House debates

Tuesday, 9 May 2017


Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017; Second Reading

4:54 pm

Photo of Brendan O'ConnorBrendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

I rise to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. It is a bill that is overdue. It is a bill that is deficient, but at least it is aimed in the right direction.

Before I go to the matter itself I would like to move an amendment:

That all the words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) notes that although the government pretends through the bill to care about vulnerable workers, those workers who earn penalty rates are also vulnerable as a result of the Fair Work Commission decision to cut penalty rates, a decision which the government supports; and

(2) calls on the government to:

  (a) abandon its support of the Fair Work Commission decision to cut penalty rates because it will mean nearly 700,000 Australians will have their take home pay cut by up to $77 a week; and

  (b) legislate to prevent the Fair Work Commission decision from taking effect, in order to stop Australians from having their penalty rates cut”.

Labor is pleased to finally have the chance to speak on this bill. We have been calling for this government to act to protect vulnerable workers for years, with no joy. This bill goes some way to dealing with some of the exploitation issues occurring across our economy, and we support its passage through the parliament because something, quite frankly, is better than nothing. The reality is that this Abbott-Turnbull government has had to be dragged to the table to bring forward any measures to address exploitation of vulnerable workers. And now that they have done so, they have brought forward a bill that falls short of what is required.

The bill falls significantly short of Labor's suite of policy and legislative reforms that we first announced 12 months ago—well before this government even turned its mind to protecting workers, so caught up has it been in its ideological crusade against workers and their unions. The measures in this bill simply do not address the breadth of worker exploitation that we have seen reach rampant proportions under the current government. This bill does nothing in relation to a range of policies which Labor took to the last election directed towards combating sham contracting, licensing labour-hire companies; 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 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.

As we can see, there are deficiencies with this bill in Labor's view and there is another gaping hole in this legislation. What is abundantly clear is that one group of vulnerable workers which the Turnbull government has absolutely no interest in protecting is of course people who rely on penalty rates, who are some of the lowest-paid workers in Australia. This is at a time when we are seeing the lowest wage growth in a generation. The idea that the Prime Minister and, tonight, the Treasurer can talk about fairness in one breath and at the same time allow for a decision by the commission to cut the penalty rates—to cut the real income—for some of the lowest-paid workers in this country is a disgrace, and the government needs to reconsider its position.

We would say that he has done nothing to support these workers, and he chooses not to involve himself in this matter. Even though he chose to intervene to stop truck drivers' wages going up, he will not intervene to stop hospitality and retail workers' wages going down. So he has already shown an inclination, when it suits him and when it suits the government, to use the parliament to intervene; to use, by way of the parliament, laws to prevent benefits to workers. And now he sits on his hands and says that he cannot do anything because he must recognise and respect the decision of the independent umpire. Well, that was not his view when it came to the Road Safety Remuneration Tribunal, as we all know. He has thrown his support behind cuts to penalty rates and he will wear that decision.

It is true to say that the Prime Minister really does not seem to have any empathy for these workers. He does not seem to be able to understand the consequences of the decision of the commission and what it may mean for them. I understand that he has not had that lived experience. He is a wealthy man, and he was a wealthy man in his 20s, a multimillionaire, so many years ago. Yes, he has made a lot of money, and good luck to him. He is good at making money for himself, but he started with a lot of money, so he has never really understood the sorts of challenges that people are going to confront as a result of the cuts to real income, to real wages. That is an unfortunate thing, but he could listen. He could listen. He could actually decide to talk to these workers.

We know he spends a lot of his time in boardrooms talking to big business and talking to bank CEOs and allaying their fears about any royal commission that might be contemplated by people other than the government, but he has not sought on one occasion to meet with workers who will be affected by this decision—not once. I do not expect him to understand through his own experience the impact of this decision, but I thought that, if he were a leader of the nation, if he were genuinely leading our nation and representing our citizens, he would actually have informed himself by listening to the stories of these workers and what will happen if this continues, if this commission decision is implemented.

There are still opportunities now. The date for the first cut for those wages and for those workers is 1 July. There has been no order made by the commission. There is plenty of time. We have five sitting weeks before 1 July in this place. There are three sitting weeks for the Senate. It can be resolved. You might recall, Deputy Speaker, that the Senate has already resolved to support the opposition's private member's bill, and indeed it passed the Senate in the last sitting. All it would take now is for this place to do the same, for Liberal members of parliament to put away their prejudices and their antipathy for workers and vote for the private member's bill introduced by the Leader of the Opposition. That would be a good start, particularly at a time when, as I said, wage growth in most parts of the labour market is going backwards in real terms. There is a wage recession for many workers, and they are struggling to make ends meet. Here is an opportunity.

That is the reason why we moved the amendment to the second reading of this bill, notwithstanding that we support the tenor of the bill. We support its direction. It is deficient, but it means well. We are going to seek to make further amendments to the bill—some substantial amendments—in the Senate. We also say by way of this second reading amendment that the government should contemplate changing its position. Never mind saving face, change your position, admit that you are wrong and support the opposition to prevent what is going to be a devastating impact on hundreds of thousands of Australians and their families.

This bill itself, as I said, has some deficiencies. We believe there should be further provisions that go to a whole range of other areas where people have been unfairly treated, where they have been underpaid and where there has been an intention to underpay, in particular. That is why I outlined the whole host of areas that we could be considering as well. For example, we think that the government should seriously consider the allegations and the disgraceful treatment of workers by some of the most well-known companies, who, in the main, probably do the right thing but on occasion let themselves down and let down their workforce.

Subcontractors engaged by Myer employing cleaners on sham contracts—under which workers were paid below-award wages, were denied penalty rates and superannuation and were working without occupational health and safety protections—are not going to be in any way regulated by the nature of this legislation. Yes, there might be some response to 7-Eleven, the outrageous large-scale form of exploitation, but this bill will not cover the conduct of Myer in relation to its subcontractors in the example I have just mentioned.

We say that 7-Eleven stores were operating a business model based on methodical, systematic exploitation of vulnerable foreign workers that included gross underpayment of wages, doctoring of pay records designed to conceal unlawful conduct, and workers subjected to threats of deportation and physical intimidation that has no place in a civilised society like ours. The allegations and claims against that company are remarkable in their nature and, indeed, in the scale of the problem.

Pizza Hut delivery drivers were getting paid as little as $6 an hour under rampant sham contracting arrangements that defy not only the law but any sense of decency. Supply chain arrangements adopted by the Baiada Group in its poultry-processing plants relied on gross exploitation of temporary workers, who were forced to work dangerously long hours for far less than the minimum wage and, to add insult to injury, were housed in overcrowded, substandard accommodation that they were compelled to accept.

This is just the tip of a very large iceberg, in the view of Labor. This year we have heard other allegations. At Caltex, staff were working night shifts for $13 an hour, half the legal rate, and not receiving tax returns, and there was widespread underpayment of staff across outlets. At Domino's, claims have been made of franchisees selling visas to prospective overseas workers and of systemic underpayment of workers.

While broadly supportive of the measures contained in this bill, we are always wary of this government's ability to draft legislation which actually does what the government says it does and which does not have unintended consequences flowing from the drafting. The Senate Education and Employment Committee inquiry into this bill confirmed that we are right to be wary. For example, this bill will prohibit the practice of employers demanding unreasonable payments from their workers—for example, demanding that a proportion of their employees' wages be paid back in cash. Prohibiting that is a sensible thing to do, but Labor is concerned that the provisions containing this prohibition will not capture situations where employers in Australia essentially sell sponsorship of working visas to people before they enter Australia, as is alleged to have occurred at one of Domino's franchisees, for example. The prohibition on demanding unreasonable payments from employees should extend to prospective employees.

Many stakeholders have raised concerns that the provisions of the bill which give the Fair Work Ombudsman the power to compel people to answer questions do not contain procedural protections which might have been expected to be included in such a regime. In particular, this bill falls short of the procedural protections that apply to the ABCC compulsory questioning power. The ABCC must apply to the AAT for notice to compel a person to attend for compulsory questioning. The AAT must be satisfied, amongst other things, that the ABCC has exhausted all other ways of obtaining the information. Further, the Commonwealth Ombudsman has a legislative review and reporting role. It is no small thing to give a government agency the power to compel citizens to answer questions, removing the right to silence, and we must be vigilant to ensure that these powers are proportionate and that appropriate safeguards on their exercise are in place. We are concerned about this provision. We understand its intent: it is to ensure the agency has teeth to get to the bottom of systemic corruption and exploitation of workers. We are concerned about how it might expose workers in these circumstances, and we need to have better oversight and better protection.

I understand about giving agencies teeth in order to get to the bottom of some of this awful, murky conduct. In many instances, as we know, these workers are very vulnerable and are too frightened to come forward and speak to their local politician or to ring the police. In many instances, that is why employers prey on people from overseas who are on temporary work visas. Most employers do the right thing, but this is quite systemic and widespread. Once you have this happening in our economy, in our labour market and in workplaces across the country at this scale, it places enormous pressure on competitors who are doing the right thing to start finding ways to cut corners too. This is the manifestation of the mantra 'the race to the bottom', where one competitor gets an advantage from acting unlawfully, putting enormous pressure on wages and labour costs even for employers who want to do the right thing. I believe most employers want to do the right thing, but they are under enormous pressure once this starts taking hold. From the scale of what we have seen in the media, there are some journalists who are certainly worth their salt and are worth their weight in gold—not all of them, that is for sure—but quite a few journalists are. Adele Ferguson from Fairfax is a remarkable journalist uncovering systemic corruption. If it was not for the role of that newspaper and that journalist, who knows how much longer that corruption would have continued on.

I do not see the government looking to find the problems that beset workers in our workplaces. I do not see the effort by the government. I see some good work by the agency, the Fair Work Ombudsman, and I note that, but I think it needs to be better resourced. We need better laws to prosecute employers. There need to be better ways of sanctioning this conduct, and whilst this bill goes some way to doing that, it does not go far enough.

I refer to the compulsory power. As I said, there needs to be greater oversight. We will obviously seek to move amendments there. I also want to make the point that stakeholders have made strong arguments for placing the same procedural protections on the Fair Work Ombudsman powers as exist for the ABCC, just to return to that provision. There are comparable arrangements with other agencies. The very least the government can do is entertain that amendment, because it is critical that we have oversight for very vulnerable people. Even though I know the power is there to target rogue, unlawful employers, not the workers, I think we have to be very careful here. We support the recommendation to have that oversight in place.

Unfortunately, for vulnerable workers in Australia, even where the government has chosen to follow Labor reforms, it falls short of the response required to really combat the heart of bad behaviour. For example, this bill 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. This, in our view, is a significant step short of Labor's position at the last election, which was that the onus of proof should be reversed so that if there are contraventions to workplace laws by franchisors, they are required to establish that they did not know or could not have reasonably known about the contravention. We believe that is the only way we are going to capture this conduct. This is stronger than the test in this bill, which places an evidential but not legal burden on franchisors.

It should be the case that where a worker makes a claim for unpaid wages from an employer who has failed to keep proper employment records, that employer should have to prove that they paid the worker what he or she was owed, not the other way around. Therefore, we need to do something in relation to that matter. At the moment, it is too hard, as has been borne out by many examples, for vulnerable workers to prove that they have been underpaid where the employer fails or refuses to provide pay slips. This is a significant imbalance of power, which should be addressed by placing the onus on an employer who has breached the act by failing to keep proper records to prove that they paid the worker what they were entitled to under the award or agreement in place.

Another significant concern with this bill is that it applies to the franchise model and holding company situation only. Also, the definition of 'franchisor' requires that the person:

… have a significant degree of influence or control over the relevant franchisee’s affairs.

According to the explanatory memorandum:

New paragraph 558A(2)(b) narrows the scope of the new provisions to those franchisors which exercise a significant degree of influence or control over the franchisee entity’s affairs. This recognises that there are a wide range of franchise models, and the extended responsibilities in Division 4A should only apply to those who have a significant degree of involvement in their franchisees’ affairs.

We are concerned that, as the Australian Chamber of Commerce and Industry and the Franchise Council of Australia have said in evidence to the Senate committee inquiry into this bill, the narrow focus on the franchisor-franchisee and holding company relationships will be an incentive for companies to move out of those models and into other commercial relationships which are not covered by this provision, or to arrange their relationships so that they are using a franchise model which allows them to argue that they do not have a significant degree of influence or control. We cannot allow loopholes like this where people can avoid their obligations. We need effective legislation, significant teeth and better resources at agency level. We need to make sure that the provisions are broad enough to cover the field and not so narrow as to be avoided through finding loopholes, restructuring companies, changing relationships and avoiding the definition that is currently narrowly constructed in the provisions of this bill.

The Franchise Council of Australia claim:

No evidence provided makes the case for singling out franchising when Fair Work compliance concerns are an economy-wide issue.

I do not agree with the Franchise Council of Australia on all matters; I probably do not even agree with them on the substance of this bill. I note the chair is a former cabinet minister and the former member for Dunkley, a fellow cricketer of mine, Bruce Billson. I spoke with him about these matters. Where he and the Franchise Council of Australia are right is that it should not just apply to their members. That is what he is saying. He is saying: 'If we have got a problem we know it's not just under the franchising model. If there are to be new laws in place, why would it be that only franchisors and franchisees are singled out?' Again, it is not sufficient for the government to argue that all we need do is enact this legislation, and somehow it is going to crack down on the corruption and exploitation that is occurring in too many workplaces in this country. The Franchise Council of Australia see this as an argument for removing the new offence from the bill. We disagree. It is an argument in support of Labor's proposition that that liability needs to be imposed more widely. But the FCA make a good point: why just them? They say: 'Why just us? Why have it at all?' We say: 'Why just them? Let's make sure it applies to all arrangements where there has been evidence of gross exploitation of workers in this country.'

The Asia-Pacific Centre for Franchising Excellence, at Griffith University, submitted to the Senate inquiry. This is a long quote, but I think it is worth putting into the Hansard:

Franchising should not be singled out. The proposed amendments appear to have evolved as a reaction to recent media involving the underpayment of employees by franchisees in some high-profile franchise brands. However, it is disingenuous and patently unfair to target franchise organisations as the problem has also been observed in non-franchise organisations such as Coles and Woolworths. Indeed, the George Calombaris restaurant group has admitted underpaying more than 160 current and former employees a total of $2.6 million. As this is a universal problem the franchising sector should not be singled out.

Quite right. That submission to the Senate inquiry absolutely picks up the problem with the construction of this bill. It is too narrow by half. It is too narrow even in how it applies to franchising and too narrow in that it only applies to franchising, given the many manifestations of exploitation that are occurring in the labour market.

Do the government want to be taken seriously? In the four years they have been in government—and they have been elected again just recently—I think it is fair to say that this would be the first time there is proposed legislation that at least ostensibly is seeking to look after workers. All other pieces of legislation in my portfolio have been about attacking unions and attacking workers, in my view. This is the first occasion when I can say that at least they are putting up some sort of limp effort. But if they want to be taken seriously—if the Prime Minister and the Minister for Employment want to be able to say genuinely that they are concerned about what is happening to thousands and thousands of workers—they need to make sure this legislation is sufficient to tackle the problem everywhere that we have already seen gross exploitation of workers, not just in one part of our economy.

We are concerned that the government has to consider the amendments we will move, which I have foreshadowed publicly. Our policies, of course, go to these matters. I mentioned earlier in my contribution to this debate that it does not touch on a whole range of other things. I am not suggesting that this bill needs to deal with every matter that is currently a problem within the labour market. But certainly, when it comes to conduct of employers and in particular the intentional systemic underpayment of workers, it is wrong to have a piece of legislation that confines itself in this manner.

We need the government to reconsider its position. If the government wants to be taken seriously, if it wants workers to believe that for the first time in its four years of existence it wants to redress the unfairness that is occurring in the labour market, then it needs to amend the bill, as advised by Labor. We will be seeking the crossbench support in the Senate, and we will also be engaging with the government. We think we can improve this bill. And if the minister and the Prime Minister are serious about tackling this issue, as they say they are, and rhetorically say they are, then they need to seriously contemplate the changes that we would make to make this bill more effective, make it broader in its application and make sure that people cannot just game it and avoid the consequences of bad conduct in workplaces. It is up to the government to contemplate that.

I will finish where I started in relation to the second reading amendment I moved to this bill. It is a nonsense for the minister, the Prime Minister or any member of this government to argue they are serious about tackling problems that beset workers in this country. On one occasion they refused to support a private member's bill moved by the Leader of the Opposition to effectively stop the decision that was handed down by the Fair Work Commission in relation to penalty rates. If they do not support that private member's bill, then whatever else they do in this place, including with this bill, is going to be seen as a joke. If they do not understand the effect the decision of the Fair Work Commission will have on hundreds of thousands of workers and their families from 1 July onwards, well then they are not connected to the real world. They are so out of touch if they cannot understand that the government needs to join Labor, for once, and support workers in this country and do what they have done before: intervene on an independent umpire's decision, but on this occasion rather than stop wages going up, stop them going down.

We are going to have pharmacy workers who will lose $77 in earnings on Sundays. We are going to have retail workers whose difference in paying the rent or the mortgage is $50, and they are going to lose that out of their pay—no compensation. Meanwhile, prices are going up and, as we know, wage growth generally is very, very low. This is an opportunity. It is not just about this legislation; it is about the other piece of legislation proposed in this place that the government should be considering. That is why I moved an amendment to allow a debate on that matter. It would be ridiculous, it would be absurd for us to debate this bill without having any regard to what is going on in relation to the penalty rates decision of the commission, and the government's callous disregard for the effects that will have on workers in this country.

We support the tenor of this bill, but it is deficient. It is too narrow. It is going to mean it is going to be very hard to prosecute employers doing the wrong thing. They must consider the amendments that we will put to them, and I am foreshadowing that now. We will move those amendments in the Senate, and we hope to get a lot of support from the crossbench, who, again, rhetorically say they are concerned about widespread exploitation. If they are, then I think we will be able to get a pretty strong set of laws. I will commend the government if they support our amendment. I will commend the government and I will say something I have never said in this place: I will say they have done something for workers. I will say that at this dispatch box if that were to happen. I hope it does happen for those workers, but, if it does not, I will make sure the government wears that decision from now on and right up to the election.


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