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Royal Commission should focus on special union funds: AiGroup

15-02-2010
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The Australian Industry Group (Ai Group) has welcomed the recent release of the Terms of Reference for the Royal Commission into Trade Union Governance and Corruption.

In addition to investigating any alleged corrupt conduct, the Royal Commission should focus upon funds and entities established by unions, said Australian Industry Group (Ai Group) Chief Executive, Innes Willox.

Such funds are purportedly established to provide redundancy, income protection and training benefits to members.

“But they provide very lucrative and inappropriate revenue streams to unions,” Mr 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, such as an industry superannuation fund.

“In such cases, unions are benefiting at the expense of both employers and employees, Mr Willox said.

“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.”

Mr Willox said the Cole Royal Commission into the Building and Construction Industry first identified the problems, but the Commission’s recommendations have “inexplicably” never been implemented.

“As a result, the problems have progressively worsened, he said.

“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.”

Mr Willox said the AiGroup 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,” Mr Willox said.

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