Malcolm Turnbull has used Bill Shorten's past as a trade union official to argue the case for new draft laws banning secret payments between employers and unions.
Under legislation the prime minister introduced to parliament on Wednesday payments with the intent to corrupt will carry a penalty of up to 10 years in prison and $900,000 in fines.
"A repeat offender when it comes to these payments was the Australian Workers Union Victoria under the leadership then of the now leader of the opposition," Mr Turnbull told MPs.
Mr Turnbull said the branch received hundreds of thousands of dollars in payments from employers at the same time as its members were facing low pay and redundancy.
"Notoriously the AWU also received $24,000 from the mushroom picking company Chiquita Mushroom that was in the process of casualising its workforce," he said.
Secret deals have the potential to corrupt union leaders and employers and seriously disadvantage workers, Mr Turnbull said.
"They are wrong. They need to be outlawed."
Payments for legitimate purposes would still be allowed, but would have to be fully disclosed.
The changes were recommended as part of the Heydon royal commission and were announced on Monday amid a debate between Labor and the government over penalty rates.
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