Unions that mismanage members' money could face fines of more than $1 million under new federal legislation to crack down on bad behaviour.
The coalition government had foreshadowed the move, saying union officials should face the same penalties as company directors.
Government house leader Christopher Pyne introduced the legislation on Thursday in parliament and linked the move to allegations of misuse of Health Services Union member's funds against former Labor MP Craig Thomson and party boss Michael Williamson.
Those cases showed existing regulations didn't sufficiently protect members' interests, Mr Pyne told the lower house.
The law applies to all registered organisations.
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There are 67 employer organisations, including the Australian Hotels Association and Master Builders Associations, and 45 employee organisations or unions.
The legislation sets up a Registered Organisations Commission, with similar powers to the Australian Securities and Investments Commission.
It also establishes civil and criminal penalties, including fines of up to $204,000 for individuals or $1.02 million for organisations that break the law.
Employment Minister Eric Abetz said that under the legislation, a person convicted of particular offences would not be eligible to be an officer of an organisation or to stand for election to office.
The Australian Greens say the bill is a curtain-raiser for a coalition return to its hated WorkChoices industrial relations policy.
"The registered organisations legislation will mean unions are tied up in red tape, while big companies are able to do what they want," Greens deputy leader Adam Bandt said.
If the Fair Work (Registered Organisations) Amendment Bill 2013 passes, the commission would start work in early 2014 and the penalties would apply from July 1.
Debate on the bill was adjourned.
