Prime Minister Malcolm Turnbull has laid the groundwork for an early election after promising to implement every recommendation of the Royal Commission into Trade Union Governance and Corruption.

Mr Turnbull said his government would present tough new legislation to federal parliament in 2016 aimed at cracking down on fraud and corruption within unions.

The move is likely to provide the government with a constitutional trigger for an early election because Labor and crossbench senators have already blocked less radical proposals to overhaul trade union governance three times in the past 12 months.

• Commission uncovers wrongdoing but needs to deliver more answers
• Commission findings a ‘watershed’ moment: PM
• Royal commission calls in the cops

Commissioner Dyson Heydon has recommended the government implement 79 reforms to combat what he described as “widespread” misconduct by union officials.

The proposals, which the government will attempt to implement early in 2016, include the establishment of a new trade union regulator known as the Registered Organisations Commission.

The new regulator will have powers to investigate union finances and commandeer internal records of registered industrial organisations.

Commissioner Dyson Heydon recommended a sweep of changes.

Mr Heydon has also recommended that the government impose tougher criminal and civil penalties against union officials involved in corruption and financial fraud.

The hardline reforms were put to government after Mr Heydon referred around 25 cases against union officials for criminal investigation by police in three states.

Several high-profile labour movement leaders are facing investigations, including Victorian state MP Cesar Melhem and former Health Services Union national secretary Kathy Jackson.

Mr Melhem is a former secretary of the Victorian branch of the Australian Workers’ Union and is alleged to have accepted secret commissions from employers.

The Federal Court has already ordered Ms Jackson to pay $1.4 million in compensation to the HSU for misusing union credit cards.

Mr Heydon said the findings of the commission indicated that misconduct was not limited to only “rogue” unions and officials.

“The misconduct exhibits great variety. It is widespread. It is deep-seated,” he stated in the long-awaited report.

“It would be utterly naïve to think that what has been uncovered is anything other than the small tip of an enormous iceberg.”

Turnbull: findings are ‘a watershed moment’

Mr Turnbull sent a strong signal that the government would fight an election over its union reform program if its re-drafted legislation was rejected by the Senate.

He described the commission’s report as a watershed moment for unions and Labor leader Bill Shorten.

“We are willing to fight, we are willing to fight an election on this, this will be – if this is not passed – if we cannot get the passage of this legislation through the Senate, then in one form or another it will be a major issue at the next election,” he said.

Malcolm Turnbull says he is willing to fight an election on the issue. Photo: AAP

“We need the support of the Parliament but if the Parliament does not provide that support then obviously we will appeal – as we should in a democracy – to the people.”

The government has put itself on a collision course with trade unions over the planned reforms, with the Australian Council of Trade Unions accusing the government and the commission of being politically motivated.

“This royal commission was a biased and politically motivated exercise from the start,” said ACTU secretary Dave Oliver.

“It was always about prosecuting an ideological agenda to cut workplace conditions.”

Mr Oliver rejected Mr Heydon’s finding that criminal misconduct was rife among union officials.

“I reject any assertion of widespread, unlawful corrupt conduct,” he said. “There is no evidence of systemic, corrupt conduct in the union movement.”

Labor workplace relations spokesman Brendan O’Connor dismissed the royal commission’s report as a political witch-hunt and renewed his attack on Mr Heydon’s involvement in a Liberal Party fundraising event earlier this year.

“This is a political stunt, a political exercise, and it is one that needs to be called for what it is and at the same time we can deal with these serious allegations,” he said.

Government measures go beyond inquiry’s proposals

Attorney-General George Brandis branded attacks on Mr Heydon as “disgraceful”, saying he was one of the country’s most eminent jurists.

The Attorney-General has defended commissioner Heydon. Photo: AAP

He revealed that the government crackdown on unions would go beyond what was recommended by the royal commission.

In addition to implementing the commission’s 79 reform proposals, the government would also provide more resources for future investigations of trade union officials by law enforcement agencies.

The government will provide new funding for a joint Commonwealth and State police taskforce known as Operation Heracles to investigate cases of alleged misconduct raised by the commission.

It will also establish a special working group of federal law enforcement agencies, which will include officials from the Tax Office, the Australian Securities and Investments Commission and the anti-money laundering watchdog, AUSTRAC.

Building union under fire

The activities of the Construction, Forestry, Mining and Energy Union will be more tightly policed if the commission’s recommendations are implemented.

Workplace Relations Minister Michaelia Cash said the government would reintroduce its bill to establish the Australian Building and Construction Commission to investigate the activities of union officials in the building industry.

“We will take firm and swift action,” Ms Cash said.

“The current legal framework is not adequately protecting union members.”