The Australian government has leapt to the defence of its appointment saying economist Ian Harper has been unfairly attacked over his involvement in a failed company.
Labor and the ACTU however have called for an investigation after it was revealed that Mr Harper, the head of the federal government's new Fair Pay Commission, was a director of a company that went broke owing workers more than A$700,000.
There were also concerns that the company of which economist Ian Harper was a non-executive director may have breached corporations law, although the company eventually gave workers their entitlements.
The controversy comes in the wake of another appointment debacle that saw Adelaide businessman, Robert Gerard, resign from his position on the Reserve Bank board.
Workplace Relations Minister, Kevin Andrews, who appointed Professor Harper to the high profile job in October, said the government was aware of the economist's history with the company.
"There has been absolutely no wrong doing," a spokesman for Mr Andrews said.
"The government was made aware by Professor Harper, and also by doing a check ourselves, of the company going into administration.”, the spokesman said.
"We believe that Professor Harper is an eminently qualified person to head up the Australian Fair Pay Commission," he said.
Professor Harper was a director of the Australian Derivatives Exchange (ADX), a futures exchange that went into administration after just a few months of trading amid concerns that it may have traded while insolvent.
Directors of ADX called in administrators on March 28, 2001.
Administrator Steve Parbury said at the time that ADX may have been insolvent for some months before it went into administration.
A week earlier, ADX had told the corporate regulator, the Australian Securities and Investments Commission, that it had breached a term of its operating licence requiring it to maintain cash reserves.
Opposition treasury spokesman, Wayne Swan, who has delivered a sustained attack on the government over the Gerard affair, claimed there were serious questions to answer about Professor Harper's appointment.
"This is a government whose actions and appointments are blinded
by extreme ideology," he claimed.
ACTU president Sharan Burrow said the government must investigate Mr Harper's business dealings.
"How on earth can they expect Australians to have any faith in their so-called Fair Pay Commission if the very head they've appointed, another government mate, is under a cloud," she told ABC radio.