Sharon Bird (Cunningham, Australian Labor Party) Share this | Hansard source

I rise to oppose the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 and to support the amendments moved by the shadow minister for industry, infrastructure and industrial relations. I will take a minute or two to make comment on the member for Ryan’s contribution. It will only take me a minute or two because most of it was about what this side of the House thinks rather than addressing the bill, so there is not a great deal to deal with in terms of the content. However, the member did make the point that there is a new breed of contractors and franchisees out there and that, somehow, on this side of the House we have a problem with that. Indeed we do not. What we have a problem with is the abuse of that system and the potential for there to be massive abuse of that system under these bills and amendments.

I say to the member for Ryan that there is a hell of a big difference between, for example, an IT person who sets themselves up as a small business and works as an independent contractor and a group of 18-year-old kids I know who deliver pizzas. They have been put onto individual contracts and made to pay their own workers compensation and provide their own uniforms. From what they tell me, they have to do a minimum of 20 deliveries in a night before they even have covered the cost of their petrol and start to make any money—despite the fact that they are on regular shifts and, in any other way, would be considered employees. What the member for Ryan fails to acknowledge is that there are too many instances where this mechanism is used to abuse particularly young people in the workforce in a way that makes it very discouraging for most of them to continue seeking work.

Most of them are at university, and they are doing this to support themselves through the massive costs of university that they now undertake. The member for Ryan well knows that there are examples where young people are forced onto this individual contract form, providing their own uniforms, paying their own workers comp and, indeed, having to do a significant amount of work before they even make a bit of profit for themselves. I accept the member for Ryan’s argument that there are people who legitimately work as independent contractors. That is not our problem with this legislation. Our problem with the legislation is that its structure enables an abuse of that system.

In particular, the shadow minister outlined in the first point of his amendment that our concern goes to the fact that, as the example of the young pizza delivery people indicates, this government has an obsession with mechanisms that allow the cutting of wages and the slashing of the conditions and entitlements of workers. This is particularly sad when it applies to young workers in our communities. The bills and the amendment are another instalment in the government campaign. It was interesting in question time today that the Prime Minister for once was pretty clear that the reason they have pursued this agenda is that it is about giving power and flexibility to the bosses. In answer to several questions, he made it quite clear that this was about providing strength to the arm of the boss in the workplace, not the worker.

The government has in its collective head the idea that times are so good. Indeed, the member for Ryan outlined how wonderful they have been over 10 years. Their logic goes that, having achieved such—according to them—wonderful wages growth and unemployment decline, that makes it crucial to put in place mechanisms that allow you to attack wages, remove conditions of work and remove entitlements. They want to make it more difficult for workers to sustain their families and communities and to participate in a way that gives not only economic fairness—which the member for Ryan spoke about—in terms of fair pay for a fair day’s work but also some social fairness in their capacity to meet their family and community obligations.

Australians are generally disposed to giving new ideas the benefit of the doubt. If they consider there is a national interest in it, most are prepared to give something a try. But most hardworking Australians struggling to keep the family budget in order at the moment, weighed down by an increase in commitments, are now realising that the government’s agenda is indeed not for the national interest. It is, in fact, reflecting an ideological obsession, which means that, in reality, for hardworking Australians, unless you are at the high end of high-demand wages in areas like the mining industry, you will actually end up working for less, getting cut wages for increased hours and having reduced protections in the workplace.

The Prime Minister likes to quote average income and wage increases but he ignores the fact that that average is achieved by an explosion in wages at the top end, in high-demand areas—in fact, to the extent that it is actually endangering the viability of major projects in the energy and construction industries, in particular in mining—whereas, on the other side of it, that average is achieved by a whole lot of people in communities like mine, working in hospitality and in retail, who actually see themselves going backwards. So averages are all very good, but if the reality is that you have vast numbers of people suffering a cut in order to provide that increase to the smaller number at the other end of the scale there is not a lot of community joy in that.

This bill and the amendment to the workplace relations legislation before us plan to implement a two-tier system of independent contractors, on which I have made some comment and which the previous member failed to address. The bill contains minor protections for outworkers and owner-drivers in New South Wales and Victoria, but these protections are only short term. Indeed, they are quite political in nature in that they were intended to get this issue over the line before the election, and they will certainly be revisited. If the government is re-elected next year, those carve-out clauses for outworkers and New South Wales and Victorian owner-drivers will clearly disappear.

Last week’s report by the Senate Employment, Workplace Relations and Education Legislation Committee highlighted the systemic flaws in this bill by recommending that part 4 be scrapped. The government’s majority sends a clear message that this bill is flawed, by including a guarantee that outworkers would be protected, but that inserting part 4 in effect does the opposite. So the government’s own majority recommends its abolition from the bill. To add insult to injury, the committee, in perhaps a quite unprecedented intervention, actually sets up negotiations for outworkers and their representatives with the minister’s department to ensure that outworkers have the promised protection.

I want to spend a little bit of time drawing to the attention of this place the views of owner-drivers in New South Wales, especially those hardworking owner-drivers who live in my electorate who have regularly met with me to outline their concerns. This bill offers these workers some slight protections until there is a review next year. Owner-drivers in New South Wales, and I suspect in Victoria, are not one bit fooled by the minister’s assurance in the second reading speech. Kennith Simpson, 52, married with children, with four years service in general transport and a $145,000 investment, lives in my electorate. He tells how this bill would affect him:

These changes just mean my rates are going to go backwards ... politicians keeping getting pay rises and we go backwards. I will be working harder and longer for the same or even less.

Ian Jack, 56, with 23 years service in transport and a $200,000 investment in his business, lives in my electorate. He says:

Howard likes to say he’s for small business. But he’s turned around and kicked us in the gut. I’m only worried about my family.

Mukesh Ram, 38, has five years in transport and lives in my electorate. He says:

It’s already so hard to make ends meet. If I lose my rates, I can’t see how I’m going to meet rising fuels costs and insurance payments. At the moment I can’t afford to take a single day off. We need someone to stick beside us.

Genady Bendersky, a courier in my electorate, says:

I’ll find it impossible to hire a lawyer to help me. The expense will be too much.

It is clear that owner-drivers of New South Wales and Victoria did wage a successful campaign to convince the government to place a clause in this bill. Indeed, I am sure that if the many other people affected by the bill had the capacity to drive large rigs around Parliament House and draw such visual attention to their concerns they might have got fairer treatment too. It was not done for any other reason than to placate a group of hardworking Australians living in coalition electorates who lobbied very successfully, to their credit. The owner-drivers in New South Wales and Victoria could have taken the clauses in this bill and let the matter rest in order to look after themselves for a short time. But they are aware that what is protecting them in the short term is denied to owner-drivers in other Australian states and territories. Therefore, this bill will only unnecessarily add greater complexity to the legal regime regulating contracting employment.

One of the reasons for implementing the Work Choices legislation, we were all told, was the perceived complexity of the Commonwealth, state and territory legislative framework. Work Choices has not made the industrial relations system any easier to navigate. You only have to look at the surveys of businesses conducted by their own business representative organisations to see that they are still confused about and unfamiliar with what this new regime actually is. This bill does nothing to simplify the legislative framework for determining contracting employment. Indeed, it actually adds unnecessary complexity.

In late May, the Productivity Commission released a major report entitled The role of non-traditional work in the Australian labour market. The Sydney Morning Herald gave the commission’s report some coverage on 30 May. The Sydney Morning Herald article indicated that, based on the commission’s findings, the proportion of contractors as a proportion of the workforce fell from 10.1 per cent to 8.1 per cent. From 2001 to 2004—the article says—contractors grew in number but not as a proportion of the workforce. The Sydney Morning Herald article went on to state:

Bureau of Statistics figures show the proportion of employers has also shrunk under the Howard Government. The proportion of employees has therefore risen and business owners shrunk since Mr Howard was elected.

I believe we all have a right to know precisely why the Howard government has allowed this to take place. The Productivity Commission should be instructed by the Treasurer to inquire into this. After all, the government parades around in this place as the friend of small business. The facts, however, tell a very different story.

Everyone recognises that Australia’s labour market has changed in significant ways over the last quarter of a century. Literature on the labour market confirms that Australia’s 10 million strong workforce is now split between up to eight different methods of earnings. We still—for the moment—have awards, collective agreements and individual agreements covering workers in the contract of service. Within these groupings there are further sub-splits on earnings, which include over-award wages, safety net adjustments, certified agreements, executive-professional contracts and minimalist individual contracts. In contract for service, we generally find a two-way split between independent contractors and dependent contractors.

Employment in Australia is clearly increasingly fragmented and diverse. Within individual workplaces there is even further fragmentation, as the industrial literature points out. Direct employees are either permanent, fixed term trainees or casuals. Indirect sources of employment are also fragmented into permanent or fixed term and casual or dependent contractors. Some are sourced through a temporary employment agency or labour hire. The government and big business lobby groups like to suggest that the labour market should be treated no differently from the general product market. They argue the labour market should be subject to the economic principles of supply and demand only. Workers, labour market economists and even the Productivity Commission know it to be very different.

The Productivity Commission report highlighted that employment demand and supply factors are:

... seldom separate from institutional factors, which include the regulatory and workplace relations environment of firms.

The report went on to state:

The institutional framework shapes the minimum conditions and entitlements that firms provide to workers under different forms of employment, which then leads to demand and supply—

factors—

being affected.

The commission’s report dismisses the rhetoric of the government and the self-serving big business lobby that the employment relationship is simply that of a worker and an employer. This deregulation mindset is a play on words and language—no more so than in the case of employment and industrial relations.

The institutional framework equally applies to employment agreements—what will be in them, how they will be reached and implemented and from them what types of work will emerge and will not be allowed to emerge. Work Choices, for example, is highly prescriptive, giving minute detail on how the employment relationship will work between workers, their employer and third party involvement. Work Choices is about destroying the award system which has historically set the concrete foundation of minimum earnings and conditions.

The government’s other intention is clearly to root out collective bargaining from the labour market. Also involved in this bill is the concept of shifting private costs to the taxpayer, which has been compellingly argued in the Senate Employment, Workplace Relations and Education Legislation Committee report by retiring Australian Democrat Senator Andrew Murray. The Productivity Commission also highlighted this fact, suggesting that non-traditional methods of work had crucial impacts on a range of public policy areas, including taxation and revenue, health and occupational health and safety, superannuation and retirement savings and skills and training. The government’s own report, Rethinking regulation, recommended:

The Australian Government should align the definitions of ‘employee’ and ‘contractor’ used for superannuation guarantee and PAYG withholding purposes.

However, the government, in its response to the report recommendation, indicated it would not agree with its adoption.

I should also note that the Dawson report, which recommended changes to the Trade Practices Act, has encouraged the use of collective bargaining for small businesses. The National Farmers Federation has been granted the right to collectively bargain—at the same time, interestingly, that it opposes the same right for workers. Those are all very interesting developments in the commercial law jurisdiction which, I can assure the other side, have not been lost on us. This bill does nothing to solve the central question of what is an independent contractor. The bill does not attempt a definition. It leaves the resolution of the question to the common law.

The next development in the industrial relations debate will focus on the bargaining power of all parties that increasingly make up the global supply chain. The most important aspect in both commercial and employment law will be the strengths and weaknesses of each of the parties involved in these chains. As the government and the big business lobby, which has never had any time for small business, remain wedded to the ideological obsession with smashing unions, wiping away awards and undermining and sterilising industrial tribunals, other statutory authorities are fleshing out a response to the weakest soft spot in commercial relations—the relative strength of bargaining by each of the parties involved in commercial relationships.

Although this bill overrides state and territory legislation on dependent contractors, the government has conceded that state and territory legislation is actually addressing a problem and recognising the limits of bargaining power. That is why it has given short-term protection to outworkers and owner-drivers in New South Wales and Victoria.

I notice that the ACCI and the Independent Contractors of Australia recently issued media releases on the importance of an ILO recommendation, clause 8. The clause says:

National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships, while at the same time ensuring individuals in an employment relationship have the protection they are due.

The ILO recommendations in subsequent clauses are framing the ongoing debate on what are ‘true civil and commercial relationships’ while at the same time ensuring that workers have the ‘protection they are due’. The ICA has condemned this bill for ‘political deal making’ and ‘corrupted policy’.

In preparing for this debate I had a chance to read the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation report Making it work. The Labor dissenting report offers a way forward in its key substantive alternative recommendation No. 2. The government should have adopted the recommendation, as it offers more certainty and removes the complexities of ambiguity that are causing major concern.

We all accept that the method of employment is wide ranging, fragmented and constantly changing in Australia. There is no valid reason for the government to continue its obsession with cutting wages, conditions and entitlements of workers. There is no valid reason why the government intends to push through this bill, which establishes in effect a two-tier system of contractors: those with minor protection in the short-term and those left on their own. This bill further complicates the legislative framework. The minister has conceded, in comments— (Time expired)

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