes the release today (14 March) of the Terms of Reference for the Royal Commission into Trade Union Governance and Corruption," says Australian Industry Group (Ai Group) Chief Executive, Innes Willox.

"In addition to investigating any alleged corrupt conduct, the Royal Commission should focus upon funds and entities established by unions purportedly to provide redundancy, income protection and training benefits to members, but which provide very lucrative and inappropriate revenue streams to unions," Willox said.

"Unions use pattern and enterprise bargaining to coerce employers to pay into funds and entities which they have established.

"Often the income protection insurance products which an employer is forced to pay for are much more costly for the employer and provide fewer benefits to the employees than other products readily available in the market.

"However, because of the very substantial commissions and other payments made to the unions, the unions typically refuse to accept employer offers to provide equivalent or better benefits to employees through an alternative provider (e.g. through an industry superannuation fund or through the insurance company which the company is using for other types of insurance). In such cases, unions are benefiting at the expense of both employers and employees.

"As union membership revenue has declined, these lucrative and inappropriate revenue streams have become central to union finances. The revenue streams no doubt result in the fines which militant unions regularly incur for unlawful conduct having a significantly reduced impact on their operations.

"These problems were identified by the Cole Royal Commission into the building and construction industry but the recommendations made by the Royal Commission in Volume 10 (Funds) of its final report have inexplicably never been implemented. As a result, the problems have progressively worsened.

"The new Royal Commission will be able to look at these revenue flows and determine what changes are needed to protect employees, employers and the community.

"The Australian Industry Group will obviously cooperate with the Royal Commission in its efforts to focus on improving union governance and ridding it of corruption. Any improper behaviour by employers which is uncovered by the Royal Commission should also, of course, be dealt with," Willox said.