PM admits HSU scandal has tarnished unions

PRIME Minister Julia Gillard has told ACTU delegates the Health Services Union scandal has tarnished the reputation of the union movement.

"I know that dismays you as it dismays me as well," she told the ACTU national congress conference in Sydney today.

"Whatever the ultimate finding in the courts and the tribunal, we know that in some parts of the union members have been let down very badly."

Ms Gillard's most strident condemnation of corruption in the HSU comes as suspended Labor MP Craig Thomson prepares to explain to Parliament how $500,000 of union funds were spent on prostitutes, lavish meals and cash withdrawals when he ran the union between 2002 and 2007.

Ms Gillard said she was under no illusions about Labor's poor performance in the opinion polls.

"While I'll never succumb to government by opinion polls, I can read the opinion polls and I'm under no illusions about the depth of the political challenges that confront out government," she said.

"I understand that. I get that. I understand that Australians have been screamed at now by the opposition for more than a year."

Ms Gillard accused the opposition of running a fear campaign.

ACTU president Ged Kearny today began the repair work needed on the issue of faith to prevent rank and file desertion of the union movement.

"Like all of us, I have been deeply disturbed by the scandals emanating from the Health Services Union East Branch," Ms Kearney told the congress as she opened it.

"I know I speak for everyone in this room when I say that the alleged misuse of members money, the arrogance and contempt shown for accountability to members, are unacceptable.

"Whether it is a union, a company, or an agency of government, misappropriation of funds, corruption or poor governance cannot be tolerated."

Ms Kearney said the unacceptable actions might have been from a small number off officials but warned: "We all bear responsibility for ensuring our movement has integrity, is governed properly, and is transparent and accountable to its members."

"We know we will always be held to a higher moral standard because of the workers who put their trust in us. I want to make sure that trust is not broken."

The ACTU has suspended the HSU from affiliation but Ms Kearney said "we know the majority of officials, delegates and members of that union are decent, committed people of integrity".

The HSU furore has hit the union movement at a critical time. Union membership globally is falling and in Australia there has been a shift in membership away from the big industrial unions to more female-dominated, public and community sector unions.

Ms Kearney said it would be a mistake to focus only on the fact that only around 18 per cent of Australian workers are union members, while the membership figure for private enterprise is much lower.

"The mistake that our opponents make is assuming that in some way raw numbers are a reflection that our values and beliefs are no longer supported by the Australian people," she said.

"This ignores the fact that our work helps all workers. Our campaigns on the minimum wage directly benefit 1.4 million people, while there are more than 4 million workers on collective agreements.