Alan Cadman (Mitchell, Liberal Party) Share this | Hansard source

In Australia today, many of those hardworking independent small businesses that formerly have been terrorised by the union movement and stood over in an unfair way in the workplace will be free at last. It will be a great day for many small businesses in Australia when the Independent Contractors Bill 2006 successfully passes both the House of Representatives and the Senate.

If there is any one area that has bogged down Australian productivity and workplace relations, it is the definition of who is and who is not a contractor. We have had the previous spokesman outline that in New South Wales the whole of the building industry is deemed to be employees. Nothing can be more distressing than to meet a contractor who is locked out of a site because he does not carry a bus card or a union membership, when he has been required by the head contractor to go onto a site to carry out work, and to have some musclebound person paid by the union stand at the gate and deny him access to perform his duties and earn a real income.

On the other hand, if one looks at the housing industry across the nation, which is totally subcontract and contract, the efficiency, value for money and earnings from those contracts are the best in the world. No housing industry in the world can match the Australian housing industry, all carried out by contractors. That is what this legislation is about. We can have those wonderful contractors get to work without impairment, without obstruction and without the standover tactics that CFMEU has adopted at so many sites around the country.

But it is not only the building industry. There are many other industries where people just want the opportunity to be set free into their own business. Now they will have a proper choice. They will be able to decide whether they want to be an employee or whether they want to be a self-employed contractor. The decision that they have to make will be a clear one, and nobody will be able to coerce them one way or the other because there are protections in this legislation against sham contracts and unfair contract identification.

First of all, it needs to be understood that, because this is Commonwealth law, this provision will only apply to a circumstance where one party to the commercial contract is a corporation under corporate law, the Commonwealth of Australia or a territory, or a resident or registered as a business in a territory. So the limitation is there. This law cannot apply to a sole trader or to an individual who is not incorporated. It is a wide ambit, but there are exclusions. If two independent people want to enter into a contract, they can be whatever they like but they cannot be covered by this legislation.

The other important factor within the legislation is the definition of who is actually an independent contractor. Unlike the Labor Party, which loves prescriptive law, I am pleased that the government has chosen to use the common law which, over a long period of time, has established precisely what is understood to be a self-employed person.

Once we get into the definitional process it becomes like a bill of rights: we all think we know what it means but every bit of it has to be tested in court. So the commonly accepted process which the courts apply to decide who is an independent contractor and not an employee amounts to whether they are working on their own account or through a partnership or a corporate structure. It relies upon the degree of control the worker has over the work—for example: is the worker subjected to direction on how the work is to be performed, not just what the job is? It depends on the degree to which a worker is integrated into and treated as part of a principal’s enterprise. A thing like a uniform is a simple indication that a person is presenting themselves to the public as part of an organisation. It also depends on whether the worker is making a capital contribution to the process that is going on, how the principal pays the worker, and whether the worker has freedom to choose their hours of work or whether they have an obligation to work at particular times. The freedom to make decisions as an independent individual is very much part of the common-law test of who is an employee and who is self-employed.

Factors such as the provision of leave, superannuation and other entitlements are also taken into account under common law. Another factor is the place of work. Does the person work from their own premises—even if it is from their home—or do they work from a factory, a workshop or a garage? This is about whether they can say that they work from their own premises or use that as a base.

What about delegation of work to others? Has a person got the capacity to delegate other people to perform work or to subcontract to them? There is a test of whether the income tax is deducted from the worker’s pay by the principal or whether the worker is responsible for their own income tax payments. Common law also indicates whether a worker provides similar services to the general public, so that anybody can come along and say, ‘I would like you to do a job for me.’ Another test is whether or not a worker has scope to bargain for their remuneration.

There is also the test of whether the worker is providing skilled labour or labour that requires special qualifications. I do not know whether there are many members in the House who are skilled bricklayers—I doubt it. That is a skill that is acquired through study, attendance at TAFE and experience on the job. It also requires the person to bring their own tools to the site.

There will be the removal of many of the provisions put in place by state governments that deem a person to be an employee, disregarding their capacity to make some of the decisions that I have outlined and disregarding things such as who they work for, when they work and what skills and knowledge they bring to the site. All of those things are significant in determining who is self-employed. That is why I am so pleased that this legislation will set so many Australians who have felt oppressed by past industrial law free of all of those inhibitions. They will be able to make decisions from their very first step into the world of being self-employed on their way to becoming a full and competent business.

Another test applied to whether or not a person is an employer or an employee is the issue of deterrence from future harm. Is the principal in a position to reduce accidents and provide for things to be done in a better manner?

The background to this legislation is that the government made an election commitment to introduce separate workplace legislation. I do not know of many countries in the world that have legislation like this, and I applaud the government for introducing it. There are approximately one million contractors—maybe more—in Australia. Australians are voting with their feet whether they want to be employees or self-employed. To be employed or self-employed is the test.

Most of the young people that I meet in the electorate of Mitchell in north-western Sydney have a high degree of motivation and ultimately want to be involved in something where they make their own decisions and are not reliant on an employer. They say that they want self-managed employment, which means they want to choose between opportunities. This probably involves study of some sort—whether it is for a trade or means going to university. They want to be able to work part-time on a regular basis. It is a mixture of self-directed, self-managed opportunities that they aspire to. This is the true aspirational voter as distinct from people whom a previous leader of the Labor Party attempted to describe. The fact of the matter is that people aspire to be able to do special and different things, and this legislation will provide the groundwork and the opportunity for that. (Quorum formed)

This legislation, for the first time, recognises and protects the unique position of independent contractors in Australia, something that has long been desired but something that has long been fought against by the Labor Party and the union movement. Combined, they have sought to make people who are self-employed into employees. They want to bring them under control. They want to manipulate them and bring them to a status where they can control and manage their lives through the union movement.

The legislation will enshrine the freedom of independent contractors to enter into arrangements they choose, primarily based on commercial considerations and on the definition in the common law as to who is self-employed, free from the prescriptive arrangements that are at the heart of so much of what the Labor Party loves and what the union movement lives on.

The bill delivers on the government’s commitment to ensure that independent contracting is encouraged, expanded, built up and given opportunities so that people in those industries will have freedoms they do not have at the moment. It will provide efficiencies and joy in the workplace which are not there when people are forced to do things and to behave in a manner which is against their best interests and against getting a job finished.

A principle this government believes in is that genuine independent contracting relationships should be governed by commercial, not industrial, law. So the break-out is from industrial law to commercial law. People will be able to say that they are either employees or contractors. A contractor is self-employed, separate from what an employee is.

This bill excludes some aspects of territory and state laws but will provide a fairer and more accessible national contracting review mechanism through the courts if there are proposals to change unfair contracts or to review contracts. The freedom to operate as a genuine contractor should be protected from inappropriate limits. People should have the freedom to enter into contracts. The efficiency of a modern economy relies on our maximising the skills, imagination and creativity of the Australian people, and most often that is best done when a person is reliant upon their own decisions, not the decisions of others.

The existing regulation for genuine independent contracting across many of the states is a regulation of entrepreneurship: it limits people. This legislation does not have any sort of statutory requirement for definition, and I applaud that. It is the totality of circumstances surrounding the workplace and what a person actually does that is taken into consideration. This legislation will override most of the states’ legislation for people termed as ‘deemed employees’. A previous speaker from the Australian Labor Party read out an amazingly long list of those industries and workers who are deemed to be employees whether they work for themselves or not. What a limitation that is, not only on entrepreneurship but on productivity, job satisfaction and the opportunity to go ahead. So these changes are really significant.

Do the changes come into place tomorrow? No, they do not. There is a three-year period for the transition to take place. So state deeming laws will not be knocked over tomorrow—the sky won’t fall in. Things will not happen overnight, but within three years those state deeming laws will be wiped out, and if people are a corporation, or one of the partners in a contract is a corporation, or they are within a Commonwealth or territory jurisdiction, they will have to change. The transitional period will allow deemed employees and employers to be fully informed about the government’s intentions and to make the one-off change. The transitional period will not apply to people who, after the passage of this legislation, enter into arrangements. From now on, people coming into the workforce are no longer able to be deemed as employees.

There is protection for outworkers in this legislation and there is a carve-out for owner-drivers in New South Wales. I am sorry that a better result has not been established for the owner-drivers of New South Wales. I understand the difficulties that have been created over many years. I also realise that the Razorback stoppage, along with ‘green dog’ and the history of that industrial conflict, was really about owner-drivers wanting unions off their backs. It was also about large freight forwarders trying to control owner-drivers. Owner-drivers in that case rejected the activity of both the Transport Workers Union and the large freight forwarders operating in concert. They wanted to be broken free of those controls. A capacity to negotiate in their own right, which the Trade Practices Act now provides for, should be encouraged so that they can in fact have a concerted and reasonable voice which does not have to be controlled, manipulated or directed by the TWU in New South Wales or anywhere else.

That is what Razorback was about. Those are the attitudes we have to resolve and that is why the minister is having a review of the process—a review which I, for one, want to be genuine, to resolve this problem and to give freedom to owner-drivers right across the country, in no matter what state, to make their own decisions, to contract together, to negotiate together for their own benefit and for the benefit of their families. (Time expired)

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