Whistleblowing union boss Kathy Jackson has told a royal commission hearing she suffered a mental breakdown after exposing widespread corruption within the Health Services Union (HSU).

The Royal Commission into Trade Union Governance and Corruption is investigating allegations Ms Jackson, the HSU national secretary, was involved in a union slush fund account and that members' money was used to pay off her personal credit cards.

Ms Jackson told the commission she had been the victim of a smear campaign after she blew the whistle on the misuse of union funds by former Labor MP and HSU official Craig Thomson, and the union's former boss Michael Williamson.

She broke down while giving evidence today, saying she was sectioned under the mental health act and spent days in a Melbourne psychiatric hospital after receiving threats at her home.

"I had never been under such immense pressure or stress in my whole life and I don't expect anybody else in this situation to have ever gone through anything like this," she said.

"I now understand what drives people to do certain things.

"That stress was caused entirely by the actions of not just the HSU East, but the actions of the national executive, the actions of the Labor movement at large."

Ms Jackson said she had not been surprised to be the target of a smear campaign after going public.

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"Everything that's happened to me I expected from day one," she said.

"I expected them to call me a Labor rat, a traitor, that I'd destroyed the HSU's reputation ... that I was a Liberal Party prostitute and that I was doing everything in my power to bring down the Labor government."

'People like Bill Shorten' behind smear campaign, Jackson claims

Ms Jackson said she had been smeared in the mainstream media, with constant phone calls from journalists asking questions about her own propriety, since going on ABC TV's Lateline program with her allegations against Williamson and Thompson in 2011.

She said the stories were being peddled by Williamson's supporters at the Labor Party's Sydney headquarters, and others.

"I would have to spend days on end defending myself to the media. These articles were placed in the media by not only Michael Williamson, but Sussex Street - and when I say Sussex Street I mean the ALP - people like [Opposition Leader] Bill Shorten, etc," she said.

"It's a bit like House of Cards and Frank Underwood's underlings doing their bidding for people."

She told the commission that there was an active push for the HSU's merged eastern branches to disamalgamate as the corruption scandal widened.

Ms Jackson said she had spoken to Victorian Labor Senator David Feeney, who had heard New South Wales ALP state secretary Sam Dastyari was proposing an "amicable divorce".

"He said that he thinks [sic] that I should do this because there was no way I could beat them. They were just too powerful, and that I could not beat Sussex Street," she said.

Ms Jackson recalled attending the HSU's Centenary Conference in 2011, where she said she was jeered and heckled by delegates.

"There were screeching banshees everywhere. I heard people calling out that I was a Judas, that I was a traitor. That how dare I'd gone to the police. One man even called out to me 'Michael Williamson invited you to his daughter's wedding and this is how you repay him, you bitch'."

Jackson speaks on branch stacking, denies credit card claims

Ms Jackson said money set aside in two union funds was sometimes given to union officials to enable ALP branch-stacking for various elections.

She told the commission a special kitty was kept by the HSU's Victorian Number 3 branch for various uses like political and industrial campaigns.

She said $7,000 was given to Victorian ALP activist David Asmar before 2007 to pay for ALP memberships.

"I would give cash to people like David Asmar, Diana Asmar. These are the same people that are out there peddling these things about me," she said.

She denied involvement in branch stacking but said that at the time she had joked with the former AWU official and now Opposition Leader Mr Shorten about it.

"Certain people within the ALP pay memberships on behalf of people I suppose they stack. I personally was not involved in branch-stacking but I was involved in providing money to people that were involved in that," she said.

"Mr Asmar collected the money. I gave it to him and the reason why it's clear in my mind about this particular $7,000 is because that weekend when I did speak to Mr Shorten about giving Mr Asmar the $7,000 he laughed and said that he had also given him money.

"The bastard must have double dipped that week or that month."

Sorry, this video has expired Kathy Jackson talks about Michael Williamson's holiday home

Ms Jackson told the commission the money which made up the kitty was cash left over after paying the sitting fees to members of the Branch Committee of Management (BCOM).

The commission heard that more than $200,000 of sitting fees was spent over a six-year period despite the honorariums being $100 per meeting for around 15 members.

She said it was used for various expenses such as the reimbursement of taxis for rank-and-file members attending rallies and bar tabs after campaign.

But Ms Jackson has denied any of the money was used for personal expenses and that the monies were known and approved by the BCOM.

She also rejected claims union money was funnelled into a company run by her ex-husband Jeff Jackson called Neranto No 10. She told the commission he was paid for work he carried out as an industrial consultant.

When questioned about the use of union credit cards, she admitted that two of them were issued in her name but that they were only ever used for union purposes such as travel, accommodation, stationary and cleaning supplies.

The allegations of Ms Jackson's alleged misuse of union funds was referred to Victorian Police in 2012 which has since said it will not be pursuing further.

Palatial holiday home spurred need for action

Earlier Ms Jackson said she had been destroyed politically by the allegations of corruption levelled against her.

She told the commission she was conflicted when she first began to have suspicions about the union's accounting in 2010 and 2011.

"I was friends with these people. When you work in the union movement, you make friendships. It's a community," she said.

Ms Jackson exposed the corruption within the union's Sydney base involving Thomson and Williamson.

Williamson is in prison, while Thomson is appealing against a three-month jail term imposed for defrauding the union of more than $24,000.

Ms Jackson said her suspicions crystallised during a working meeting at Williamson's holiday house.

"There was no way, from what I knew at the time, that Mr Williamson could afford to live in such a palatial holiday home and have the mod-cons available to it," she said.

"I think he had plans there as well - this in-ground swimming pool was going to be built. And there was going to be a cabana and all this other stuff - there were jet skis out on the lake."

But she said she was very wary about raising her allegations until she had further information.

"It dawned upon me after that visit, seeing what I saw and seeing some the behaviour of the people there, that something had to be done. But I knew that if I did something, it wasn't an easy thing to do because they'd be after me."

Yesterday, the commission heard evidence that a $250,000 settlement for underpaid workers was transferred from the HSU into Ms Jackson's slush fund, called the National Health Development Account.

But Ms Jackson said she had been targeted for speaking out.

"I'm here telling the truth - I've always told the truth. And here I am as a target, not by the membership, but more importantly a target by the media, a target by the ALP and the Labor movement, which I knew would happen, but I'd never thought it would happen this badly," she said.

Ms Jackson will continue giving evidence on Thursday.