Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Hansard source

It is a pleasure to follow the member for Lowe on these matters, because many people on this side of the House are very concerned about the changes that are being proposed in the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, which come hot on the heels of the government’s extreme Work Choices legislation coming into force in the community. Like our opposition to Work Choices, Labor opposes these bills.

As we all know, courtesy of the exorbitant advertising campaign the government has run, the government has been making all sorts of claims trying to sell their extreme industrial relations agenda to a sceptical Australian public. And, like many of the claims the government has made about their Work Choices legislation and what it will deliver, we see that those claims will be even further from the truth if these bills become law. The government has been pretending for months and months that these changes will result in a simplified, unitary industrial relations system. They have been asserting that it will result in deregulation of the labour market. They have been claiming it will increase flexibility and freedom for workers. But these bills, like the Work Choices changes before them, do absolutely nothing of the sort.

Work Choices did not simplify the system. The government has not delivered a single national system. In fact, it has created more confusion and led to a High Court challenge by the states disputing the extent of coverage of this new law. I note that even if the government is successful in the High Court challenge, many categories of workers will not be or might not be able to be covered by Work Choices, and I dealt with this in more detail in my speech on the Work Choices bill. There is, of course, a natural limit to how far the corporations power can extend, even if the government’s arguments are successful in the court.

On top of this confusion, these bills will now add several more layers of complication. Ascertaining who will be covered by this new legislation, who will have the benefit of state protections continuing, who will no longer be covered by existing laws and what the myriad different standards are that will apply in different states puts the final nail in the coffin of the government’s now well-and-truly dead claim that their laws are simplifying anything.

It is the single biggest con on business to pretend that these changes will streamline anything. Look, for example, at just some of the variations and options that might confront a small business in trying to work out what laws will cover them. First they have to ask whether they are a corporation, which is easy enough to ascertain. Then they have to consider the other more dubious categories. How will not-for-profit organisations work? How will large not-for-profit organisations compare to small not-for-profit organisations? How will small businesses that are not incorporated, that do not operate interstate or that operate as partnerships interstate ascertain which set of laws they are covered by? Then, of course, there are all of the new distinctions in the ill-defined definitions in these bills. Who is an employee? Who is a contractor? What would be a sham contract? Who is a state protected contractor? And the list goes on and on.

The government claims that the Independent Contractors Bill will ‘enshrine and protect the status of independent contractors’ and ‘encourage independent contracting as a wholly legitimate form of work’. But in fact these bills will undermine the safeguards currently enjoyed by independent contractors and significantly weaken protections for outworkers. Rather than deregulating the labour market, the bills will introduce a highly technical and complex regulatory framework to the independent contractor sector. The content of the regulations will weaken protections, but ascertaining who is covered by which regulations and rules is much harder. The bills may also create an environment that encourages employers to reclassify their employees as independent contractors and thereby avoid their obligations altogether. On top of all of this, the regulation-making power that we see in these bills means that all sorts of other exemptions and exceptions could be made quietly and without the usual scrutiny of a normal piece of legislation.

Before I address all of these concerns, let me first explain the broad scope of the legislation and the sectors that it covers. The government has claimed in the past that virtually all workers would be covered by Work Choices, but the very existence of these bills shows that that was always untrue. The exact numbers have always been difficult to obtain, but estimates as to the total number of independent contractors operating in Australia vary from 800,000 to 1.9 million people. This represents between eight and 20 per cent of Australian employed persons—a rather large number of workers that the very existence of these bills demonstrates are not covered by Work Choices.

Independent contractors are predominantly located in the trucking industry and, as outworkers, in the textile, clothing and footwear industries, but are in a range of other industries as well. I must note, however, that these two groups have a very significant presence in my electorate. Because of the heavy industry in my electorate and the proximity and access to the river, the docks and the freeways, the trucking industry has had a strong presence in the area. ABS statistics show that over 3,000 people in Gellibrand are employed in the various industries categorised as transport and storage. While managing safety and traffic noise is always an issue for residents, no-one doubts that it is extremely important to ensure that the many workers in the industry who live and work in our area are adequately protected, not exploited and not left in unfair or vulnerable positions. Existing protections are important to provide reasonable working conditions and also to maintain the financial viability of the scores of owner-driver businesses in my electorate—businesses that would otherwise be forced to cut corners or be squeezed out of the industry. As we all know in this House, cutting corners in the trucking industry is to no-one’s benefit. It compromises the safety of workers and it compromises road safety for the wider community. No-one wins. These bills, as I will discuss, significantly increase the pressure on these drivers at great risk to themselves and to all of us.

The textile, clothing and footwear industries also have a notable presence in my electorate of Gellibrand. Unlike the transport sector, figures on the number of TCF workers and outworkers are very difficult to obtain, but there have been in the past and still are a number of large textile companies in my electorate. Unfortunately, some of them have not seen good times recently. But there are also many women in our community from diverse ethnic backgrounds who work from their own homes as pieceworkers. These women in particular are already in a vulnerable and exploited position, and these bills will do little to assist them. Rather, the bills will significantly weaken outworker entitlements, removing independent contractors from protections under state industrial laws. These workers will be even more exposed than they already are, losing entitlements such as sick leave and annual leave.

I will now address in more detail some of the particular concerns that I have with these bills. It is Labor’s strong view that these bills will undermine the safeguards currently enjoyed by independent contractors, increase uncertainty for independent contractors and introduce a highly technical and complex regulatory framework to the independent contractor sector. The independent contractor’s bill accepts the common-law definition of the term ‘independent contractor’, whereby a person is engaged under a contract for services without the legal status or protections of an employee. As such the independent contractor, rather than an employer, is liable for aspects of their working life such as superannuation and taxation responsibilities. The primary principle underpinning the bill is that independent contracting relationships should be governed by commercial law not industrial law, and it seems that the government’s intention is that as many employees as possible be categorised as independent contractors, thereby shifting responsibilities from employers to individuals. So it is clear the bill’s reach goes well beyond existing contractors to those who might currently get the benefits and protections of employees.

Like Work Choices before them, these bills will create an even more confusing system where businesses and employees will not know what laws they are covered by and what conditions they retain. When the government introduced its extreme Work Choices bill, I noted—as I have mentioned already—that the promise of a single national system, without support from the states, was a myth. The Independent Contractors Bill offers one more demonstration of where the federal government, despite its grand plans, is unable to deliver a single coherent system. Instead it is a bit of federal law here and a bit of state or territory law there all mixed in together. How the government thinks this will lead to greater efficiencies for business is beyond me.

Part 2 of the bill, for example, overrides all existing deeming provisions contained in state industrial legislation which deem certain categories of independent contractors to be employees and all existing provisions granting employee related entitlements on independent contactors. It therefore seeks to override the state and territory provisions on issues such as remuneration, leave, hours of work and disputes. Yet, confusingly, both bills simultaneously retain state and territory provisions relating to issues such as discrimination and occupational health and safety. Again we are faced with duplication of regulation and uncertainty for business, with one law applying in one area and a different law in another. The bill means that independent contractors can no longer access state unfair contracts laws.

Equally complex are the transitional provisions under part 5 of the bill. These provisions attempt to create transitional arrangements for people once recognised by state and territory laws as employees—and consequently afforded employee style entitlements—who are regarded under these bills as independent contractors at common law. The bill provides a complex structure of transitional arrangements, which stretch over three years, to define just what entitlements such people will continue to hold. So for that period of time it is going to be even more difficult for businesses and individuals to know what laws they are to have the protection of.

In relation to owner-drivers, the bill is just downright weird. It recognises that existing laws in Victoria and New South Wales will continue to exist but ignores the pending legislation in WA and the ACT. It even prevents states from legislating protections in the future. So it acknowledges—it even concedes—that owner-drivers are in a vulnerable position without the Victorian or New South Wales protections, and therefore maintains them, but it is happy to let there be a different standard in other states; it is not only happy to allow it, but it absolutely prohibits any action then being taken in the future by other states. So these bills guarantee that there will always be a differential between states in the owner-driver area. You have to ask, ‘Where is Mr Howard’s single system now?’ Soon I am going to go in more detail to the situation with owner-drivers, because it is something that I think needs specific attention. But like the Work Choices legislation, as I have already said, this bill is not about deregulation or streamlining; in fact it is all about over-regulation and politics.

One of the most worrying aspects of the bill is the significant weakening of protection for outworkers. Part 4 of the bill purports to protect outworkers because it provides a default minimum rate of pay of $12.75 per hour. However, that part excludes all the broader protections that were in existence for outworkers in state laws and federal awards, like holiday entitlements, overtime, superannuation, workers compensation and redundancy pay.

A so-called contract outworker under the bill will not be entitled to any of the minimal and inadequate protections maintained through Work Choices other than a basic minimum rate of pay. In states which do not have outworker laws, this will be the only protection for outworkers. In states which do have outworker laws, only a tiny subset of these laws would remain effective. This creates an easy loophole for unscrupulous employers to argue that outworkers are contract outworkers and thereby avoid federal protections.

These cognate bills are simply designed to allow workers to be further exploited, a particularly worrying thing in an area where we know that workers have already been seriously exploited. For workers in the textile, clothing and footwear industry, where outworkers predominate, existing poor conditions such as low rates of pay, irregular payment and substandard working conditions will be exacerbated by removing even the most basic of protections.

I think it is important to note in this place that the Senate committee unanimously exposed the government’s superficial rhetoric about protecting outworkers and recommended that the whole of part 4 be omitted. The government senators themselves stated that these changes ‘serve no useful purpose’. Even the government members acknowledged the ridiculous position that is being put forward by part 4 and proposed that it should be omitted.

I have already noted briefly that these bills will create an environment encouraging employers to reclassify their employees as independent contractors and thereby avoid their obligations. Of course this is bad for workers, but it is also not good for businesses. They will be forced to compete in a race to the bottom as employers increasingly transfer their employees, who no longer will be protected by state and territory deeming provisions, over to independent contractor status to avoid their responsibility for worker’s entitlements and to lower their costs. Even good bosses who may not want to take this approach will feel pressure to change, as they will otherwise lose a competitive edge against those businesses that are doing the wrong thing. It will become a downward spiral where workers become the biggest losers.

I want to come back to the question of the owner-driver issue. I have noted that these bills are just simply weird in this area. I note the different treatment for different states and the inconsistent views that the government has in this area. If, despite our opposition to these bills, this legislation does go through the parliament, one of its few positive aspects is that it preserves, at least for the time being, existing state arrangements and protections for owner-drivers—in New South Wales, under chapter 6 of the New South Wales Industrial Relations Act 1996 and, in Victoria, under the Owner Drivers and Forestry Contractors Act 2005.

But, as mentioned above, this concession recognises that owner-drivers are a unique and particularly vulnerable group who require a basic level of regulatory protection to avoid exploitation by transport operators. Once this recognition has been made by this concession, surely even the Howard government must concede that it needs to go further. Shouldn’t owner-drivers in all states be covered?

But, even if this is a small portion of good news, this reservation is only temporary. The fact that these bills allow New South Wales and Victorian legislation to continue is only a temporary protection. The legislation itself says that this part has to be subject to review in 2007. That is right: 2007 is only next year. Given the election is due in 2007, it seem very likely that there will be an immediate review after the election—and the mean and tricky Prime Minister, as he has been described by his own, is making no promise that this protection will continue if he again secures government.

So, even in the one aspect of these bills where we see there might be some sensible protection maintained, the government is only doing that with a sleight of hand. It is some sort of political arrangement which has been made. It recognises the value of those bills. It excludes other states from taking any action to get similar protection, and it does not even guarantee beyond the next election that those protections will stay in place in those states.

I do not think the Prime Minister is going to be able to convince owner-drivers in Victoria and New South Wales that this is a good enough guarantee or protection for them, and I am sure he will not be able to convince all the owner-drivers in other states, where legislation might have been forthcoming—as we know, it has been foreshadowed in the ACT and WA—that it will be good enough for them. So it seems to me that the one small provision which might provide some protection if you take this action is built on very flimsy ground.

Ultimately, I think the only conclusion you can be left with regarding these bills is that they are a total mess. There is not one system for employment regulation, as the government has proposed. There is not protection for individual workers, owner-drivers or contractors. There is not deregulation for business. There are confusing and inconsistent state exemptions and there are complex transitional provisions. All in all, it is a confusing, complex mess with no discernable benefit to either individuals covered by the system or businesses operating in these fields.

The working men and women of Gellibrand—the heartland of industrial Melbourne, in the inner west of Melbourne—deserve much better than these bills. They risk being attacked in all directions: losing their entitlements, losing protections and losing rights, making them even more insecure in their jobs. In government, Labor will tear up the extreme Work Choices laws and these laws too, as there is nothing good about them. They harm families, young people and ordinary, regular working Australians who are just trying to make ends meet. These laws must not remain on the statute books.

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