The Turnbull government has flagged sweeping new laws to tackle trade union corruption after a Royal Commission found the labour movement was riddled with "widespread" and "deep-seated" misconduct.

The final report by Commissioner Dyson Heydon referred key union figures including the disgraced former Health Services Union Kathy Jackson and Victorian Labor MP Cesar Melhem to prosecutors for possible charges. But it made no adverse finding against Labor leader Bill Shorten, who was head of the Australian Workers Union when it committed a series of breaches detailed in the report.

Labor and the unions swiftly dismissed the report as a political witch-hunt, saying that the cases highlighted by Mr Heydon were isolated and did not represent systemic problems among union officials.

Prime Minister Malcolm Turnbull, Minister for Employment, Senator Michaelia Cash, and Attorney-General Senator George ...

Prime Minister Malcolm Turnbull, Minister for Employment, Senator Michaelia Cash, and Attorney-General Senator George Brandis address the media after the release of the final report from the Royal Commission into Trade Union Governance and Corruption in Sydney. Photo: Janie Barrett

Prime Minister Malcolm Turnbull and Employment Minister Michaelia Cash strongly indicated that many of the report's 79 recommendations would be adopted by the government in the form of new laws, amounting to a significant tightening of union regulation.

 

"If its recommendations are substantially adopted, if the lessons of this report are learned, the trade union movement will emerge much stronger," Mr Turnbull said.

Describing the report as a "watershed moment" for unions, Mr Turnbull vowed to make union reform an election issue if the Senate blocks new laws.