Former High Court judge Dyson Heydon will be asked to sack himself as unions royal commissioner when the ACTU pursues its claims of bias at the inquiry.
The ACTU will apply on Friday to have Mr Heydon disqualify himself from presiding over the commission into union corruption because he initially accepted an invitation to speak at a Liberal Party event.
ACTU secretary Dave Oliver says unions always believed the royal commission was a witch-hunt set up by Prime Minister Tony Abbott to weaken his political opponents.
“When it came to light that commissioner Dyson Heydon had agreed to speak at a Liberal Party fundraiser we called on Prime Minister Tony Abbott to shut down the royal commission,” he said.
“Given Tony Abbott has failed to act, the ACTU must now take further action.”
Earlier on Wednesday, Labor backed away from asking the Senate to call on the governor-general to dismiss Mr Heydon.
Instead, the opposition will wait until September 7, to give Mr Heydon time to rule on the ACTU application.
“Labor maintains that commissioner Heydon’s decision to accept an invitation to address a Liberal Party fundraiser is unacceptable and his position is untenable,” Labor Senate leader Penny Wong said.
Mr Heydon last week withdrew from delivering the Sir Garfield Barwick lecture when he realised the event was a Liberal Party fundraiser. He admitted he had “overlooked” the connection to the party.
But Mr Abbott accused Labor of hypocrisy over its attack on Mr Heydon, highlighting Opposition Leader Bill Shorten’s appearance at the royal commission which uncovered undeclared donations to the former union boss.
“All members opposite are doing with this increasingly shrill and hysterical and hypocritical attack on the royal commissioner is demonstrate how much they have to hide,” Mr Abbott told parliament.
“And, based on the evidence before the royal commission so far, there is a very great deal to hide.”
Attorney-General George Brandis said the commissioner still enjoyed his full support as an eminent legal scholar and a “person of impeccable reputation”.
If Mr Heydon is disqualified, legal experts say it will be a simple process to appoint a new royal commissioner and complete the inquiry’s work.
On Wednesday, video emerged of Mr Heydon speaking at a Centre for Independent Studies forum in June 2013 in which the former judge criticises the then Labor government.
He said the Rudd government had a tendency “to do non-substantive things.”
Mr Abbott told parliament that for Mr Heydon to describe the Rudd government as having done non-substantive things was evidence of the former judge’s “gentle tolerance”.
“Frankly that’s the best thing that has ever been said about the Rudd government,” Mr Abbott said, to laughter from coalition MPs.
He described the Liberal dinner as a “networking event” to which Mr Heydon had agreed to address only after he was originally due to complete his work as royal commissioner.
Mr Abbott said the Labor and union attack was “vicious slander”.
The $61 million commission has to date referred 26 people to 11 agencies, including prosecutors and the Fair Work Commission.
Four people had been arrested by the commission’s police task forces.