Michael Keenan (Stirling, Liberal Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

by leave—I move amendments (1) to (9) together:

(1)    Schedule 3, Part 5, item 23, page 32 (lines 6 to 12), omit subitem (1) and note 1, substitute:

(1)    Where a transitional instrument deals with a matter that is dealt with under the National Employment Standards, the transitional instrument is of no effect  to the extent that the overall entitlements of the  transitional instrument in relation to the matter are detrimental to the employee when compared to the overall entitlements of the National Employment Standards in relation to the matter.

(2)    Schedule 3, Part 5, item 23, page 32, line 24, omit “in any respect”.

(3)    Schedule 5, after Part 3, page 61 (after line 11) insert:

Part 4 – Relief from increased labour costs

14  Part 10A award modernisation process is not intended to result in an increase in labour costs

(1)    The Part 10A award modernisation process is not intended to result in an increase in labour costs for employers.

(2)    An employer’s labour costs in respect to an employee or outworker is the actual cost to the employer to employ the employee or engage the outworker:

                  (a)    including wages and incentive-based payments, and additional amounts such as allowances and overtime; but

                  (b)    disregarding the effect of any deductions that are made as permitted by section 324 of the FW Act.

Note:                Deductions permitted by section 324 of the FW Act may (for example) include deductions under salary sacrificing arrangements.

(3)    An employer suffers a modernisation-related increase in labour costs in respect to any employee or outworker if, and only if:

                  (a)    a modern award made in the Part 10A award modernisation process starts to apply to the employer when the award comes into operation; and

                  (b)    the employer’s labour costs are higher after the modern award comes into operation than what the employer’s labour costs were immediately before the modern award came into operation; and

                  (c)    the increase in labour costs is attributable to the Part 10A award modernisation process.

15  Orders remedying an increase in labour costs

(1)    If FWA is satisfied that an employer, or a class of employers, to whom a modern award applies, has suffered a modernisation-related increase in labour costs, FWA may make an order (a relief from increased costs order) varying particular terms of the modern award as they relate to the employer or class of employers, as FWA considers appropriate to remedy the situation.

(2)    FWA may make a relief from increased cost order on application by:

                  (a)    an employer who has suffered a modernisation-related increase in labour costs; or

                  (b)    an organisation that is entitled to represent the industrial interests of such employer.

(3)    FWA must not make a relief from increased costs order in relation to an employer or class of employers, if:

                  (a)    FWA considers that the modernisation-related increase in labour costs is minor or insignificant; or

                  (b)    FWA is satisfied that the employer or employers have been adequately compensated in other ways for the increase, such as through increased productivity or flexibility.

(4)    FWA must ensure that a relief from increased costs order is expressed so that it does not apply to an employer unless the employer has actually suffered a modernisation-related increase in labour costs.

16  Relief from increased costs order continues to have effect so long as modern award continues to cover the employer or employers

A relief from increased costs order in relation to an employer or class of employers to whom a particular modern award applies continues to have effect (subject to the terms of the order) for so long as the modern award continues to cover the employer or employers, even if it stops applying to the employer or employers because an enterprise agreement starts to apply.

17  Inconsistency with modern awards and enterprise agreements

A term of a modern award or an enterprise agreement has no effect in relation to an employer to the extent that it is less beneficial to the employer than a term of a relief from increased costs order that applies to the employer.

18  Application of provisions of FW Act to relief from increased costs orders

The FW Act applies as if the following provisions of that Act included a reference to a relief from increased costs order:

                  (a)    subsection 675(2);

                  (b)    subsection 706(2).

(4)    Schedule 5, after Part 3, page 61 (after line 11) insert:

Part 5—Amendments

Fair Work Act 2009

19  Paragraph 139(1)(i)

After “superannuation” insert “but ensuring employers can nominate any complying superannuation fund as the default fund”.

(5)    Schedule 5, after Part 3, page 61 (after line 11) insert:

Part 6—Other amendments

Workplace Relations Act 1996

20  Section 576T

Repeal the section, substitute:

576T  Terms that contain State-based differences

        (1)    For a period of 5 years starting on the day on which a modern award commences, the award is to reflect the State and Territory differences in previously existing awards.

        (2)    If, at the end of the period of 5 years starting on the day on which a modern award commences, the modern award includes terms and conditions of employment that:

                  (a)    are determined by reference to State or Territory boundaries; or

                  (b)    do not have effect in each State and Territory,

those terms and conditions cease to have effect at the end of that period.

        (3)    The Commission may reduce the 5 year period referred to in subsection (1) only when it is satisfied that it is appropriate to do so, having regard to:

                  (a)    the views of the sector in which the modern award is intended to cover; and

                  (b)    the impact on employment within the sector to which the modern award is intended to cover.

(6)    Schedule 22, Part 3, page 238, (after line 27), after the note, insert:

     (1A)    For the purposes of subsection (1), a dispute can be threatened, probable or imminent.

(7)    Schedule 22, Part 3, page 239, (after line 12), after subsection (7), insert:

Application of right of entry penalties to employers

        (8)    An employer who refuses entry to an employee organisation on the grounds of seeking an order or interim order under this section, and acts expeditiously and in good faith in seeking that order, is not subject to right of entry penalties under Part 3-4 of this Act.

(8)    Schedule 22, Part 3, page 239, line 30, after paragraph (f), insert:

                           ; and

                  (g)    the views of the employer.

(9)    Schedule 22, Part 3, page 239, (before line 31), before subsection (2), insert:

     (1A)    For the purposes of paragraph (1)(d), any agreement or understanding includes prior judicial and administrative decisions under previous legislation or involving related or predecessor employee organisations.

It is astonishing that, as we have been sitting here listening to this debate, Labor members of parliament, one after the other, have marched in here to talk about this bill and none of them, as far as I am aware, mentioned award modernisation once. Every single one of them will have small businesses that will go bust in their electorate. Every single one of them will have constituents who will lose jobs because of these changes. Yet none of them saw fit to talk about it or defend it. One of the worst consequences of this bill can be alleviated if Labor and this minister listen to reason and embrace some of the sensible amendments that I am now moving. I would like to go to those amendments.

Firstly, the Fair Work Act created 10 National Employment Standards to replace the five Australian fair pay and conditions standards created under the former Workplace Relations Act. The bill sets rules for how the NES will interact with existing agreements and instruments. The approach adopted by the bill is to require a line-by-line comparison between the terms within an existing instrument and the terms of the NES. Where there is any detriment found, the terms of the NES will automatically apply.

This is going to be an incredibly complex and bureaucratic approach. This is a government that used to talk about reducing red tape and how it planned to deregulate aspects of the Australian economy, although you do not hear much talk about that lately. But this is actually a chance for the government to act on that talk. This is an amendment that will allow Labor an opportunity to make this act less bureaucratic in its operation and it will do something to reduce the red tape that is associated with it. This will make the task of employers easier and, when you make the task of employers easier, you make the task of encouraging them to employ people easier.

These amendments seek to remove the line-by-line approach to the concept of detriment as it relates to the interaction of the NES with transitional instruments. These amendments will ensure that the interaction between the NES and the transitional instruments is such that comparisons can be looked at on an overall basis when they occur. This is something that will make this test easier and make the task of employing Australians easier.

I want to move to the issue that Labor members refused to address during their contribution to this debate. That is the issue of award modernisation—doubtless the most important thing that we will be discussing here today and something that has the potential to throw tens of thousands of Australians onto the dole queue.

The new workplace relations system, when it takes full effect on 1 January, is predicated on the existence of a series of so-called modern awards. The bill creates a new power for Fair Work Australia to issue employee take-home pay orders. These orders are available to employees where their take-home pay is reduced as a result of the operation of a modern award. This is reasonable and it gives effect to one of the minister’s promises—an undertaking that no employees will be disadvantaged under her changes.

Sadly, there is no equivalent legislative provision that gives effect to the other part of Minister Gillard’s promise—that these modern awards will not cause an increase to employer costs. This is simply unbelievable. Labor is happy to stand by whilst thousands of small businesses are put to the sword and tens of thousands of Australians are thrown out of work.

These amendments seek to insert a new provision that provides the equivalent employer version of the take-home pay orders outlined in the preceding part. The provision recognises and seeks to enshrine a provision, within the existing award modernisation requests, that promises, as the minister promised, no increase in costs to business. The provision details what a labour cost might include and describes the circumstances under which an employer may suffer an increase in labour costs related to the transition to a modern award. Where Fair Work Australia finds that an employer has suffered a modernisation related increase in labour costs, they are empowered to vary the particular instrument as it applies to that particular employer. Such an order remains in effect whilst the modern award continues to cover the employer. This amendment will fix up the nonsensical nature of the minister’s promise on award modernisation.

Further evidence of the unrealistic nature of this request was revealed during Senate debates through the passage of the Fair Work Act. On several occasions the government acknowledged that there was no reference to the terms of the minister’s request within that legislation, and in addition they voted against coalition amendments that would have enshrined the minister’s award modernisation request as law. (Extension of time granted) It is beyond dispute that employers must at some point absorb increased labour costs arising from the award modernisation process. Anecdotal evidencesuggests that employers are making alterations to their staffing levels and that employees are already losing their jobs in anticipation of these new workplace laws. The impact of the award modernisation process on jobs and business should not be underestimated. The evidence presented to the committee is of extreme concern as it reveals that thousands of jobs will be lost directly as a result of this process. Worryingly, the sectors that will be the most adversely affected are those that are already the most likely to be affected by the worsening economic situation. These sectors, such as retail, aged care and horticulture, to name but a few, also employ significant numbers of young Australians and female workers. Casual and part-time employment opportunities are higher in these sectors.

It is essential that the bill be amended to provide an avenue for employers to seek relief from increased costs arising from the transition to a modern award. The failure to pass this amendment and the absence of such a provision is simply unfair and it ignores the overwhelming evidence regarding the true cost and impact for employers. It is clearly in the public interest that such a provision be included and that an individual workplace or enterprise be afforded the opportunity to argue its own particular circumstances. Industrial laws and a new workplace system cannot ignore the economic realities that are being felt within Australian workplaces today.

While an avenue such as that suggested deals with individual workplaces, a similar problem exits in relation to particular sectors and/or particular states. The legislation maintains the transition phase-in period contained at section 576T of the current act. We understand that this provision allows the commission a defined period within which it can phase out state based differences within modern awards and phase in these additional labour costs. This phase-in period has also been referred to by the minister with reference to the increased labour costs associated with the modernisation process, with reference to a maximum five-year period.

The minister’s award modernisation request does not provide the commission with enough guidance in relation to award modernisation. If this minister is genuine about this phase-in period—and she constantly refers to it when she is questioned about modern awards—it should be enshrined in law. It is appropriate that the commission maximise the transitional period for phasing out state based differences in order to provide workplaces the best opportunity to deal with the resulting changes to their conditions of employment and increased labour costs. The approach should be one that requires the commission to ensure changes are incrementally phased in over the longest possible period, with some discretion to determine a shorter period should it be satisfied that it is in the public interest to do so. This is a markedly different approach to the one that is currently proposed by Labor, which contains an implicit presumption that state based differences will be phased out immediately unless it can be convinced otherwise.

The coalition amendments seek to provide power to Fair Work Australia to hear claims from employers seeking relief from increased costs. They seek to provide power to Fair Work Australia to exempt an employer from certain provisions of a modern award or delay the application of certain provisions of a modern award for any period that it feels appropriate. The amendments also seek to alter part 10A of the Workplace Relations Act, as continued by schedule 5, part 2 of the main bill, to require Fair Work Australia to adopt the five-year phase-in period as a default unless it is in the public interest to do otherwise.

I want to move to another matter, and that is representation orders, which are the subject of further amendments. The legislation creates a new power for Fair Work Australia to issue union representation orders where a dispute exists between unions about who can cover a particular workplace. This has implications for who can represent employees, who can be involved in bargaining and who can enter a workplace. The intention of this aspect of the legislation is to assist in resolving demarcation disputes that will increase, arising from the loss of the traditional party concept to industrial awards flowing from the new system of modern awards. By inserting the words ‘threatened, probable or imminent,’ this amendment has the effect of allowing the pre-emptive resolution of a demarcation dispute via a representation order. (Extension of time granted) This ensures that representation orders can be made before a dispute occurs and avoids disruption, job loss or industrial disharmony. It also provides for the application of right of entry penalties to be suspended for an employer who has acted in good faith in seeking a representation order.

An addition to the items to be considered by Fair Work Australia when making such an order is the views of the employer. Previously, Fair Work Australia were not required to consider the views of the employer. The amendment we have moved requires that Fair Work Australia have regard to previous demarcation decisions issued under the previous legislation. As foreshadowed during the earlier discussion on this bill and debate on the Fair Work Act, a consequence of this removal would be the further potential for union demarcation disputes—sometimes known as ‘turf wars’. A number of employee and employer associations previously expressed concern about this very real potential and they specifically requested a mechanism by which this could be addressed. The bill provides a facility whereby orders may be obtained from Fair Work Australia to hear and determine any such dispute where one exists. Such a facility is welcomed and should provide an avenue to resolve demarcation disputes in the event that they arise.

Notwithstanding this new facility, there are a number of concerns about the proposed provisions. In particular, concern was raised about the failure of the proposed bill to take account of the views of employers when making orders and the apparent limitation on circumstances when such orders can be proactively obtained. The bill as currently drafted appears to require that a dispute must exist before an application can be made for a representation order. This would necessarily require the existence of a disagreement between two competing unions prior to the intervention of Fair Work Australia. Demarcation disputes can be time consuming and raise complex legal considerations. It is essential that such disputes be resolved in a timely manner to ensure disruption to productivity is minimal and jobs are not lost. As the bill is predicated on the existence of a dispute before it is enlivened, it is essential that there be a pre-emptive or proactive element to this section, as is proposed. It is clear that the provision as drafted creates uncertainty. This uncertainty would be alleviated by the amendments we propose here today.

Demarcation issues often emerge in circumstances involving union entry into a particular workplace. This entry is a right bestowed upon unions by virtue of the Fair Work Act and can carry significant penalties in circumstances of non-compliance by an employer. The right or otherwise of a union to enter a workplace has already been complicated by various provisions within the Fair Work Act. This complication would be exacerbated in circumstances of a demarcation dispute. The coalition amendments would ensure that Fair Work Australia were empowered to stay any attempt to enter a workplace subject to a demarcation dispute.

The bill details matters that Fair Work Australia must take into account in making a representation order. These matters include two significant factors, being the existence of any demarcation orders under the current Workplace Relations Act and the views of the employer. There is no valid or logical reason for the exclusion of these two factors, which are essential to ensuring the timely and sensible making of representation orders. The proposed amendment will require Fair Work Australia to take account of the views held by the employer when making representation orders and have greater regard to existing representation orders.

I will very briefly refer to the proposed amendment regarding default superannuation. The coalition see default superannuation provisions in this bill as a restraint on competition. The provisions encourage apathy in superannuation choice at a time when people need to be engaged in their retirement planning. Our amendment would increase the employer’s choice of super fund, and we would encourage them to take account of this choice. This amendment would change the default provisions so that when choosing a superannuation fund an employer could also nominate a complying superannuation fund as the default. (Extension of time granted) The amendments we propose are sensible amendments. They improve aspects of the act. Most importantly, they would alleviate some of the worst job-destroying aspects of the act in the fatally flawed award modernisation process. I urge the government to see sense on these amendments, and I commend them to the House.

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