Royal commission gets broad brief to crack union corruption

What do the royal commission into union corruption’s terms of reference, as released by the Abbott government, suggest about the scope of its inquiry? AAP/Dan Peled

The terms of reference for a royal commission into allegations of corruption and misconduct in the unions were lodged earlier this week by the federal government.

The remit of the royal commission is both abstract and large. While the clear focus is to investigate “financial irregularities associated with the affairs of trade unions” and “registered employee associations”, it is:

…not limited to any particular organisations, particular allegations, or particular industries.

What we can take from this is that it is not just unions that fall within the scope of the royal commission, and not just the building and construction industry that will be investigated. This may seem like a huge task, and that’s because it is. It is also unprecedented.

Comparisons have already been made between this royal commission and the Cole Royal Commission in 2001 into the building and construction industry. This is a problematic comparison to make. Despite both being born out of allegations of misconduct in this industry, the terms of reference for both are quite different.

The Cole Royal Commission was briefed to only investigate the building and construction industry, while the Abbott government’s royal commission, to be led by former High Court justice Dyson Heydon, is to have a wide scope of investigation.

Further to this, in the initial terms of reference of the Cole Royal Commission, there is no mention of unions and no mention of third parties. In this sense, the focus of the Cole Royal Commission was narrower.

Perhaps most importantly, the initial terms of reference of the Cole Royal Commission clearly outline the types of behaviour to be investigated. These were:

…failure to disclose financial transactions, inappropriate management, interfering with employment decisions, fraud, corruption, collusion, violence, and inappropriate payments.

Each of these actions (or inactions) encompass a range of different types of behaviour. There are many types of corruption, and many ways in which an organisation can be inappropriately managed.

However, the terms of reference released by the Abbott government give ten points of inquiry to the commission, each allowing the commission a degree of discretion. For example, point ten requests that the commission investigates “any issue or matter reasonably incidental” to all other outlined lines of inquiry.

This allows the royal commission a degree of wriggle room. The terms of reference emphasise that the primary focus of the royal commission will be into “financial irregularities”, namely into so-called union “slush funds”, financial management and accountability, kickbacks, and secret funds.

However, the original ABC 7:30 and Fairfax Media reports – which helped prompt this inquiry – made allegations of conduct outside the scope of “financial irregularities”, such as collusion with organised crime and extortion.

So, by including ambiguous clauses that rely on discretion, the royal commission will be able to follow lines of inquiry that may otherwise have been outside its original focus of “financial irregularities”. This includes non-financial “benefits”, any action or inaction that may “cause detriment” to a person, and other unexpected lines of inquiry.

However, the level of discretion awarded to the commission risks rendering the task unmanageable.

The terms of reference emphasise that the primary focus of the royal commission will be into ‘financial irregularities’ in trade unions. AAP/Alan Porritt

One way in which the terms of reference have aimed to ease the manageability of its investigations is by encompassing existing state and territory commissions that investigate corruption in related industries. By building upon existing investigative architecture, the royal commission will potentially be granted access to existing findings and operational systems.

Therefore, the often timely process of establishing a commission (both physically and administratively) has the potential to be expedited.

The ambiguous nature of some of the terms of reference give some credence to the claim made by Labor leader Bill Shorten that the royal commission risks creating “a lawyers picnic”, with he and other ALP MPs suggesting that this investigation be instead led by the Australian Federal Police. This solution would indeed be more cost effective.

However, the claims made by the ALP that the police would be better able to address the criminality of the alleged corruption hold little weight. Royal commissions are often awarded the same (if not greater) levels of investigative power than the police. The terms of reference also include scope to investigate the effectiveness and conduct of law enforcement in dealing with the unions.

There are no current allegations of police involvement in union misconduct. But should any emerge through the course of investigations, having a separate and independent body will reduce the chances of allegations of cover-ups or conflict of interest being made. In order for the reform to be successful, it is important that investigations and proceedings are seen to be transparent and legitimate.

Given the historical political ties between the ALP and the unions, it is perhaps not surprising that allegations have started to emerge from Canberra that the announcement of this royal commission exists to serve a greater political cause. But as Fairfax Media’s Mark Kenny wrote:

Whether you back the royal commission or regard it as a nakedly political exercise by a hostile government, it has just become real.

With any luck, the reform will be too.