Keith Pitt (Hinkler, National Party, Assistant Minister for Trade, Tourism and Investment) Share this | Link to this | Hansard source

After some delay, it is my great pleasure to be here speaking today in support of the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. This is a matter that I have been extremely vocal about for some time. It is an issue which has been around a lot longer than I have, with the Hon. Phillip Ruddock raising it back in 1999. It has been the subject of numerous inquiries, numerous Senate reports and various other activities within government. I have campaigned long and hard against worker exploitation since I was elected to this place in 2013, and this legislation will ensure that workers in Australia are better protected.

In 2014, at the federal council, the Nationals voted unanimously to seek a multi-jurisdictional task force to address worker exploitation. The exploitation of foreign workers is something which largely impacts regional farming areas like my electorate of Hinkler, but in reality it can happen anywhere—and, sadly, I am sure my office is not alone in receiving reports of allegations and complaints of worker exploitation. In May 2015, Taskforce Cadena was established by the coalition government to investigate illegal practices in temporary visa programs and to target unscrupulous labour hire contracting firms. Led by the Department of Immigration and Border Protection and the Fair Work Ombudsman, it works with the Australian Federal Police, the Australian Securities and Investments Commission, the Australian Taxation Office and various state and territory agencies to ensure that incidents involving exploitation and visa fraud are appropriately investigated. The reason for Taskforce Cadena is that we needed better coordination and intelligence sharing between agencies at the various levels of government to ensure seasonal workers are protected from these unscrupulous employers. As at 12 January 2017, Taskforce Cadena had received 267 allegations for investigation and completed 13 operations, uncovering evidence of serious wrongdoing, including illicit drug, illicit firearms and proceeds-of-crime offences.

The legislation being debated today delivers another tool to increase safeguards for vulnerable workers, whether they are migrant workers here on a working holiday visa or a local teen working in a franchise. This is about human decency. Regardless of the nationality of the worker, they all have the same rights and obligations while they are working here in Australia. Yet, in the 2015-16 financial year, 38 of the Fair Work Ombudsman's 50 litigations—some 76 per cent—involved a visa holder. Sixteen of those litigations involved a 417 visa holder. In 2015-16 the Fair Work Ombudsman recovered just over $3 million for all visa holders, with $1.37 million of this for 417 visa holders. Importantly, this legislation is another coalition government election commitment being delivered.

The government has provided $20 million in funding to the Fair Work Ombudsman and established the Migrant Workers' Taskforce. The Migrant Workers' Taskforce, led by Professor Allan Fels AO, will provide expert advice on measures that will deliver better protections for overseas workers. The exploitation of migrant workers affects a range of industries, and in recent cases it has become clear that some employers have blatantly ignored their responsibilities under Australian law.

In February Professor Fels provided an update on the four areas of action the task force has set for itself: better communication with visa holders, stronger measures to prevent and redress workplace exploitation, more effective enforcement and ensuring that policy frameworks and regulatory settings are right. The task force has endorsed a proposal by the Fair Work Ombudsman to host a new, anonymous-reporting-online tool designed specifically for migrant workers. This new tool will allow migrant workers to provide information or share concerns about a workplace without identifying themselves if they do not want to make a formal request for assistance from the Fair Work Ombudsman. The task force is also considering the matter of visa arrangements for exploited migrant workers and is in discussions with the Department of Immigration and Border Protection on how this will be handled.

Professor Fels also stated in his public statement:

I look forward to this very important legislation as I consider it is critical to addressing the highly exploitative culture and practice of some employers.

I agree with him wholeheartedly, as I am sure you do, Deputy Speaker Kelly. This legislation sends a clear message to employers: if you are doing the wrong thing, you will be caught. It will not be tolerated, and you will be punished to the fullest extent of the law.

There are concerns that civil penalties under the Fair Work Act are currently too low to effectively deter unscrupulous employers who exploit vulnerable workers because the costs associated with being caught are seen as an acceptable cost of doing business. This bill will introduce a higher scale of penalties for serious contraventions of payment related workplace laws so the threat of being fined acts as an effective deterrent to potential wrongdoers. The higher penalties—and these are 10 times higher than previously—will apply where a contravention was deliberate and formed part of a systematic pattern of conduct.

The Fair Work Ombudsman issued 347 on-the-spot fines between 1 July and 31 December 2016. They range from $540 to $2,700 to employers for contraventions of recordkeeping and payslip laws. In February the Fair Work Ombudsman announced that it had initiated proceedings against a Queensland labour-hire firm over claims that its failure to keep records of employees' hours prevented the agency from determining whether 265 migrant workers had received their full entitlements. The labour-hire firm supplied employees to pick and pack strawberries at a Stanthorpe farm, and the Fair Work Ombudsman alleges that a lack of basic records of hours of work prevented its inspectors from checking whether almost all employees were being paid their minimum entitlements. Underpayment of entitlements could be calculated for just six of those 265 employees identified, with inspectors determining the workers had been underpaid a total of $316.

Under the legislation, penalties will also increase for recordkeeping failures. Contraventions relating to employee records and payslips double for both individuals and bodies corporate, companies et cetera, and the maximum penalty also extends to false or misleading employee records or payslips which the employer knows to be false or misleading. Employee records and payslips play an important role in determining compliance under the Fair Work Act. Without reliable employee records, employees may be unable to prove their case and recover their minimum entitlements. If underpayments cannot be proved, employers may end up with a significant windfall even if fined for the contraventions.

This increase in penalties is not designed to target those employers who genuinely overlook recordkeeping requirements. It is aimed at deterring the small minority of employers—and I reinforce that it is a small minority and the overwhelming majority of employers do the right thing—who deliberately fail to keep records as part of a systematic plan to underpay workers and disguise their wrongdoing. This will also help ensure that employees receive their legal entitlements under the act and levels the playing field for those employers who are doing the right thing and comply with their legal obligations to their employees.

At any one time in my electorate of Hinkler there can be a large number of backpackers who are working on local farms. A common complaint that I have heard over the years is that lack of paperwork makes it hard to establish that underpayment has actually taken place. Working holiday-makers are not just a travelling workforce; they are also an essential part of the tourism industry. Tourism Australia is promoting Australia to potential working holiday makers through a $10 million global youth targeted advertising campaign. Our growers require a large labour force of unskilled workers for short periods of time and they need them at short notice; otherwise, their crops would sit there, they would not be picked and that would be a great loss to our economy. We want people here on working holiday visas to enjoy their time in Australia both while they work and whilst they are a tourist. And we need to ensure that when they go home they encourage others to come here and have exactly the same experience. We do not want them to go home and tell people they were ripped off or treated poorly.

Under this legislation, the Fair Work Ombudsman will have its evidence gathering powers strengthened to ensure the exploitation of vulnerable workers can be effectively investigated. These powers will be similar to those already available to corporate regulators like the Australian Securities Investment Commission and the Australian Competition and Consumer Commission. New examination powers will provide the Fair Work Ombudsman with a greater suite of options to investigate potential noncompliance with workplace laws. This will help achieve positive investigation outcomes where existing powers to require the production of documents fall short because there are no employer records or other relevant documents. This will enable the most serious cases involving the exploitation of vulnerable workers to be properly investigated, even if no documents are produced. The bill will also give the Fair Work Ombudsman new avenues to pursue those who hinder or obstruct investigations, or who provide false or misleading information to the regulator; and penalties will also apply to individuals and bodies corporate who fail to comply with an FWA notice.

New provisions in this legislation will make franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or were reasonably to have known of the contraventions and failed to take reasonable steps to prevent them. Some franchisors and holding companies have established franchise agreements and subsidiaries in their corporate structure that operate on a business model based on underpaying workers. Some have either been blind to the problem, which is unlikely, or not taken sufficient action to deal with it once it was brought to their attention.

The highly publicised case of the 7-Eleven franchisees shows that more needs to be done by the franchisors and holding companies to protect vulnerable workers employed in their business networks. These new provisions only apply to the franchisor—entities which have is significant degree of influence or control over the relevant franchisee's affairs. Where a franchisor or holding company should have known of the breach but did not take reasonable steps to try to prevent it, they may be liable for the underpayments. There is no liability if the franchisor or holding company has taken reasonable steps to deal with the problem.

Lastly, the bill will expressly prohibit employers from unreasonably requiring their employees to make payments. This seems unfathomable to me that this would even happen but there are instances where employers have forced employees to hand back part of their wages so they can keep their job. An overseas worker employed as a cook on the Gold Coast was allegedly required to pay back more than $21,000 of her wages to the employer. The Fair Work Ombudsman claims the Korean national felt compelled to do it as she was concerned her employer would cease to sponsor her 457 visa if she did not. Asking an employee for any amount to be spent or money to be paid out of an employee's pocket in a way which involves undue influence, duress or coercion will always be unreasonable and unacceptable. Under the amendments, any employee who has paid cash back or made other payments which are unreasonable is entitled to have the amounts reimbursed by their employer. This legislation will deliver on the commitment made by the coalition government to provide greater protection for vulnerable workers and hold accountable those who intentionally exploit those workers.

In the brief time I have left, I want to mention hapless member for Bundaberg, Leanne Donaldson, who, on 3 May 2017, put in our local paper, the Bundaberg News Mail, a story that we had done nothing for local workers, and that it was only the state Labor government which was out there making changes which would be of a difference to these people who have been exploited. I have stood in this place on many occasions and given credit where credit is due. I have given credit certainly to Minister Jones, who is a Labor Minister for Tourism in Queensland, for her work with me on HMAS Tobruk to deliver it for the people of Wide Bay as a piece of tourism infrastructure. But for a member who obviously has some problems with her memory, who has clearly forgotten what has happened over the last three or four years, to make a public statement to say that we have done nothing is quite simply unacceptable. It is the coalition government which has delivered these changes. It is the coalition government and the National Party in particular which have moved things through the federal conference, through the Nationals' party room unanimously. It was us who had the meetings, it was us who consulted with stakeholders, it was us who made the changes and it was us who delivered $20 million to Fair Work to make a difference. It is absolutely us that implemented Taskforce Cadena, which is out there making a real difference to the people who are being exploited. This is the reality. But here we have a member who, I have to say, forgot to pay her bills for some three or four years. However, to be out there spruiking that nothing has been done is just clearly unacceptable. The member for Bundaberg should be out giving credit where it is due, because these changes make a real difference to workers who are being exploited.

The Queensland Labor government has form. Would you believe the proposal is to charge a fee? The solution for them is that they would like to have a regulation which lists all labour hire firms. To be on the list, of course, firms will have to pay, so they are going to tax them. On top of that, firms have to report the number of employees they have, as well as the number of employees engaged through work visa arrangements. Now, I think whoever put this together has never worked in the horticulture field. We are talking about thousands and thousands of workers, which change not only on a weekly or daily basis but on an hourly basis. Fundamentally, workers could do three hours of work and move to a different property on a different farm with a different employer every single week.

This is another burden of red tape on our hardworking small businesses. This is another tax from the Queensland Labor government, which small businesses are going to absolutely have to pay, unfortunately. Then, to be out to say, 'This is the only solution,' I think, is incorrect. The absolute best way to do this is the way that we have taken it on in consultation with the state governments. Taskforce Cadena brings together all of the different jurisdictions. It has been successful. It is making a difference. It is cracking down, and I can tell you that, being on the ground, we have seen the results.

In my electorate, specifically in my home town, I have seen four brand-new backpacker accommodation hostels. That is clearly because we are making a real difference on the ground for people who are being exploited. Certainly, we will continue to do that. I commend the bill to House.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

I was in the union for 21 years.

Michael McCormack (Riverina, National Party, Minister for Small Business) Share this | Link to this | Hansard source

Because I am here.

John McVeigh (Groom, Liberal Party) Share this | Link to this | Hansard source

It is a pleasure to rise to speak on the Turnbull government's Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. Our government recognises that the deliberate underpayment of workers has been too common in Australia and such practices have, unfortunately, as we know, been uncovered at 7-Eleven, Muffin Break, Gloria Jean's, Subway, Caltex, Domino's and Pizza Hut franchises. We have also seen a number of cases of exploitation of seasonal workers in horticultural industries, for example, and they are quite often migrant workers. Such conduct has unfortunately developed due to weak laws, amongst other things, which make it difficult for the independent Fair Work Ombudsman to prove exploitation. This bill, therefore, delivers on the final element of the government's election commitment to protect vulnerable workers from unscrupulous employers, which, in turn, is fairer for competing businesses who do the right thing and pay their employees properly.

In this place, I am proud to represent the electorate of Groom, which has one of the lowest levels of unemployment in the nation. It is an entrepreneurial and small business focused region—a place with many opportunities. But we cannot assume that we are immune to the exploitation of workers by unscrupulous employers either. As I have said throughout regional areas such as ours, we have seen the example in the horticulture sector where contract employment agencies or labour hire companies have on occasions not met their obligation to employ properly staff working in their clients' businesses. Although distressing, I must say it has been good to see such practices being identified and addressed. It is these and other instances that I am keen to see addressed, especially when the good name of such client organisations including farmers, food packers and processors are unfairly and disgracefully tarnished despite the fact that they have done nothing wrong at all.

We all know that the vast majority of employers do the right thing by their employees, including most especially those who could be considered vulnerable. This bill is deliberately designed to lift the compliance rate even higher. The bill introduces higher penalties for serious contraventions of payment-related workplace laws which will apply where the underpayments or other breaches are deliberate and systemic. The penalties for these contraventions will be 10 times higher than usual. It will increase penalties for breaches of record keeping and pay slip requirements—not for genuine mistakes but for deliberate and systemic breaches. The bill also prohibits employers asking for cash back from their employees. Vulnerable workers can easily be intimidated, as we have learnt, into handing back part of their wages in cash or other coercive behaviour under threats of losing their employment. The bill will also clarify the accessorial liability provisions to make them more effective in ensuring holding companies or franchisors are held accountable if they should have reasonably known of payment contraventions of franchisees or subsidiaries. It also prohibits hindering or providing false information to Fair Work inspectors in their work in compliance with the Fair Work Act. Finally, the bill strengthens the Fair Work Ombudsman's evidence-gathering and protection powers to ensure that deliberate and systematic contraventions of workplace laws can be effectively investigated, similar to those powers held by other regulators such as ASIC and ACCC.

It should be noted that the measures in this bill come on top of the government's establishment of the Migrant Workers' Taskforce, chaired by former ACCC chair Professor Allan Fels, to target employers who exploit migrant workers and monitor progress of rectification of prior instances of underpayment. Its provision of additional funding as outlined in this bill to the Fair Work Ombudsman for investigation and prosecution relating to instances of worker exploitation is another feature that strengthens up provisions to protect vulnerable workers. Of course, both of those are in line with the coalition's May 2016 policy to protect vulnerable workers. This particular bill implements the third aspect of that commitment in legislating to create stronger protections for employees in the Fair Work Act. This is yet another instance of the Turnbull government listening to employees and employers as well as our regulators, identifying problems and shortcomings that can allow exploitation to emerge and going about putting in place the safeguards, provisions and solutions the Turnbull government promised.

As we talk about these protections and this continuing and increased focus from the Turnbull government on protecting vulnerable workers, such as in the instances of franchisees and amongst migrant workers—the examples we have all noted—I particularly want to revisit the comments about the practices of some of those unscrupulous employment agencies or labour hire companies in the horticulture sector as seen in regional areas such as my electorate of Groom and throughout horticultural production regions throughout the entire nation. Again, I stress that it is galling to see that when investigations are, understandably, undertaken—obviously, we will see more of that and, eventually, less unscrupulous behaviour such that those investigations may not be required as often or, hopefully, at all—quite often, the good names of client organisations of those labour hire companies and organisations who are, effectively, employment agencies are tarnished and dragged through the mud when those companies, which are often farming and food-processing companies in regional areas, are proven to not be doing the wrong thing. They are proven to be doing the right thing in relating to and, certainly, remunerating their employees on a fair and legal basis and depending on them, in the long term, for the livelihoods of their businesses. That typically involves many Australians and, of course, migrant workers as well. To see their names tarnished because of unscrupulous activity by labour hire companies is galling indeed. It is something that I want to see regional areas focus on. I want people, particularly potential employees, to understand that those farming, food-packing and food-processing businesses in regional areas, on which, most often, our regional economies can depend, are doing the right thing. This is about weeding out the unscrupulous employer organisations, such as labour hire companies that we have heard of.

With that in mind, I am particularly proud to be standing here to speak on this bill. It seeks to put in place, as I have said, further measures that are outlined to protect the most vulnerable workers in our nation. That is important in Groom and throughout Australia and it ensures fairness for hardworking employees and, of course, law-abiding employers.

(Quorum formed)

Andrew Wallace (Fisher, Liberal Party) Share this | Link to this | Hansard source

The bill before us today is about fairness, and it is about who it is in Australia that really stands up for workers rights. Those opposite always talk about fairness, but they do not have a licence on fairness. Vulnerable workers have only one true friend in this place: it is the coalition government, who have proposed the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017.

I have spoken often in this place, and outside, about union corruption and malfeasance, and rightly so. Unscrupulous and criminal union officials have defrauded workers of their money, caused reductions in their pay, increased the costs of the services on which they rely and even caused them physical intimidation and harm. I have spoken often on that issue, but, in the interests of fairness, this bill is about tackling the other side of the equation.

Vulnerable workers are often hurt and neglected through their unions' misbehaviour and self-interest. But sometimes they are hurt by unscrupulous employers. The Turnbull government recognise this fact, and, unlike those opposite, we are interested in solving people's problems, not in protecting our mates or scoring political points. We have proposed this bill because we have looked at the evidence, uncovered by a series of inquiries, and we have accepted the serious concerns that they have identified. Take, for example, the Heydon royal commission. We accepted its findings, and we acted by reintroducing the Australian Building and Construction Commission. We are doing just that here.

Fairness is about treating everyone the same. It is about taking on those who are doing the wrong thing wherever you find them, and whoever they are. Those opposite claim that theirs is the party that stands up for workers rights. That claim, however, has rung hollow for a very long time. Today, led by a man who has spent most of his life giving workers rights away, that proposition is nothing short of laughable. With their words, members opposite pretend to take a stand for vulnerable working Australians; however, with their actions they again and again betray the very workers they claim to represent. When the time comes to make speeches, they are brave—they huff and they puff; they pontificate; they claim the moral high ground and talk the good fight—but when the time comes to act, when they have the power to make a real difference to workers lives, they slink away and sell workers out for their union mates. Those opposite have only one constituent, only one lord and master, and that is the Australian union movement. That is who they represent.

Let us examine the facts, because the contrasts are very clear. The central object of this bill is to stamp out the practice of underpaying workers. The Fair Work Ombudsman's inquiry into 7-Eleven, as one example, identified the systematic underpayment of migrant workers. This is being done through direct underpayment. It is being done through the creation of false pay slips and employment records. And it is being done by coercing workers, by way of threats or intimidation, to wrongly give back money they were rightly paid. This bill seeks to stop these practices by imposing stiff penalties on offenders, by ensuring that those who could prevent these actions take the proper responsibility and by giving the Fair Work Ombudsman the power it needs to find and punish unscrupulous employers. The coalition government, with this bill, is seeking to ensure that workers are not underpaid.

What is the Leader of the Opposition's record on protecting workers' pay? In sharp contrast, as National Secretary of the Australian Workers' Union, he happily signed up to the workers he looked after receiving less than their lawful entitlements. The workers at Clean Event, for example, were stripped of all penalty rates with no compensation, under a 2006 agreement for which the Leader of the Opposition was responsible. The Melbourne and Olympic Parks Trust agreements, which he approved in 2001 and 2003, stripped workers of almost all penalty rates and overtime. The Leader of the Opposition, however, has not been alone. The union movement all over Australia has been getting stuck into reducing workers' pay, often in return for benefits for the union itself, for years. That is why workers at many five-star hotels, having the so-called benefit of a union negotiated enterprise agreement, are paid $10.24 an hour less than those on the Fair Work Commission's penalty rates. That is why workers at David Jones and Dan Murphy's and KFC and McDonald's get up to $8 less than their counterparts on award rates. This bill protects vulnerable workers' pay, while the Leader of the Opposition and those opposite give it away.

Another of the central objects of this bill is tackling the lawlessness and unfairness in the workplace that undermine workers' rights. Part 1 of schedule 1 of the bill introduces tough new penalties for serious contraventions of the Fair Work Act and even tougher penalties where those contraventions are systematic. The bill makes it clear, in no uncertain terms, that exploiting workers is unacceptable and that this government will come down very hard on unscrupulous employers that engage in this type of unconscionable conduct. The government do a great deal to support small businesses that are doing the right thing, but we believe in fairness and we believe in the rule of law, so we are tough on all businesses that are failing to respect employees' rights. Part 3 of schedule 1 ensures that it is clear and unambiguous that the specific practice of requiring, without good reason, an employee to directly or indirectly pay back any amount of the money to which they are entitled is prohibited and subject to significant penalties under the law. Part 6 also prohibits employers from making and keeping false records relating to employees and, in particular, pay slips. This will help to stamp out the practice of providing what looks like proper pay and conditions but is in reality withholding that pay or reclaiming it from workers in cash. All of these provisions will work to stamp out employer misconduct where it happens and ensure that workers are not deprived of their lawful entitlements through intimidation. That is what the Turnbull government is proposing.

What is the track record of members opposite when it comes to stamping out lawlessness that deprives workers of their rights? First, as evidence mounted that AWU officials were misappropriating workers' funds and that Labor Party members were facing allegations of fraud, Labor did everything they could to prevent the setting up of a royal commission to investigate. When it was up and running, they did everything they could to undermine it and protect their corrupt union mates—and they still are.

When the Heydon royal commission had referred more than 40 people to authorities, when there were more than 100 union officials before the courts, when the royal commission had identified widespread union corruption, illegality and violence, when it had demonstrated the damage unions were doing to workers' rights, their pay and conditions and even their safety, what did these champions of the working man do? They fought tooth and nail to prevent the reintroduction of the one body that could do something about it. They voted down our efforts to reintroduce a tough cop on the beat. They were even willing to go to a double dissolution election to prevent it. The Labor Party tried to absolve the unions. They blamed a few bad apples. Not taking responsibility for their actions is a habit of the Labor Party—for example, not taking responsibility for the ideological energy policies that have resulted in crippling, rising costs, and not taking responsibility for the Fair Work Commission inquiry that they set up.

This bill seeks to stamp out lawlessness and unfairness in the workplace. The Labor Party tried to keep workers vulnerable to the illegal activities of their union mates for the economic benefit of those unions and the ALP, who received more than $10 million from the union movement in disclosed donations alone in 2015-16.

Another of the central objects of this bill is ensuring that authorities have the power to investigate and catch these corporate wrongdoers. Under part 4 of schedule 1, the bill introduces new formal evidence-gathering powers which will give the Fair Work Ombudsman the same sort of authority as the Australian Securities and Investments Commission and the ACCC. With these new powers, the Fair Work Ombudsman will be able to compel a person who they reasonably suspect of having information relating to an investigation to attend before them to answer questions. This is an important power, as far too often unscrupulous employers do not keep the records that would expose their misdeeds, and others destroy them when an investigation begins, just as the CFMEU did when under investigation by the Heydon royal commission.

Under part 5 of schedule 1, the bill prohibits anyone from hindering or obstructing the Fair Work Ombudsman or a prescribed official acting in the course of their duties. Part 6 of this schedule also introduces significant penalties for anyone giving false or misleading documents to the Fair Work Ombudsman.

The coalition government is making sure with this bill that the Fair Work Ombudsman has the real teeth it needs to find the truth.

What is the Labor Party's record? It is very simple. When they had a chance, they took this power away. They abolished the ABCC in 2012 and, with it, its power to compel witnesses to attend. They also took away the power for the regulator to enforce the law if a secret settlement had been reached. They created a situation unique among Australian regulatory agencies and replaced the ABCC with a toothless tiger.

The state Labor government in Queensland have recently gone even further to ensure that our authorities are unable to uncover and investigate illegal activity that is hurting workers in our state. They have instigated Queensland's withdrawal from the Trade Union Joint Police Taskforce. This task force had been rooting out and prosecuting examples of union corruption which were damaging workers' interests all over Australia. But now, thanks to the state Labor government, it will not be operating in Queensland. Do you think it is a coincidence that the state Labor government would have disbanded that police task force? Hardly.

As for hindering an investigation, we have only to look at how Labor approached the Heydon royal commission. As the evidence it uncovered mounted and the case about the union movement became stronger and stronger, they called it a witch-hunt. They called it politically biased. They called its well-evidenced findings smears and sought to undermine its very well respected commissioner on frivolous grounds.

While this bill ensures that the Fair Work Ombudsman will have the investigative powers it needs to protect vulnerable workers from unscrupulous employers, Labor have done everything they could to prevent investigation into their union mates. Labor is weak on corruption, weak on crime and weak on accountability providing it is them and their union mates that are being held to account.

This bill is a tough but proportionate response to the facts that have emerged about a small number of employers who are exploiting vulnerable workers. It is one of a number of such measures that the Turnbull government has introduced to protect workers in Australia.

Only one side of politics today believes in fairness. Only one side stands up for workers rights, and that is this government.

Lisa Chesters (Bendigo, Australian Labor Party) Share this | Link to this | Hansard source

I would like to give a quick shout-out to my good friend the member for Indi's school that is visiting: the Catholic College Wodonga. Welcome to parliament. We have a Catholic school in Bendigo in my electorate, and they are good friends and fantastic every time they visit. I am sure you will have lots of questions and challenges for the member for Indi, so welcome to Canberra. It is probably fitting that you are here for this bill, because a lot of young people find themselves in precarious employment and today, unfortunately, are in fact vulnerable workers.

As I stand up and speak about this bill, I find myself disappointed. It is good to see the government finally doing something on vulnerable workers. It is good to see that they are catching up to Labor and to community expectations. After years and years of reports, media reports, Senate inquiries and their own investigations by Fair Work Australia, we finally have something on vulnerable workers. But, in an opportunity to stand here and say that we are doing something to protect people who have been exploited, instead they stand up and spend their speaking time bashing unions. That is so disappointing because our contributions on this bill should be acknowledging the work that is done by unions to help expose the seedy underbelly of what is happening in a lot of these workplaces. Unions have worked with media and the Fair Work Ombudsman to help expose the exploitation in our agricultural industry, in our cleaning industry and in our property services industries and have helped expose the exploitation that is occurring in a lot of our meatworks and processing. That is just four industries where we know that vulnerable workers are being mistreated.

The extent of the mistreatment ranges from not being paid properly, being underpaid or not receiving award entitlements to the very other end, which is bordering on modern slavery, where people who are temporary workers here are having their passports confiscated. They are being locked into places, being forced to board 20 people to a house and are charged exorbitant rates. There are cases of sexual assault and sexual harassment. That is the very extreme end of what is essentially a worker issue.

This bill is a start. It starts to address some of the exploitation issues occurring across our economy and in our community. Labor supports its passage through the parliament, because it is about time we started to do something. On a daily basis we have reports about what is going on. I acknowledge that in the last week it has probably been every couple of days; with our Fairfax journalists taking industrial action, we have lost a few of our investigative journalists helping to expose what is going on. I acknowledge that they are back at work today.

I also acknowledge that the government has not called any Fairfax journalists criminals for taking unprotected industrial action. They said that, if a childcare worker took unprotected industrial action, they were putting the lives of the children at risk and they would be sent nasty letters. If they are a construction worker who walked onto a site and said we need to stop work because my late has just fallen down with an almost fatal injury, they get sent show-cause notices from the ABCC, and this government stands up and calls those people criminals. Those people are facing criminal fines. They are very quick to demonise every other worker that stands up for their rights. Perhaps their treatment of our friends at Fairfax is turning over a new leaf—but, as we have seen in these contributions, it is not. Maybe they just fear journalists more than they fear early-childhood educators.

This bill, as I said, falls significantly short of Labor's policy that we took to the last election and what we announced 12 months ago. Before this government even turned its mind to protecting workers, we were out there with workers, with organisations saying, 'Something needs to be done.' This bill does not combat sham contracting, the licensing of labour hire companies or the shutting down of companies phoenixing to avoid wage liabilities. It does not reform the Fair Work Act to strengthen the protections for workers and those who seek to represent them. It does not criminalise employers involved in conduct used to coerce or threaten during the commission of serious contraventions of the Fair Work Act, particularly in relation to temporary overseas workers. And it also fails to make it easier for workers to recover unpaid wages from an employer or directors responsible for these companies.

This is the problem with this government: it does something it calls 'protecting vulnerable workers' and hopes that nobody notices it does not quite complete the job. But we need to look at the impact of labour hire and what is happening in our workplaces, particularly ag and food processing. In my own electorate, and this is quite common in regional Australia, we have a chicken processor who uses a significant component of labour hire. I have met with several of those workers. They have in some cases worked very long hours, up to 24 hours. They did not know when they were going to finish. They are paid cash in hand. One woman fell while she was there, miscarried and had no support. I do acknowledge that the Fair Work Ombudsman has been involved and has said that it is working with the company to help clean up these practices. But it took a lot of media and some very brave and bold individuals to speak up to get action. People should not have to fight so hard to get their basic entitlements. This particular factory is also happening up the road in Kyneton at Hardwicks. Almost on a weekly basis I am sent images out of overcrowded streets, lots of cars, lots of people being crammed into boarding houses that are owned by people who work at the facility.

These backpackers are being employed to work in meatworks and are being paid the award—not the collective agreement rate, the award. In some cases they are not even being paid the award. It is putting downward pressure on the labour market. If we do not clean this up, if we do not support people and ensure they get paid properly, if there is a cheap source of backdoor labour, what happens is it puts pressure on those who are working next them being paid the correct entitlements. This is what is happening with a lot of foreign workers, temporary workers and guest workers in our country. Welcome to Australia and be exploited.

We have seen exploitation in some very high profile cases. Take the case of Australia Post. International students were basically being coerced into working above the maximum 20 hours that they can do. Again, we had to work way too hard to have this investigated. These are not the only group of international students who are being mistreated. We have seen the case of 7-Eleven. We have seen the case of Caltex. Three other cases involves predominantly international students who are supposed to be here for study but find they have very little time to study because their employer is making them work longer and holds the threat of their visas over their heads. One of the things the government could have done in this bill is go after employers who bully people and say, 'Unless you do this, I will report you and have you deported.' The bill also does not have any whistleblower protections for people who speak up, meaning that it is going to be very hard to get people to speak up to help address many of these issues.

In the case of 7-Eleven, we saw the business model that was created to systematically exploit vulnerable foreign workers. We all remember the footage of someone being paid right into their bank account and then forced to go to the ATM to take the money out to give back to their boss. There is a fundamental problem with the structure of that business if it can only be sustained by exploiting foreign workers and stealing their wages.

Myer is another really disappointing one. Myer have said, 'It's not our problem.' Two decades ago they used to directly employ their cleaners. Their cleaners were known; they were part of the family—part of their staff. Then they outsourced the work to cleaning companies. Today, the cleaning company is engaged in a complex network of sham contracting. The workers who ended up doing the work—as we found out in another union investigation, working with local media—were not being paid award wages. They were denied penalty rates and superannuation and they were working without decent occupational health and safety protections. We are not just talking about recently arrived migrants but people in regional areas, like Bendigo and Ballarat, who took the job because they needed a job, knowing full well that they were being exploited and underpaid. Yet Myer have said: 'It's not our problem. Take it up with the contractor.' That is, quite frankly, not good enough. When we have multinationals and major businesses in Australia saying, 'I am not responsible,' we need to take responsibility and reform the Fair Work Act to protect vulnerable workers.

Then there are the Pizza Hut delivery drivers—and if it is Pizza Hut it is probably a lot of others—and supply chains like Baiada, another chicken group in South Australia. There is exploitation in their plants of temporary overseas workers—workers being forced to work dangerously long hours for far less than the minimum wage. Despite the efforts of the Fair Work Ombudsman and the dollars and time that have been spent to investigate this particular industry and this particular company, we are still not seeing significant reform. This is just the tip of the iceberg that is the exploitation going on in our economy. It is widespread. There is undercutting of the minimum wage. There are more and more people being forced to take up jobs that, quite frankly, are cases of exploitation.

Penalty rates are another issue that we are debating. Previous speakers have highlighted what is going on in hotels and with some collective agreements. One of the points they fundamentally miss every time they talk about penalty rates—take Crown casino—is that every hour of the day that they work they are paid the same rate—Sunday, Monday and through the week. It is a rolled-up rate. It is a really high rate of pay. When you compare their roster, they pass the better off overall test. These workers are some of the best paid hospitality workers in the country. Security guards at Melbourne Airport are the same; they are paid a rolled-up rate. They have negotiated a rolled-up rate. As a result, with what they earn over the year of the agreement, with the averaging out, they are much better off overall, moving off minimum rates of pay of about $40,000 a year into salaries of $50,000 to $60,000 a year depending on how much overtime they have. That is what happens when we have a genuine and fair collective bargaining scheme. The government chooses to look just at the Sunday rate and not at all the other conditions that have been agreed. Instead, what we have is more union bashing—bashing of the very people who have gone into these situations to help expose them, to talk to people who are not members of their union to find out about the appalling conditions they are living and working in and how they are being treated by their employer.

What is happening is disgraceful. It should be a national shame. It is a stain on our good reputation, here and overseas, the way some workers are being treated, particularly recently arrived migrants and temporary workers, international students, backpackers, people who are here on 457 visas and people who are here as part of our aid program or our seasonal worker program. Too many of them are victims of exploitation. This bill is a start but it does not go far enough to close the loopholes, clean up the act and hold accountable the employers and the clients at the centre of this. If we want to be a country with high wages and good, secure jobs, we have to start with the fundamental of ensuring that every single worker is paid properly.

The Australian Jobs Embassy is back—a demonstration of how this government has failed their own election mantra around jobs and growth. The Australian Jobs Embassy is back, and these are some of the issues that they are looking at: a company's ability to terminate agreements, companies using labour-hire terms that exploit workers and the fact that this government has no plan to create decent, secure jobs. After all the commentary in the media, all of the research work done by all of the not-for-profits and all of the work done by their own agencies—for example, the Fair Work Ombudsman and the Fair Work Commission—and all the different agencies, we expected more to be in this bill. This government should accept Labor's amendment, because at least that will address the issue of protecting penalty rates and take-home pay. But, quite frankly, the government must do better.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

It gives me great pleasure this afternoon to rise to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. First off, I would like to make the comment that the vast majority of employers in this country do the right thing when it comes to employing their staff, because they know that one of the things about having a successful and well-run business is to have staff that you value, that are motivated, that you trust and that you look after. In fact, many people who run small businesses treat their staff like family members.

One of the things, even for medium- to larger-sized businesses, that enforces that good relationship between employer and employee is simply the disciplines of the marketplace. Where you have a diversified marketplace with many different employees in each section, if an employer mistreats his employee or if he underpays them the employee then has the option of going to another business to take up employment that other business. That is why we must always fight for greater diversity in every industry. No business can succeed if they have unmotivated employees that are being underpaid the rates. But having said that, there have been recent examples—a very small number of cases—where some employers have been doing the wrong thing. Of course there was the well-documented case of 7-Eleven, where some employees were taken by their employer down to the ATM to give a rebate out of their salary. All members of the House agree that this is completely unacceptable.

The bill does five specific things. Firstly, it introduces a higher scale of penalties for what it describes as '"serious contraventions" of prescribed workplace laws.' Taking your employee down to the ATM to get a rebate out of his salary is clearly a serious contravention. Secondly, it increases penalties for record-keeping failures. Employers have to keep accurate records of the hours their employees work and the rates they are being paid. Thirdly, it makes:

…franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought reasonably to have known of the contraventions and failed to take reasonable steps to prevent them. The new responsibilities will only apply where franchisors and holding companies have a significant degree of influence or control over their business networks.

In that third point, I think we have to acknowledge some of the concerns by the Franchise Council of Australia. They have legitimately expressed some concerns over the workings of this bill. They are concerns that we should recognise and that we should acknowledge, and we should monitor how they work. The franchise system is a system that can be very important. It can be very efficient and generate a lot of wealth for our nation. We cannot have a situation where we are putting copious amounts of red tape upon that sector, making franchisors liable in situations where they do not have any control. I would say the only upside is that all good franchise systems have a great responsibility to protect their good names and goodwill. It is in their interests to make sure that anyone that is using their names or franchise systems respects the workplace laws of this nation in doing so. We saw that the damage done to the 7-Eleven brand from the bad publicity from the recent case far outweighed any economic benefits that that franchisor, 7-Eleven, would have received.

Fourthly, it expressly prohibits employers from unreasonably requiring their employees to make payments which are rebates—that is, demanding a portion of their wages to be paid back in cash.

Fifthly, it strengthens the evidence-gathering powers of the Fair Work Ombudsman to ensure that exploitation of vulnerable workers can be effectively investigated.

Having said that, this debate has exposed the Labor Party's barefaced hypocrisy on the issue of penalty rates. We all agree that the 7-Eleven case that we saw, where the workers were forced to give cash back to the employer and therefore received about $8 less than they were entitled to under the award, is wrong. But compare that to the situation that has been exposed recently in the debate on Sunday penalty rates, where a KFC worker on a Sunday would get $29.16 per hour under the award. If a KFC worker got the award rate and were taken by their employer down to the ATM and told, 'We want $8 of rebate out of your Sunday pay,' I think everyone in this parliament would think that would be absolutely outrageous. But that is exactly—or almost exactly—what happens because of the grubby union deal that was done with KFC. Someone working for KFC does not actually get that $29.16 an hour. They get $21.19 an hour because their union has done them this favour by doing them this great deal. The member for Bendigo thinks this is okay and excuses this conduct, because she says, 'Oh, it is balanced out elsewhere.' How is it balanced out elsewhere if someone only works on the weekend? How does that happen? That person is clearly worse off overall. Another example is a McDonald's worker. Exactly the same thing happens to them. If we say it is wrong for someone at 7-Eleven to have $8 taken off their award rate and given as cash back to the employer, why is it correct for the unions to do a deal with McDonald's, where a worker would get $29.16 under the award on a Sunday but, because of the deal done by the union, is cut back by $8 to $21.08? If we are going to condemn one, we should also equally condemn the other.

The other thing that was interesting in the 7-Eleven case was the decision by Federal Circuit Court Judge Michael Jarrett. In his comments, he said he found that the 7-Eleven franchisee had 'systematically exploited' employees by implementing:

a business model that relied on … deliberate disregard of the employees' workplace entitlements.

He continued that it was 'also vital to recognise the importance of maintaining a level playing field for all employers in an industry, with respect to wage costs'. Hang on! The learned judge is correct. There should be a level playing field between employers that are in competition with each other with respect to wage costs. But that is not what is happening in the community at the moment.

Because of these dodgy union deals selling off Sunday penalty rates, we are seeing that large unionised firms that employ unionised workers are at a competitive advantage against small business. Let's just look at one example. The award rate for a weekend for a family-owned pizza shop is $28.48 an hour, but, in the union deal that was done where they sold off the penalty rates, someone working for Pizza Hut gets $20.35 an hour. So how can that small business compete if, because of those dodgy union deals, they are paying $8 more per hour for their labour? These are the dodgy deals that the unions have done. Another example is that someone working at David Jones, with their penalty rate, gets paid $29.53 an hour on a Sunday, but the small boutique across the mall that is competing against David Jones has to pay $37.05. Again, it is a dodgy union deal that gives that union a competitive advantage over the small business. If we are going to condemn one, we certainly must condemn the other. If we are going to say that these deals that are done by 7-Eleven, where workers have their penalty rates slashed, are unfair and unconscionable, we need to say exactly the same thing of these union deals that have sold off workers' penalty rates for greater union control.

There is another comment I would like to make on this. We think of the idea of someone earning some money and having their employer taking a big rebate—a big chunk out of it—but how is that different to the conduct that we have seen from our large supermarket chains, Coles and Woolworths, in relation to small employers? We had the recent case where Coles admitted that they had engaged in unconscionable conduct. After their suppliers had supplied them with goods and they had paid them the price under the contract, they went back and they said: 'No, we want more. We need more.' Justice Gordon said in that case, where the ACCC took Coles to court:

Coles' misconduct was serious, deliberate and repeated. Coles misused its bargaining power. Its conduct was 'not done in good conscience'. It was contrary to conscience. Coles treated its suppliers in a manner not consistent with acceptable business and social standards which apply to commercial dealings. Coles demanded payments from suppliers to which it was not entitled by threatening harm to the suppliers that did not comply with the demand. Coles withheld money from suppliers it had no right to withhold.

Coles' practices, demands and threats were deliberate, orchestrated and relentless.

How is that conduct any better than what we saw in the 7-Eleven case? It is abuse of their dominant position. It is abuse of their market power to extract an unjustified rebate or discount from someone that has supplied with a good, a service or their labour. We must condemn both.

There was a similar case involving Woolworths, and the court found that Woolworths did not engage in unconscionable conduct with its Mind the Gap program, where it systematically sought to raise as much as $60 million from suppliers. The court in that decision said that the ACCC failed to prove that Woolworths' conduct was unconscionable, and it accepted Woolworths' defence that demanding money from suppliers was 'consistent with the "ordinary nature" of retailer and supplier relationships' and is common practice in grocery retail—common practice.

It is one thing to have hard negotiations, to bargain or to ask for something like a special deal or a special rebate. There is nothing wrong with that. What makes it unconscionable is where the purchaser has a significant degree of market power over the supplier. Firms in our grocery retailing sector which would have 50 per cent or more of their business in supplying to one of those large retailers are not in a position to say no to any demand. They have long-term leases on plant and equipment. They have ongoing obligations to their employees which they cannot just turn off like a tap. They have overdrafts with their banks. They have contracts with their supply chain and subcontractors. They are not in a position to say no because if they lose 40 or 50 per cent of their business overnight it cannot be replaced. They are placed in a position where they cannot say no. If we are going to condemn one, we must stand and condemn both. I thank the House.

Steve Georganas (Hindmarsh, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak on this bill protecting workers' rights, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. Protecting workers' rights is something that we on this side of the House take very seriously and are fundamentally committed to. It should be of primary concern to all of us because we are talking about some of the most vulnerable people—lots of our newly arrived migrants, very low-paid workers, people who work shifts. Protecting these vulnerable workers is of the utmost importance.

Working conditions are considered an essential human right as stated in article 23 of the Universal Declaration of Human Rights. Let's just refresh ourselves on those rights:

1. Everyone has the right to work, to free choice of employment, to just and favourable conditions of work and to protection against unemployment.

2. Everyone, without any discrimination, has the right to equal pay for equal work.

3. Everyone who works has the right to just and favourable remuneration ensuring for himself and his family an existence worthy of human dignity, and supplemented, if necessary, by other means of social protection.

4. Everyone has the right to form and to join trade unions for the protection of his interests.

It is interesting that we speak about vulnerable workers. There is a bill before the House today and we are debating issues that affect some of the most vulnerable people in society—those that are earning far less money than we earn here and far less money than the average—and yet the other side uses it as a union-bashing exercise. What we just heard from the member for Hughes was exactly that: an opportunity to have a go at unions, bash them, degrade them and talk lowly about them. What we should be doing is ensuring that we are doing everything possible to protect those vulnerable workers, like those people who work shifts, those people who work in assembly lines and the cleaners that perhaps some of us have in our home or offices. These are the vulnerable workers. These are the people this bill is all about, and this is what we should be talking about; not an exercise in union bashing as we have seen time and again from the other side.

Many people are at risk, and those at risk are our vulnerable workers. The term 'vulnerable workers' includes workers most at risk of injury and harm, as well as workers who are at risk of being exploited, being underpaid, facing excessively long hours at work or being held to ransom to accept below-standard working conditions out of necessity. We on this side of the House will always welcome any initiative, such as this bill, that addresses such injustices. Therefore, we welcome this bill because it amends the Fair Work Act in a number of ways to protect vulnerable workers, but it does not go far enough. It goes nowhere near far enough to protect vulnerable workers. It is a start, but we need far more measures in place.

The legislation increases penalties for serious contraventions of prescribed workplace laws, and this is defined as deliberate conduct which is part of a systematic pattern of behaviour. It increases penalties for employers who fail to adequately keep employee records. We have heard of cases where two sets of books are kept: one for the records and one for the employee. It makes franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries. This measure will allow those who know or should reasonably know about contraventions but have failed to take reasonable steps to prevent them to be held responsible. For example, we have seen many companies go to labour hire firms and then wipe their hands of any wrongdoing, saying: 'It's not our fault. We had no idea.' People should be made responsible. It is your duty to understand the conditions that people at your premises, on your job or under your contract are working under.

The legislation also clearly prohibits employers from requiring their employees to make such payments where workers are forced to pay back a portion of their wages. We heard the member for Bendigo talk earlier about a case where members were put in cars on payday, driven around to different ATMs, made to withdraw money and then pay back part of their wages because that was the verbal agreement those workers had with their employers. The employers had to justify it on their books by showing the correct wages, but they could get these workers to do that because they were vulnerable, because they did not know where to go and, more importantly, because there was no union at that workplace to protect them. These are the very unions that those opposite talk about as being some form of monster. You will find that these workers were not covered by any union. There was no union at their workplaces to protect them and, therefore, they became even more vulnerable. So we hear about stories such as the tour of the ATMs where workers had to withdraw part of their wages to pay back their boss.

On this side of the House, we will not stay silent on these issues when we believe the legislation simply does not go far enough to protect these very vulnerable workers. This bill simply needs to do far more than what it currently presents. For example, we are very concerned that the provisions in this legislation are not wide enough. They do not capture situations where Australian employers basically sell sponsorships for working visas to people before they enter Australia, as has been alleged to have occurred at one of the franchises. Labor believes that the prohibition on demanding unreasonable payments from employees should extend to prospective employees as well. We have seen many cases around the country where people are offered the ability to apply for a particular job but part of the application process is to purchase their goods or certain material from the employer or perhaps do a training course that is being run by the employer and then pay them for that training course.

In addition, many stakeholders have raised concerns that the provisions in the bill which give the Fair Work Ombudsman the power to compel people to answer questions do not contain the necessary procedural protections. This is of particular concern with respect to the ABCC's compulsory questioning power—a power that goes way overboard. We must consider how we go about giving a government agency the power to compel citizens to answer questions—citizens who are doing nothing wrong, who are going to their workplaces and speaking to their unions about work issues and about those rights which I spoke about earlier: human rights. Does this bill go far enough to ensure that these powers are balanced and include the necessary safeguards? I do not believe so. I definitely do not believe that this bill goes far enough to ensure that this power is balanced and provides good safeguards.

But then again, what can we expect from a party that has spent many years, whether in government or in opposition, with its only goal, its only focus, to bash the unions, to see the destruction of workplace unions and their negotiations to ensure that workers get good deals, fair deals and better deals? We have seen the witch-hunts that have taken place for decades. Recently we saw the royal commission into unions. This was no more and no less than a witch-hunt to ensure that they could basically dirty up people through this royal commission. We saw that even the chair of that commission had a connection to the Liberal Party. He was invited to go to a Liberal Party fundraising event. That was very questionable. It takes it back to what I said: this was nothing but a witch-hunt for political gain by this government. I think it is a first in this country, where we basically set up kangaroo courts for witch-hunts against our political opponents.

One thing is certain: this bill does not address the breadth of worker exploitation that we have seen under this Abbott-Turnbull government. There is a particular story from my part of the world in South Australia, where a chicken processing factory—there were foreign workers coming to work every day in two or three vans. They were driven into the factory. No-one knew where these people were coming from or where they were going. When other workers tried to question them, those workers were pulled aside and threatened with the sack. Until this day, we do not know who those workers were or where they were coming from. Every morning, the van would turn up with these workers sitting in them—most of the workers were of Chinese origin—and the vans would drive in and these people would go to work. They would not talk to anyone. At night, back in the van and off they would go again.

Labor took a whole range of policies to the last election to stamp out this sort of stuff out. Our policies went much further in protecting workers rights. These included combating sham contracting, where a firm or a company decides to set up separate contracting company and then asks people to reapply for their jobs through this contracting company and sacking people who do not meet the standards of this other contracting company. Licensing for labour hire companies, ensuring that before they were licensed there was a whole process to go through to ensure that these labour hire companies were doing the right thing before they were licensed. Shutting down the practice of companies phoenixing to avoid wage liabilities. Reforming the Fair Work Act to strengthen protections for workers. Criminalising employer conduct that involves the use of coercion or threats during a commission of serious contraventions of the Fair Work Act in relation to temporary overseas workers. And making it easier for workers to recover unpaid wages from employers and directors of responsible companies. We have seen what a big problem this is, how difficult it is for a worker to recover unpaid wages from employers.

At the moment, as I have said, it is very hard for vulnerable workers to prove that they have been underpaid. Too often the employer fails or refuses to provide pay slips. We have seen the repercussions of this affecting many people, most recently in the Centrelink debt recovery debacle that has taken place. Too often workers have found themselves in difficult situations because of poor record-keeping on the part of their employer. Unfortunately, in the Centrelink debt recovery disaster, the onus fell on the employee to provide what they did or did not do. So too bad if you went to your employer and asked for the books or the papers and they refused to give them to you. In order to address this imbalance of power, we need to put the onus on the employer who has breached the act by failing to keep proper records.

There is another glaring omission in this bill. This bill does absolutely nothing to protect a group of vulnerable workers who just recently have become even more vulnerable, thanks to this government's refusal to act. Of course I am talking about the Australian workers who rely on penalty rates.

Time and time again the Turnbull government has demonstrated that it has absolutely no interest in protecting these workers. These are some of the lowest paid workers in Australia. They are dependent on penalty rates on the weekends. As we know, this penalty rate decision could mean that up to 700,000 Australian workers will lose up to $77 per week. People will have to work longer for less pay. Of course, women will be disproportionately affected, and regional communities will have less money to spend in their economies.

We on this side of the House will continue to push our private member's bill, the Fair Work Amendment (Protecting Take-Home Pay) Bill 2017, which will stop the cuts to penalty rates. The fact that the Turnbull government continues to avoid supporting Labor's bill is a clear testament to its lack of commitment to vulnerable workers. We know, as I said, that these people depend on penalty rates. If the government really wanted to do something about vulnerable workers, it would support our bill and ensure that the penalty rates or wage cuts cannot just be determined by the Fair Work Commission. These are things that are negotiated between the workers and their employers— (Time expired)

Trevor Evans (Brisbane, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. It is an area of law and of practice where I have had some experiences, given my previous work with the business sector and my former role in the retail sector. I will start by putting on the record my strong and unequivocal support for cracking down on the deliberate underpayment of workers, and vulnerable workers especially. This bill before the parliament follows some headline cases of systemic and deliberate underpayment of mostly young, mostly foreign and mostly vulnerable workers. It is always a reasonable observation to make, of course, that there are good and bad employers and there are good and bad employees. My personal experience is that the vast majority of employees and the vast majority of employers are overwhelmingly good and trying to be so. The member for Gorton made the same point.

Yet, when it comes to that small number of bad apples, we cannot throw the book hard enough at those who would seek to deliberately flout the law. Any business which deliberately and systemically underpays its employees is not just committing a terrible act that directly hurts its own team members; it is also hurting every other small business with whom it competes by gaining an unfair cost advantage over them, and it is potentially attracting the patronage of customers who would be appalled to know that they are supporting a business that would break the rules.

I want to also put on record a comparison of how this government is taking action compared to the former Labor government taking no action in this space. I note that the member for Gorton in his initial comments and other Labor speakers including the member for Hindmarsh just then were using weasel words along the lines of this bill not going far enough. But, for the record, Labor had absolutely no policy to protect vulnerable workers during their six years in government recently. They actually slashed the funding of the responsible agency, the Fair Work Ombudsman, by 17 per cent, from $150 million down to $124 million, over those six years. That is when the now Leader of the Opposition, Bill Shorten, was the minister for employment, incidentally, and directly responsible for this. As a consequence of Labor's funding cuts and approach, that regulator cut its staff numbers over those six years of their government by 20 per cent, down by about 173 workers. That was effectively a reduction in the number of cops on the beat that Labor oversaw when they were in government and, as I said, when the now Leader of the Opposition was the minister responsible for this important area.

I will give some credit to Labor here. They did finally come up with a worker exploitation policy at the very end of the campaign last year. The member for Gorton confirmed that when he referred to their policy as being initially announced 12 months ago. But you always have to remember to judge Labor on what they do, not what they say. Their policy came three years after they were in government and responsible for the portfolio. Sadly, as always with Labor policies, it was full of good intentions but massively flawed. Labor's policy proposal applied higher penalties but exempted businesses like most 7-Eleven franchisees on the basis of their size, which is pretty shocking when you consider that the 7-Eleven case has really been the headline case when we think about this bill.

In stark contrast to the record of those previous Labor governments, this government has already taken a number of significant actions in the area of protecting vulnerable workers. Two years ago, before any Labor policy had ever existed in this area, this government established Taskforce Cadena, a joint task force between the Australian Border Force and the Fair Work Ombudsman, to target and disrupt criminals organising visa fraud, illegal work and the exploitation of vulnerable and foreign workers.

This government made changes to require a valid payslip as proof of paid work before a second working holiday visa could be granted to a temporary migrant worker. This government outlawed payments to the sponsors of foreign workers by making it a criminal offence for employers and visa applicants to solicit or receive a payment in return for visa sponsorship. This government has better funded our enforcement bodies to ensure that employers comply with their obligations as sponsors of 457 visa holders. That is the record of this government to date, and anyone who really cares about protecting vulnerable workers would compare those very real achievements, together with the proposals in this bill right now, to the lack of any policies or actions under any Labor government to date, and they would draw certain conclusions from that.

This bill before the House now proposes to build on everything this government has already achieved and makes essentially six further changes to the Fair Work Act, but these amendments to the law are not being proposed in a vacuum. On top of the amendments to the law, this government is boosting funding to the regulator, the Fair Work Ombudsman, by $20 million. This is about ensuring that the regulator, the cop on the beat, has the resources to better investigate and prosecute those who do deliberately exploit workers. Of course, we established the Migrant Workers' Taskforce, chaired by the former ACCC chair Professor Allan Fels to target employers who exploit migrant workers and continue to monitor the progress of 7-Eleven in rectifying its terrible cases of worker underpayment.

In terms of the six main changes this bill proposes to make to the law, firstly, this bill will amend the Fair Work Act to increase penalties for serious contraventions of payment related protections in the Fair Work Act. These higher penalties—10 times the current penalties—will apply where contraventions are systematic and deliberate. Secondly, the bill will amend the Fair Work Act to increase penalties for breaches of recordkeeping and payslip requirements to make them consistent with the existing higher penalties that apply for the underpayment of workers. That will be a doubling or a tripling of existing penalties. On the topic of increased penalties, I want to make it clear how strongly I support higher penalties for those found to be involved in deliberate and systemic underpayment of employees. All of my experience working with retailers and small businesses leads me repeatedly to the important and significant distinction between deliberate and systemic noncompliance and technical, inadvertent and minor breaches that, sadly, too many small businesses occasionally do commit due to the complexity and ever-changing nature of their regulatory environment.

I will return to this fact in a moment, but, when regulators such as the Fair Work Ombudsman audit small businesses in sectors like retail, fast food, hospitality, liquor, and hair and beauty, they often find noncompliance rates of about 40 per cent. A long list of regulators actually finds similar rates of noncompliance in small business—around that 40 per cent number—in a whole heap of areas, not just in industrial relations. We are talking, say, health and safety or consumer law, by way of example. This noncompliance the regulators frequently find is substantially minor, technical and inadvertent in nature rather than serious or deliberate, but the point needs to be made that we have so many areas of regulation now with the rules changing so frequently in so many of those areas that small businesses in Australia are often already overwhelmed. So it is vitally important that we do draw this important distinction that these amendments seek to make between conduct that is clearly deliberate and systemic versus conduct that is inadvertent, minor or technical in nature.

I said in my maiden speech last year that many small businesses survive right now in a fraught purgatory of noncompliance and nonenforcement and that they do need a strong voice. I do not want to see well-intentioned but ill-considered or poorly administered new rules further strangling or unnecessarily killing our struggling small businesses. So I support amendments which would seek to tie harsher penalties to conduct which is systemic and deliberate in nature. I suggest it is a good approach for policymakers to consider on future occasions.

Further amendments the government is proposing to make to the Fair Work Act include outlawing cashback, another coercive behaviour by employers, where employees may be paid correctly but are then forced by their employer to repay part of their wages. That was a very specific type of conduct we saw emerge in that 7-Eleven case, and it is clearly inexcusable.

On top of the increased funding provided to the regulator to be a better resourced cop on the beat, this government is also proposing amendments to the Fair Work Act to increase its capabilities and powers. These amendments seek to expressly prohibit hindering, obstructing or providing false or misleading information to Fair Work inspectors who carry out investigations into compliance. These amendments also seek to strengthen the evidence-gathering powers of the Fair Work Ombudsman to ensure the regulator can gather evidence where proper records to do not exist and to overcome that culture of fear that often prevents vulnerable workers from coming forward. These are similar to the powers held by ASIC and the ACCC.

I support these amendments and I want to add a comment in passing that it will be incumbent on the Fair Work Ombudsman, as it is on all of our regulators to use their powers wisely and proportionately on the cases of potential noncompliance they are investigating. I am all too aware of the temptation for regulators, and the individual investigators within them, to sometimes shy away from larger or more complex cases and to target smaller, easier cases, such as small businesses with a lower capacity to respond to investigations and achieve natural justice.

I have spoken before in this place about the need to ensure the culture within Australian regulators is one that avoids any preference for seeking scalps, through media releases or high profile court rulings, if that comes at the expense of pursuing more serious or systemic noncompliance or if it comes at the expense of achieving better overall rates of compliance in particular industries of concern. It comes back to my comments earlier about throwing the book at those involved in the most serious, deliberate and systemic cases of noncompliance, whilst understanding that small businesses are sometimes found to be noncompliant in minor technical and inadvertent ways.

The final amendments the government proposes to the Fair Work Act are to clarify the accessorial liability provisions to ensure franchisors who are complicit or turn a blind eye to underpayments are responsible for rectifying them. That involves the introduction of a three-step test. If a franchisee or a subsidiary contravenes a payment related provision of the Fair Work Act and the franchisor or holding company (1) has a significant degree of control over the franchisee or subsidiary and (2) reasonably should have known of some noncompliance, then the franchisor or holding company will be found to be liable for the noncompliance, unless (3) they took reasonable steps to prevent it.

On the specifics of that drafting, I note comments by the member for Gorton earlier and indeed some other members here about the drafting and about the Senate Education and Employment Committee inquiry into this bill. The inquiry conducted hearings and I was very interested to observe the contributions of many of the stakeholders with experience in these matters. That Senate inquiry reported back last night, and I have had the opportunity to read its recommendations this morning.

The Labor opposition and the Greens in dissenting comments in that report have proposed additional amendments that would be just crazy. They have proposed reversing the onus of proof. They have proposed imposing strict liability and they continue to show that they have no sense of proportion or context or understanding of how businesses actually operate. It is not a question of being pro business or anti business it is about having enough of an understanding of how things work to make a meaningful and practical contribution to solving problems like this. It is all shallow posturing and undergraduate solutions with modern Labor. Of course we should not be surprised; very few of them have ever been involved in small business or the private sector. They do not have the context to understand how franchising works or how small business works.

The majority report of the Senate committee, however, did hear and understand the evidence given to them by many of the experts and those with experience in these sectors. They made a number of recommendations, and I would like to note and commend one of them in particular: the first recommendation of the committee, which is that the control exerted by a franchisor or holding company be linked to workplace relations matters. Anyone who has been involved in franchising will understand the common sense behind that recommendation, and witnesses to the Senate inquiry made that point very strongly. Franchising by its very nature involves control; it involves quite detailed contracts full of obligations, responsibility, liability and certain rights. Even in cases where a franchise system is fairly limited—to, say, bulk buying or joint marketing—there is going to be some evidence there of significant control. Finding a link between the arrangements that shows the franchisor or parent company having some oversight or influence in the payroll functions or rostering functions is a necessary precondition towards allocating blame and responsibility in cases of systemic underpayment. Of course in the 7-Eleven case that test would have been easily met. The 7-Eleven head office had direct oversight of rostering and was involved in processing payroll after all.

Lastly, I believe it would be helpful to provide clarification around what reasonable steps might be in relation to the third limb of the proposed test. Whether that clarification is proposed in the legislation or by the regulator, the point is that the certainty it would provide would be helpful, which was also a point made very strongly by witnesses to the Senate inquiry. We are, after all, aiming for compliance here, not the creation of further cases of inadvertent and technical noncompliance. I strongly and unequivocally support cracking down on the deliberate underpayment of workers, and vulnerable workers especially. Labor did nothing in office, and are now proposing crazy and extreme responses. This government is acting.

Ross Hart (Bass, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to be able to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 which is currently before the House. The bill goes some way to addressing the ever-increasing community concerns around the exploitation of vulnerable workers by unscrupulous employers.

The Fair Work Act is amended in several key ways by this legislation. Firstly, it introduces a higher scale of penalties for serious contraventions of proscribed workplace laws, as well as increasing the penalties for record keeping failures. The bill makes franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought to have reasonably known of the contraventions and failed to take reasonable steps to prevent them. I note that this responsibility only applies where franchisors and holding companies have a significant degree of influence or control over their business networks. The bill also expressly prohibits employers from unreasonably requiring their employees to make payments—for example, demanding a proportion of their wages paid back in cash, a sickening situation that was recently revealed by the Fair Work Ombudsman's recent inquiry into 7-Eleven. Lastly, it strengthens the evidence-gathering powers of the Fair Work Ombudsman to ensure that exploitation of vulnerable workers can be effectively investigated. The new examination powers will provide the Fair Work Ombudsman with a greater suite of options to investigate potential noncompliance with workplace laws. The ombudsman is also given new avenues to pursue those who hinder or obstruct investigations or provide false or misleading information to the regulator.

What this bill does not do, however, is go far enough in protecting our most vulnerable and low-paid workers. Labor will support the passage of this bill through the House because the current extent of worker exploitation within Australia's economy is such that anything is better than nothing. I would make the point, however, that this bill falls well short of the policies and legislative reforms Labor took to the last election directed towards combating sham contracting, licensing labour hire companies, shutting down the practices of companies phoenixing to avoid wage liabilities, reforming the Fair Work Act to strengthen protections for workers and criminalising employer conduct that involves the use of coercion or threats during the commission of serious contraventions of the Fair Work Act in relation to temporary overseas workers or making it easier for workers to recover unpaid wages from employers and directors of responsible companies.

Significantly, there is one particular group of vulnerable workers which it is clear the Turnbull Liberal government has no interest in protecting. We just heard the member for Brisbane giving us a lecture on how Labor could or should have acted earlier. Strangely, he was silent when addressing the issue of protection of the lowest-paid workers in Australia. This government has wilfully refused to support the wages of low-paid workers. The evidence is there for all to see. Not only has the government refused to take any action in support of preserving the pay of those affected by the Fair Work decision with respect to penalty rates, the government also does not support any move to ensure that low-paid workers receive reasonable increases in their remuneration so as to keep pace with increasing costs of living. Paradoxically, this wilful refusal to support the incomes of low-paid workers also hurts the substantial constituency that is small business which must suffer if their customers have reduced spending power, in that discretionary spending is eroded by low wage growth not meeting the costs of living pressures. This underscores a fundamental difference between a government which claims a focus on jobs and growth but through its actions can be seen to be favouring large corporations, at least with respect to the government's failed proposal to deliver $50 billion worth of tax cuts over 10 years, which was recently reaffirmed in the budget last night. This tax cut will be delivered to the largest corporations in Australia. In contrast to that, Labor puts people first.

Labor accepts that small business is the engine room of the economy an drives employment. However, there is a consensus, particularly amongst economists, that low wage growth is a real risk to the present economy. Ideological insistence by those opposite on driving down the costs of doing business, which ignores that labour costs also represent the discretionary income of consumers within an economy, can ultimately destroy the living standards of our community. This is why Labor is particularly concerned to ensure that low-paid and, in the present case, vulnerable workers receive appropriate protections. This is another example of what Labor stands for: the rights of ordinary people so that all within our communities can benefit. Putting people first benefits all, including businesses.

The list of areas which are not addressed by this bill has already been outlined. The fact that these issues remain to be addressed is of concern. It is perfectly obvious from the conduct identified in multiple inquiries and reports that a culture of avoidance of employer obligations with respect to employees has infected a range of workplaces. Exploitation of temporary work visa holders, the appalling revelations with respect to the 7-Eleven franchise abuses, the misuse of labour procurement arrangements of the Baiada Group and, indeed, other reports of workplace abuses indicate that this may be fertile ground for further legislation should a government take further interest in the issues identified in these reports.

In its Fair Work Amendment (Protecting Australian Workers) Bill 2016, introduced into the Senate on 15 March 2016 and restored to the Notice Paper on 31 August 2016, Labor acted to address serious allegations of disgraceful treatment of workers by well-known companies. This government was silent until now despite the appalling nature of the revelations.

The present revelations include subcontractors engaged by Myer employing cleaners on sham contracts where workers were paid below award wages, workers were denied penalty rates and superannuation and workers were employed without appropriate OH&S protections. The 7-Eleven stores operated a business model based upon a methodical, systematic exploitation of vulnerable foreign workers, including underpayment of wages, fraudulent manipulation of pay records and workers threatened with deportation and physical intimidation in order to extract payments of cash to cover up award noncompliance. Pizza Hut delivery drivers were paid as little as $6 an hour under sham contracting arrangements. Poultry processing involved exploitation of temporary overseas workers forced to work dangerously long hours for less than the minimum wage housed in overcrowded and substandard accommodation.

Just this year we have heard further allegations with respect to other high-profile businesses. Caltex staff were working night shifts for $13 an hour, half the legal entitlement, and there was widespread underpayment of staff across the outlets. At Domino's claims have been made of franchisees selling visas to prospective overseas workers together with claims of systematic underpayment of workers.

Reform is a priority. I say that this is a real priority because a failure to address these issues has the potential to strike at the heart of our workplace relations system. Labor takes the view that a comprehensive approach should be taken to workplace relations so as to protect all workers. Employers who do not do the right thing and regard compliance with their obligations of minimum payments and workplace entitlements generally do not just exploit the workers they steal from; they also undercut employers who do the right thing. This undermines the integrity of our workplace relations system and arguably is a cost to the whole community in that the labour market is distorted, fair competition is impossible and, ultimately, our economy loses, whether by way of taxation which may be avoided through undocumented transactions or simply by way of exploitation of a worker who might otherwise participate in the economy in a more meaningful way with all the associated consumption that that implies.

The problem that I see with this bill and, indeed, with this government despite this bill is that the government sends an implicit message that avoidance of award obligations towards employees is in some way accepted or desirable, because they have a consistent message that the Australian employment framework is inflexible. We often hear from those opposite about the necessity for flexibility with respect to employment arrangements and that high wages mean that additional employment is more difficult. There is, of course, no suggestion that other business inputs such as rentals should be reduced so as to facilitate the employment of further employees or the opening of a business on a Sunday or a public holiday. Rather, each time, there is a call for low-paid workers to give up an entitlement so that the employer can choose whether to redirect that saving towards other purposes.

It is usually suggested that an employer will choose to employ additional employees on the basis that the current cost of overall cost of employment will be less. There is nevertheless scant evidence to suggest this will in fact follow. Employers are of course free to apply any such saving in any way that they rationally wish. No assumption should be made that a savings measure should result in any particular pattern of behaviour, including adding additional employment. I would like to see this government take real steps to protect low-paid workers in addition to those who were subject to the worst form of exploitation covered by this bill. In my view, the support of low-paid workers is just as important as ensuring the most vulnerable workers are not exploited and, for this reason, Labor will continue to press the government to support our private member's bill.

Returning to this bill, the opposition is broadly supportive of the measures within the bill but has some concerns with respect to the drafting of the legislation. The legislation has been the subject of an inquiry before the Senate Standing Committees on Education and Employment. There are some provisions which do not go far enough such as the prohibition of the practice of employers demanding unreasonable payments from their workers—for example, employers demanding a proportion of their employees' wages be paid back in cash so as to cover up an underpayment under an award, in the case of 7-Eleven, which does not apply to prospective employees. The effect of this does not capture the situation where employers in Australia might effectively sell sponsorship of working visas to people before they enter Australia—that is what is alleged to have occurred at one of the Domino's franchises.

The Fair Work Ombudsman has attracted the power to compel people to answer questions for certain purposes. However, there are not procedural protections within the bill which might have been expected to be included in such legislation. The bill falls short of the procedural protections that apply to the ABCC compulsory questioning power. As the shadow minister, Brendan O'Connor, has stated in the second reading speech, the power to give a government agency to compel citizens to answer questions is not a trivial power; it removes a right to silence. We must be vigilant to ensure that such powers are proportionate and that there are appropriate safeguards with respect to the exercise of that power.

Stakeholders have argued that the same procedural protections which apply to the ABCC should apply to the FWO; I agree. There are other provisions which appear to fall short of an optimal response to the identified misbehaviour. Multiple inquiries have suggested that franchisors and holding companies have effectively exploited underpayments by franchisees or subsidiaries. In a case where the franchisor or holding company knew or reasonably ought to have known of the contraventions and failed to take reasonable steps to prevent them, that franchisor or holding company should be responsible for those underpayments. The position as expressed in the bill does not include a reversal of the onus of proof, a position which Labor supported at the last election which would make the establishment of liability much easier without imposing a legal burden on the franchisor. In other words, this would be an evidentiary provision.

Labor favours the proposition that accessories to contraventions of workplace laws such as franchisors are required to establish that they did not know or could not reasonably have known about the contraventions. Labor supports the bill. However, it can and should be improved if this government is committed to the task of combatting exploitation of vulnerable workers.

Sarah Henderson (Corangamite, Liberal Party) Share this | Link to this | Hansard source

Deputy Speaker Coulton, I am conscious we have only got about a minute to go before 1:30. I will start off making of brief contribution if you are happy for me to proceed.

Craig Kelly (Hughes, Liberal Party) Share this | Link to this | Hansard source

Yes.

Sarah Henderson (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I rise to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. In the short time I have to speak before 1:30, I am absolutely delighted that the Turnbull government is introducing tougher laws to protect vulnerable workers from so-called cashback scams and other types of exploitation and I am pleased to hear that members opposite in general are supporting this bill. Frankly, the deliberate underpayment of workers has been all too common in Australia. We have seen this widespread exploitation, which was not addressed by members opposite when they were in government, uncovered at employers like 7-Eleven, Muffin Break, Gloria Jeans, Subway, Caltex, Dominoes and Pizza Hut franchises. Some franchise operators were operating on a frolic of their own but nevertheless we are very proud of the action we are taking on this bill.

Mark Coulton (Parkes, Deputy-Speaker) Share this | Link to this | Hansard source

The debate is interrupted in accordance with standing order 43. The debate may be resumed at a later hour. I thank the member for Corangamite for her contribution so far. She will be given an opportunity to continue at a later hour.