Monday, 11 September 2023
Fair Work Legislation Amendment (Closing Loopholes) Bill 2023; Second Reading
The Fair Work Legislation Amendment (Closing Loopholes) Bill 2023 deals with a range of critically important issues. As the title suggests, it closes a range of loopholes. I want to dwell on loopholes for a moment, because loopholes arise in a wide range of contexts. They can arise when actions are taken by certain parties to get around legislation or regulation, or, alternatively, they can arise when a piece of legislation that was well-designed gets overtaken by events, when the nature of society or the nature of the economy changes. We see this all the time—for example, in relation to taxation, where we constantly refresh taxation bills in order to deal with both of the phenomena that I just described.
Now, those opposite never have a problem with that, but, when it comes to industrial relations, when it comes to workers' rights, then anything to do with closing loopholes or anything to do with adding to workers' fundamental rights will lead to the end of civilisation and the end of the economy! And of course it's all nonsense, as we've seen so many times before.
This bill deals with many important issues. It deals with casual employees' rights. Now, nobody on this side is suggesting that the existence of casual employees is a bad thing at all—of course not. What we are saying is that a loophole exists where people who work on a casual basis do so on a permanent basis in a way that is not actually reflective of the nature of their work and where that, often, denies them rights that are absolutely fundamental. It denies them protections and security. It denies them the ability to get a mortgage, for example. So that's the kind of loophole that we are trying to deal with, not with casual work per se.
We look at labour force agreements, not because labour force agreements per se are a bad thing—of course not. They can be very important for dealing with surge workforce requirements. They can be very important for dealing with specialist skills. But where they are used to undercut basic conditions, then there are loopholes that need to be dealt with.
We will look at the gig economy. We will look at wage theft. And I will deal with those in more detail.
But I want to start with some of the issues that have been raised by those opposite—indeed, that were raised by the speaker most immediately past, and that is the scare campaign. It's the later stage of a multistage scare campaign.
Let's go back to the election, where those opposite said that a $1-an-hour increase for those on the lowest wages, those most vulnerable in the economy, would see the sky fall in. Of course, since that time, we've seen the opposite. We've seen record jobs growth. So those opposite used ridiculous hyperbole and rhetoric during the election campaign. The electorate, fortunately, didn't buy it. And it hasn't led to any of the consequences that they said it would.
Let's go to the secure jobs, better pay legislation. We were told it would be the end of the economy, the end of employment. Of course, when it comes to the level of strikes, when it comes to wages—when it comes to all of the things that they said would be problematic—the reverse has ended up being true.
Now we hear this rhetoric about productivity: 'We need more flexibility to get productivity going.' Those opposite use 'flexibility' as a euphemism for insecurity, for the race to the bottom. The reality couldn't be further from the truth. The way to boost productivity in a sophisticated economy is not to worsen people's conditions; it's not to make them more insecure. The evidence is clear, and it is the reverse. When people feel more secure, they invest more in highly specialised skills. When people feel more secure, they are more likely to invest in the particular skills of a particular employer. We see, in high-productivity, high-wage economies, that there is a clear link between people who are paid more and are more secure and their willingness to invest in greater skills that are specific to a particular firm or a particular sector. There is considerable evidence in some contexts that, particularly for some people on very low incomes, increasing their remuneration can lead to a greater attachment to and a greater willingness to exert effort for the firm that is paying them greater wages and providing them with more security. So there is absolutely abundant evidence in many contexts, particularly for people who are starting off in a position of very poor and very insecure conditions, that an improvement in their conditions can actually lead to behaviours, in terms of their effort and their investment in specialised skills, that actually lead to greater productivity. That's at the individual level.
Let's look at the societal level. Let's look at the highest productivity economies—economies like those of Scandinavia and Germany, where we don't see people forced into a race to the bottom; we see the opposite. In the highest productivity economies—Scandinavia and Germany being two very good cases in point—we see people with high job security. Indeed, in Germany—the manufacturing powerhouse and the high-wage manufacturing economy of the OECD—we see, in fact, a whole bunch of governance arrangements where unions have positions on management boards. So what those opposite say will lead to productivity, in fact, is not the case. It's a highly simplified, highly caricatured version of a first-year economics textbook which suggests that we need to reduce wages and increase insecurity in order to boost company profits and reduce costs, but it doesn't fly in the real world of complicated, sophisticated industries where we need to empower workers and give workers incentives to invest in human capital—to invest in themselves—for the long run.
Then, of course, there are the broader benefits of the kinds of security we're talking about here. We don't want to create a whole class of people who are, through a contrivance, characterised as insecure workers, when it's not necessary for their work arrangements, so that they can't get a mortgage and can't take part in absolutely core social arrangements. Those opposite so often claim to be the party of home ownership, but—when we try to change arrangements that are fake contrivances, are unnecessary and force people to be characterised as insecure workers or casual workers when, in substance, they are long term, permanent part-time or full-time workers—those opposite are denying many people participation in many of these core social arrangements. When looking at productivity in a more holistic sense, again, those opposite take this route towards a race to the bottom and insecurity—a path which doesn't lead to the kinds of outcomes that they're claiming.
So let's start with casual employees, an absolutely critical part of this bill. Nobody is saying that casual workers shouldn't exist. There are many, many people who like the casual arrangements that they are offered, but we find that there is this set of people on permanent casual arrangements, whether they be in part-time arrangements or full-time arrangements, who have been put into a situation where they are called casual, but what they are experiencing are not the kinds of circumstances that casual arrangements were originally set up to provide. These people lose job security and peace of mind. Indeed, in 2021, the AMA called for the minimising of financial barriers for insecure workers. Insecure work is associated with a range of negative health outcomes, including mental ill-health, chronic disease and workplace injuries. Eight hundred and fifty thousand workers could be beneficially impacted by the pathways that are being offered by this bill, where, if you're on long-term arrangements that, in substance, are really ongoing, and you choose to translate that into ongoing employment, that is going to provide substantial benefits, in terms of your job security and your peace of mind, but also, as I mentioned earlier, your capacity in a broader sense to engage with a raft of social arrangements, such as getting a mortgage, which many people are currently excluded from, for no good reason.
Let's look at labour force agreements. Again, labour force agreements are often worthwhile. They can be a way in which firms can deal with the need for a surge in workforce numbers. They can be a way in which workforces can be supplemented by specialist arrangements. But labour force agreements, in some instances, can be used as a way of undercutting an enterprise agreement. Now, the arrangements that we're talking about in this bill will only apply in situations where there is an enterprise agreement. This bill will ensure that labour force agreements are not used for the predominant purpose of undercutting wages and conditions. That was never the intention of labour force agreements, and it is a highly inappropriate use of that structure.
Let me get on to the gig economy. I have spoken in favour of many aspects of the gig economy since my inaugural speech. I believe that there are many productivity-enhancing aspects of the gig economy, whether we look at the transport sector and point-to-point rides or meal delivery. But, despite the fact that the gig economy can in some instances lead to higher standards of service and greater efficiency in the utilisation of assets, such as cars in the case of Uber, there are concerning aspects of this sector.
For example, there is often a lack of transparency around remuneration. There have been many studies in the US showing that there are many workers on gig platforms are being paid less than the minimum wage, but that is unclear. We had the almost farcical situation in the last parliament where minister after minister was asked point blank, 'Can you guarantee that there aren't swathes of workers earning less the minimum wage,' and the response was 'it's complicated'. That level of lack of transparency is not appropriate. There are also, of course, a number of workplace safety issues arising in a number of contexts.
The minister has made it clear that we accept the technology, we accept the method of engagement, but we do need to strengthen the regulatory arrangements because the number of people on gig platforms is rising. As I said, there are many aspects of the gig economy which are beneficial both to workers and to the broader economy, but we need stronger and better arrangements.
At the moment, if you go to the Fair Work Commission and they ask, 'Are you an employee?' and you say no, you fall off the regulatory cliff. What this bill is doing and what this government is saying is we need a ramp, not a cliff. We need an intermediate set of arrangements that allow us to keep the best aspects of the gig economy to protect workers in an appropriate way.
So what does it look like? Firstly, the bill proposes an arrangement where there's a gateway with a number of questions. If you're on a digital platform, does your work have employee-like characteristics? That would be a test that would be considered across a number of criteria. Do you have low bargaining power? Do you have low levels of control over the work that you do? Are you being paid low wages, in the sense that they are less than you would be paid if you were an employee? In considering all of these criteria, the Fair Work Commission can come to a decision as to whether or not a subset of protections should be offered to somebody working on gig platform. It might be that, having made a determination, some workers—not everyone working on gig platforms—might be offered, for example, minimum rates of pay, but in a way that reflects the nature of the work on the gig platform. It may not be hourly, for example; it may be based on smaller time increments. Another right that gig workers might be able to receive is not to be unfairly deactivated from the platform. Again, that's entirely reasonable and would reflect a mechanism by which you could keep the fundamental structure of the platform while providing workers on that platform with a reasonable subset of rights.
These changes create a situation for those workers where they go from effectively having no guaranteed rights to having a subset of guaranteed rights that are appropriate for the context. We need to move away from the contrivance that any worker on the gig platform is an independent contractor or small business. It's a contrivance which has led to a situation where too many people don't get any protection at all, and there are possibly well over half a million people that could benefit from these kinds of protections.
Finally, there's wage theft—extremely important. It's almost so obvious that it doesn't need that much explanation. Of course, if an employee steals from their employer, then they are criminally liable. At the moment, the reverse is not true. Now, there are going to be instances where money isn't paid to a worker by accident or through some kind of error. But if it goes beyond that, if it goes beyond an error to the point where there was intention and it was theft, then there should be consequences for employers just as there are for employees.
So this bill is a reasonable balance. This bill closes loopholes that shouldn't be there. In contradiction to what those opposite are saying, it is not going to damage productivity. Productivity isn't a simple matter of reducing costs to employees. That is not what we see in the high-productivity economies of the world. This bill will actually help us move down the productivity journey, but in a way that provides reasonable protection for workers, subject to allowing casual workers, labour force agreements and the gig economy to continue, but in an appropriate way.