Tuesday, 9 May 2017
Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017; Second Reading
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.'
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.
The original question was that this bill be now read a second time. To this the honourable member for Gorton has moved as an amendment that all words after 'That' be omitted with a view to substituting other words. If it suits the House, I will state the question in the form that the amendment be agreed to. The question now is that the amendment be agreed to, and I call the honourable member for Fairfax.
All talk and no action. The member for Gorton, the first speaker from the opposition, has again reinforced that that is the general predisposition of the opposition: all talk and no action.
We saw from the former speaker that he started his delivery with a personal attack against the Prime Minister for being a self-made man, believing that somehow the Prime Minister, through his own endeavours and his own enterprise in the real world economy, is ineligible to be leading the country in making decisions on economic matters. This is despite the fact that the former member himself and most of his colleagues are all unionists. They will kick and scream if there is any suggestion that the unions they represent, in particular the CFMEU that has caused nothing but disruption across workplaces in Australia, are challenged. It is also a pity that the member for Gorton has decided to suggest that, in going further, this bill should be looking at improving the resourcing of the ombudsman's office. This is an opposition that when in government stripped the budget of the ombudsman's office by 17 per cent. That is equivalent to 200 people. And now they have the gall to suggest that not only should this bill be going further but—wait—we should be providing further resources to the ombudsman's office. At the end of the day, this is all talk but no action. The only reason, I suggest, that the opposition wish to make further changes to this bill is so that they can kick the can down that time-honoured road and never deal with the issue, because it is only the coalition that is protecting workers. It is clearly not very Labor with their proud traditions, and it is certainly not very Australian.
This bill, the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017, is wonderfully Australian. It is all about protecting the little guy who cannot stand up for himself to be sure that he or she does not get ripped off. What could be more Australian than that? What is a little unusual, however, is that most of the beneficiaries of this bill—which aims to curtail the exploitation of workers, especially in relation to employers cheating them on wages—will not even be Australians. The Fair Work Ombudsman has made very clear that the vast majority of complaints about this sort of underpaying behaviour by employers involves overseas workers who are in our country as visitors on various forms of short-term visas. The beneficiaries of the crackdown on this practice through this bill will be backpackers from all corners of the world, here on working holidays, whose rights have been abused. It will also be skilled workers here on temporary visas. Many will be drawn from the legions of foreign students here for an education, working nights to help pay for their fees and rent, while their decision to study in Australia, in turn, collectively boosts the economy by billions.
It is a sad fact that some Australian employers, far too many in fact, are taking advantage of these people. They take advantage, in many instances, of the fact that some vulnerable workers do not have highly-developed English language skills. Some may not even have proficiency in our language at all, let alone any familiarity with our laws or institutions. They take advantage of the fact that they are mostly young and inexperienced in relation to their rights in our workplaces or in relation to any workplace.
Some employers take advantage of the fact that many of these visitors, and also the new permanent arrivals similarly targeted by such wage scams, have no tradition of modern workplace relations in their former countries, where workers' rights are perhaps either inadequate or non-existent. Such employers take advantage of the fact that exploited employees, so desperate for a job or so concerned about maintaining their visas, will be uncomplaining. That is a point the Fair Work Ombudsman highlights. The ombudsman's office struggles to get cooperation from many victims, because they are fearful of reprisals.
This sort of behaviour is un-Australian. Treating people like this, whether they are Australians or short-term visitors to our country, is not the Australian way, and that is what makes this bill very Australian. The Aussie fair go, especially in relation to rights at work, is a core Australian value, and not just as a birthright. We will protect it and enhance it even when the main beneficiaries may not be Australians, because that is who we are as a people and as a nation.
The scale of the problem became apparent from the point where the 457 visa program really took off during the mining boom, which roughly coincided with the huge increase in foreign student numbers as our tertiary sector became one of the biggest suppliers of education services worldwide, with great benefit to our economy. There was also a simultaneous increased reliance on backpacker labour in the horticulture sector as Australians deserted such work. Over the last decade, these circumstances combined to generate a significant increase in temporary foreign labour in the economy, and the problem of the treatment of some of these people by unscrupulous employers was becoming apparent. The well-known, infamous exploitation of workers by 7-Eleven franchisees, with inadequate attention from headquarters, came to most people's attention when there was a series of media reports in the Fairfax media and on the ABC in 2013, but the Fair Work Ombudsman and its predecessor had been trying to act on concerns around the behaviour of that particular franchise since 2008. To many people, the seemingly systemic abuse of mainly foreign workers by 7-Eleven franchisees, and some of the well-publicised exploitation of 457 visa holders in the horticultural sector, will have been their biggest exposure to this sort of practice, but you only have to go to the Fair Work Ombudsman's website to see that the problem is, sadly, far more widespread and is deserving of the sort of response that this bill represents, which was a coalition policy taken to the last election.
Of the matters before the ombudsman that have been the subject of public comment so far in calendar year 2017, the vast majority involve wage exploitation of workers who were, or indeed are, in this country as visitors. They have involved breaches by employers across many areas of the economy. For example, the ombudsman commenced legal action in March 2017 against the owner of a Japanese restaurant on the Gold Coast who paid foreign workers as little as $8 an hour and used false records to suggest he was paying higher rates. A supermarket trolley collection operation in Bendigo is facing court for exploiting two recent immigrants from Afghanistan and Pakistan. The operator of a childcare centre in Melbourne, at Glen Waverley, is facing court action for a repeat offence of having cheated workers out of thousands of dollars. A supermarket operator in Melbourne is going to court for the underpayment of wages, despite the fact that he had previously been put on notice by the ombudsman about his obligation to pay staff properly and keep appropriate records. A Western Sydney homeware retailer was fined after paying a Chinese employee $12 an hour. The list goes on, detailing rip-offs involving every sort of business from nail care salons to retailers of mobile phone accessories to bus operators, migrant agencies, car windscreen repairers and cleaning companies from all across the country.
It is not difficult to work out why it is that most of the victims of this sort of behaviour, and indeed many of the perpetrators, are either not Australian citizens or have only recently become Australians. Australians, as a generalisation, are a pretty forthright mob: we are not easily fooled, we are not easily intimidated and typically we are not afraid to speak up when we believe that we have been wronged. Employers, even those who might consider standover tactics or other forms of skulduggery to cheat workers, will often back off in the knowledge that intimidation is not likely to work for very long, if at all, with most Australians. Australians, typically, just will not put up with it. Over the decades, that attitude has led to a body of law based on those ideals, and generally the rule of law stands up pretty well in this country in workplaces—give or take rogue outfits like the CFMEU or the occasional Marxist-style ramblings of people like the current head of the ACTU. Most Aussies know that. They appreciate that and they would not have any other way, but if the victim is a visitor or a recent arrival, for whom the job is crucial and who may well be operating from a position of very little, possibly even zero, knowledge of their rights in an Australian workplace, then exploitation is made easier. It is made even easier if employers themselves are unfamiliar with the Australian way, yet know their victims' weaknesses all too well. The coalition is determined to stamp out this practice.
This bill includes a range of measures that will enable the Fair Work Ombudsman to crack down more rigorously on unscrupulous employers, who will face significantly enhanced fines for transgressions against vulnerable workers. There is a view among many employers who have already been caught out and dealt with that the price of the current penalty regime is so low that it can be absorbed as a simple cost of doing business. The fact that a number of employers are repeat offenders gives credence to this. The maximum civil penalty for a serious transgression by an individual leaps to $108,000 and for bodies corporate to $540,000—over half a million dollars. That will get rogue employers' attention. That will definitely get their attention. You cannot regard penalties at that level as a viable cost of doing business.
The second leg of the disincentives for unscrupulous employers in this bill is to make sure that franchisors, and not franchisees, are held more accountable—not just franchisees, but also the franchisors. They will become liable for underpayment of wages in those instances where they exercise significant control over their franchisees or subsidiaries: if they turn a blind eye or if they are themselves complicit. Going further still, franchisors will also be held accountable under this bill if they reasonably should have known about a breach. So simply saying, 'We did not know' will no longer cut it.
The third leg of the measures in the bill go to strengthening the Fair Work Ombudsman's evidence-gathering powers to put it on a level with agencies like ASIC and the ACCC. People will be compelled to provide information and to answer questions. Currently, it is too easy for them to brush off the Fair Work Ombudsman. This will no longer be the case if this bill is passed. These measures are on top of the fact that the coalition, fulfilling another election commitment on this issue, has already restored some $20.1 million to the Fair Work Ombudsman's budget to enable the agency to restore its strength and take the fight up to dishonest employers, after Labor had stripped it of nearly 200 staff, cutting its budget by 17 per cent, as I mentioned earlier. It is ironic, to say the least, that it was the current Leader of the Labor Party who oversaw those cuts. He was the responsible minister when Labor cut the staff of the Fair Work Ombudsman from 900 in 2009-10 to 723 in 2013. He was the responsible minister when the ombudsman's budget shrank by 17 per cent, from $150 million to $124 million. And so it is left to the coalition to legislate, through a bill such as this, to restore the rights of workers and give them a fair go.
I rise to speak in relation to the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. These amendments seek to protect vulnerable workers from unscrupulous employers exploiting them for a fair day's work. We are going to support this legislation through the House, but, as is so often the case with this government, it is half-baked and half-thought-out and simply not good enough.
The exploitation of workers has been widely reported. A key example of that is the widespread, coordinated and systemic exploitation of workers outlined in the Senate Education and Employment References Committee report A national disgrace: The exploitation of temporary work visa holders in March 2016. It is no secret that within Australia there are employers who are deliberately and systemically denying Australian and migrant workers their rights and freedoms and a fair day's pay for a fair day's work. These actions are disgraceful but have wider impact. They undercut the overwhelming majority of good employers, who want to do the right thing, they undermine the integrity of the workplace relations system, they distort the labour market and they undermine the principles of fair competition that underpin our successful free-enterprise economy.
We witnessed this when numerous 7-Eleven stores operated while systemically exploiting vulnerable overseas workers. This included the gross underpayment of wages, doctoring of pay records, concealing unlawful conduct, physical intimidation and subjecting workers to threats of deportation. I received a letter from 7-Eleven chief executive Angus McKay on 28 February 2017 outlining the remediation and reform journey the company have undertaken. I encourage him to do even more. They have paid back tens of millions of dollars to over 2,000 underpaid employees, but I encourage them to scrutinise their business practices more and outline a reform agenda which is even more widespread and systemic than we have seen them undertake in the past. The shameful actions of these franchises should never have reached the point of widespread exploitation. We must restore vigilance to restore the community's faith in businesses generally, and examples like 7-Eleven should never happen again. The unfair, unlawful and unjust practices witnessed have no place in Australian society. This pool of evidence is only the tip of the iceberg, and we saw the most recent Fair Work Ombudsman report, which outlined systemic exploitation of vulnerable people in workplaces across Australia, particularly visa holders. Our industrial and workplace protections must focus on ensuring that vulnerable workers have the utmost protections, that they are not taken advantage of and that employers who exploit these workers are called and held to account.
As has become the custom of this government, the Turnbull government, this legislation is a very, very long time coming and, unfortunately, does not go far enough to protect vulnerable workers. Once again, we see an attempt to grab a headline but limited substance from the Turnbull government to back it up. This government has fallen well short of the standard that Labor set to safeguard vulnerable people against exploitation in the workplace prior to, during and after the federal election. The Fair Work Amendment (Protecting Vulnerable Workers) Bill brings about the commitments the Turnbull government only made because Labor was leading the way with important, necessary and long-overdue measures to stop the exploitation of vulnerable workers by employers. This government bill is playing catch-up to Labor's policy. Labor is relieved to see the government following its example, but these actions are woefully deficient and fall significantly short of the suite of legislative reforms and measures which this government should be introducing to address the breadth of worker exploitation in this country. This bill does nothing in relation to sham contracting, nothing in relation to phoenixing to avoid wages liabilities, nothing in relation to reforms to the Fair Work Act to strengthen protection for workers and nothing to make it easier for workers to recover unpaid wages from employers and directors of responsible companies—reforms which I encourage the government to undertake.
Protecting vulnerable workers has always been a priority for Labor, but not the coalition. It is not a priority for those opposite, and the fact that it has taken them so many months since the last election to introduce legislation and that we are only debating it today is evidence of a half-hearted attempt by the Turnbull government. On this side of the chamber, we will not abandon those workers. We will stand shoulder to shoulder with these workers, fighting the good fight to make sure that they have a fair go, a fair pay and a safe workplace.
Vulnerable workers come in many different forms. SafeWork NSW identifies vulnerable workers as including young people, new workers, apprentices, trainees, contractors, workers with low literacy skills or from migrant and culturally and linguistically diverse community backgrounds, workers with a disability and newly expectant mums. Commonly, these are the workers who are vulnerable and exploited by unscrupulous employers. The Turnbull government's recent actions have proved the government has little interest in protecting these people who rely on penalty rates. These are the people who sacrifice their weekends for the workplace to provide for their families. They do it to ease the economic burden in their households and to make ends meet.
If the Turnbull government genuinely cared about Australian families and their economic security—and we will see about that tonight—the economy generally, these young people in particular and the vulnerable workers I mentioned before, they would not allow their penalty rates to be ruthlessly cut. Only Labor is committed to protecting the 700,000 of Australia's lowest-paid workers by stopping these cuts to penalty rates. The government should be supporting Labor's bill to protect penalty rates.
The bill before the House has some good things, and we will support it accordingly. The bill amends the Fair Work Act to increase penalties for serious contraventions, which are described as conduct that is:
… deliberate and part of a systemic pattern of conduct …
relating to prescribed workplace laws. It will increase penalties—and we applaud that—for employers' record-keeping failures, with new maximum penalties extending to false or misleading employee records or pay slips, where the contravening employer knows the documents to be false or misleading. It is a good reform. There is a new provision that ensures franchisors and holding companies are responsible for underpayments by their franchisees or subsidiaries where they knew, or ought reasonably to have known, of the contravention and failed to take reasonable steps to prevent it—an objective test that has been upheld by courts for a very long time. These new responsibilities will only apply where franchisors and holding companies have significant degrees of influence or control over their business networks, and a franchisor or holding company may raise a defence of taking reasonable steps to prevent the contravention.
The bill also expressly prohibits employers unreasonably requiring their employees to make payments. This should prevent employers from demanding a portion of their wages to be paid back in cash, like we saw in the Four Corners and Fairfax stories covering the experience of exploited 7-Eleven workers. Importantly, the bill gives the Fair Work Ombudsman the power to ask questions and to expect compulsory answers in relation to investigations concerning a breach of the Fair Work Act, where failure to answer questions may arise and cause civil liability. And we welcome the increase in penalties for serious contraventions of the Fair Work Act, as well as the increase in penalties for record-keeping failures by employers. These penalties are there to act as a deterrent—to modify behaviour, as it were.
We have seen these instances time and time again, from big businesses to small businesses, across the country. Commenting on this particular bill, the Australian Council of Trade Unions said:
What is clear from these recent wage scandals is that business size is not a guarantee against widespread breaches of workplace laws, neither is commercial success, nor is being a common household name present on many high streets.
We have seen exploitation across a whole range of areas—for example, exploitation in Albury recently involved a penalty of more than half a million dollars, the result of legal action against a cuisine company by the Fair Work Ombudsman for exploitation of five workers coerced into paying portions of their wages under threat of violence, dismissal and withdrawal of support for visas. It is unconscionable that employers should threaten a person's place in this country. The Fair Work Ombudsman is setting penalties and has said they send a clear message to employers exploiting their workers, saying:
These record penalties are a big blow in the fight to stamp out deliberate exploitation of overseas workers in Australia.
Regrettably, some businesses will still attempt to negate the law.
We support the role of the Fair Work Ombudsman and the efforts that have been made to address the abuse and exploitation of vulnerable workers, and we do not accept the criticism of those opposite in relation to our stewardship of the Fair Work Ombudsman when we were in government. We reject that. The ombudsman acts as a single point of contact for advice and information on Australia's workplace relations system. The Fair Work Ombudsman monitors compliance and inquires into and investigates any practice or act which is contrary to workplace laws, awards and agreements. It also has the capacity to litigate. The Fair Work Ombudsman has said in relation to this bill:
Stronger powers … would ensure that unscrupulous operators that habitually ignore our requests and hinder our investigations are held to account; higher penalties would more effectively deter intentional wrong-doing and incentivise employers who are unsure of their obligations to check they are doing the right thing.
In 2015-16 alone, the Fair Work Ombudsman recovered $27.3 million for 11,518 workers who were exploited. These workers deserve protection, not exploitation. They deserve the pay that is rightfully theirs. We will target these issues and we will continue to support the work done by so many organisations, such as workers' representatives like United Voice and the Shop, Distributive and Allied Employees Association, which told the ABC that text messages being exchanged between the employer and 7-Eleven workers demonstrate that the cashback scheme is still alive and kicking amongst businesses. We have taken the view that we should continue the fight in relation to these issues.
An appropriate comment was made in a submission the Uniting Church in Australia made to the inquiry into this bill by the Senate Education and Employment Legislation Committee. It said:
Theft of wages can cause more harm to a person compared to other more minor forms of theft that are treated as criminal matters.
That is very apt. I commend the Uniting Church for making that point. It is a very appropriate point to make. The ACTU stated in its submission to the Senate committee inquiry into this bill:
There is fear amongst many temporary visa holders about the precarious visa status and the potential for deportation over minor, inadvertent or coerced breaches of their visa conditions.
The Federation of Ethnic Communities Councils of Australia said:
Lack of knowledge about the Australian workplace relations scheme, including their workplace rights and entitlements, lack of support networks, social isolation, and language barriers all contribute to this vulnerability.
As shadow minister for immigration and border protection, I am well aware of the important role the Fair Work Ombudsman plays in protecting from exploitation vulnerable migrant workers on visas. The number of disputes involving visa holders resolved by the Fair Work Ombudsman has increased from about five per cent of dispute forms lodged in 2011-12 to 13 per cent in 2015-16, despite visa workers accounting for only seven per cent of the total Australian workforce.
There is a case for change. There have been instances in relation to Myer and to Pizza Hut, to supply chain arrangements in relation to groups involved in poultry processing plants. There have been allegations made in relation to Coffee Club, Caltex, Outback Steakhouse and so many others, including Domino's. We have introduced a private member's bill that would protect workers. We have talked about the idea of protecting penalty rates and protecting workers generally. We call on the government to take up Labor's approach. Labor's bill has a more comprehensive approach to the protection of workers. The government needs to get rid of its half baked, almost laissez faire attitude to this area of work and get on with the job of protecting workers. Ours is a far more comprehensive approach. The government should be addressing issues of sham contracting and phoenixing. We propose strengthening the powers of the courts to make orders requiring directors of phoenixed companies to pay unpaid wages and employee entitlements. The government needs to make sure that the Fair Work Act applies to all workers. The bill we have introduced makes it clear that the Fair Work Act applies to all workers, regardless of their immigration status, and requires the Fair Work Ombudsman to take further steps to inform employees of their rights. We want to make directors of companies responsible. We will criminalise employer conduct that involves the use of coercion or threats, including the commission of serious contraventions of the Fair Work Act in relation to temporary overseas workers. We led the way during the 2016 election campaign, enhancing a comprehensive packaging, and we are calling on the government to pick these reforms up.
We want a bipartisan approach in this area. We are prepared to support this legislation, but the government must do much more. We call on them to adopt Labor's reforms—not a half-baked attempt but the entire suite of Labor's reforms—to protect vulnerable workers in this country. In addition to that, they can certainly take up Labor's protection of 700,000 of Australia's lowest paid workers, who on 1 July this year will lose $77 unless this government acts. We call on the government to act.