"It was reported in The Australian newspaper today that the Protect fund that operates in the electrical contracting industry recently transferred $16.9 million to the Victorian Branch of the Electrical Trades Union (ETU). The accounts of the ETU note that these funds were transferred because of the possibility that the Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 will be passed by Parliament.
"The money transferred appears to be the bulk of the investment earnings on the workers’ entitlements in the Protect fund. The money that the Victorian Electrical Branch of the ETU reportedly received from the inappropriate transaction exceeds the reported annual subscription revenue from its members ($8.1 million). It is not right that the investment earnings on worker entitlements in the Protect fund have been diverted in this way. This unacceptable practice needs to be addressed urgently.
"Members of superannuation funds rightly expect to, and do, benefit from the investment earnings on employer contributions to superannuation funds, and so should members of construction and electrical contracting industry redundancy funds.
"Only one of the redundancy funds that operates in the construction and electrical contracting industries (the Australian Construction Industry Redundancy Trust - ACIRT) prohibits the distribution of funds to sponsoring unions and employer organisations, under the terms of its Trust Deed. The other funds that operate in these industries contain no such restrictions, and millions of dollars have been transferred from these other funds to the unions and employer organisations represented on their Boards.
"Redundancy funds attempt to justify their conduct by arguing that the distributions to the sponsoring unions and employer associations are appropriate because the transfers are made for the purposes of 'training' or 'welfare', but there are inadequate laws in place to ensure that the transferred amounts are used for such purposes.
"The sponsoring organisations appoint the representatives to the Boards of the funds, and there is an obvious conflict of interest in allowing such Boards to resolve to transfer millions of dollars of workers’ entitlements to the organisations that appointed them to the Board.
"The Heydon Royal Commission and the earlier Cole Royal Commission into the Building and Construction Industry uncovered numerous examples of inappropriate conduct relating to Worker Entitlement Funds.
"It is essential that the Bill is passed without delay. This Bill would implement long overdue governance standards for Worker Entitlement Funds," Mr Willox said.
Media enquiries: Tony Melville – 0419 190 347