Senate debates

Tuesday, 28 November 2006

Independent Contractors Bill 2006; Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006

Second Reading

Debate resumed from 13 September, on motion by Senator Abetz:

That these bills be now read a second time.

6:03 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | | Hansard source

I rise to speak on these two bills, which deal with independent contractors. Before I proceed with my speech in the second reading debate, I want to make the point that, some time after four o’clock today, a significant number of amendments—40-odd pages worth—to supplementary explanatory memoranda were tabled by the government. It is difficult when dealing with legislation in this place for the opposition and the minor parties—in fact, for all senators—to be clear about the actual impact of legislation when we are presented with amendments at such a late stage and so close to the time of the matter being debated.

Some might recall in the context of the Work Choices legislation that, within 40 minutes of the debate commencing, we were provided with some 337 amendments—it was over 300, in any event—which certainly did not leave much time for consideration of the substance of those amendments. I suggest to the government that, apart from treating the chamber in this way and not enabling senators to get across various amendments, this is probably not the best way to legislate. If you are amending at a late stage, subsequent to a Senate committee inquiry, the chances of there not being errors in legislation—in fact, as has been indicated, there has been some further discussion of the amendments to the Work Choices legislation—or issues which need to be remedied are probably not the best. I make that point to start with.

Labor opposes the Independent Contractors Bill 2006 and the associated Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. The bill and the associated bill flow on from the government’s so-called Work Choices legislation—its extreme industrial relations legislation. In that act, we have seen an attack upon rights, an attack upon entitlements, an attack upon conditions and an overall attack upon the living standards of Australian workers. The bills now before the chamber are yet a further attack upon rights, conditions, entitlements and protections in Australian workplaces and upon living standards generally.

The government has sought to mask this fact by saying that this legislation is good for contractors and for small business, but the Howard government is effectively saying to small business and independent contractors: ‘You’re on your own. In an unequal bargaining position with a contract partner who has more economic power, you will now effectively be on your own, with limited or no access to state based protections, no access to unfair contract provisions, no access to employee deeming provisions.’

The government’s legislation covers five key areas. They are: state laws dealing with employee deeming provisions; state transport owner-driver laws; the state unfair contracts jurisdiction; outworkers in the textile, clothing and footwear industry; and the so-called sham arrangement provisions. Despite the government’s continued assertion that the legislation is intended to protect independent contractors, it does no such thing. As with so many areas of Howard government policy, one has to examine what they do and not what they say, because there is often a vast difference.

The bills place a layer of additional complexity on top of an already complex industrial relations legal system brought to us courtesy of the Howard government. Its provisions are highly prescriptive and technical and introduce a confusing array of concepts. These include pre-reform commencement contracts, continuation contracts, related continuation contracts, remedy contracts, test contracts and a contractor test designed to clarify the continued application of state contractor law in relation to relevant service contractors. In addition, some types of contracts entered into after the commencement of the bills will be subject to relevant state laws while others will not, depending on the satisfaction of certain technical requirements. It reminds us of the transitional provisions in the Work Choices legislation, which were extraordinarily confusing to some of the most experienced legal practitioners in Australia in this area.

There are two basic concepts which the government legislation establishes. First, under the guise of so-called independent contractors, the legislation will allow vulnerable employees to be pushed out of a genuine employer-employee relationship and be established as so-called independent contractors—in other words, as sham contractors. The consequences of this will be that employees’ conditions and entitlements will be reduced or removed but further burdens will be placed on those employees as sham independent contractors—the burdens of workers compensation, taxation arrangements, superannuation arrangements and others which would normally be carried by the employer.

Second, at the state level, there are many very soundly based protections for contractors who are effectively in a dependent contract position—contractors who provide services or a service in the main to one contract partner, such as in the transport industry, particularly in relation to owner-drivers. The legislation removes or reduces many of these protections. It does that by overriding state provisions and state based legislation which has employee deeming provisions or provides access at the state level to unfair contract provisions and unfair contract legislation. These protections are for the benefit of not just consumers but also contractors and small business. As I said, this legislation has one clear message to vulnerable employees and dependent contractors alike: you are on your own now. This should be concerning to all those who are contractors, and there are many millions of independent contractors in Australia: up to 20 per cent of all Australians who are in work are independent contractors.

The central principle which underpins these bills is that independent contractor relationships should be recognised and supported and that the appropriate mechanism for regulation is commercial law. The government’s legislation does not seek to define the term ‘independent contractor’, seeking rather to apply its meaning under common law. The test for distinguishing between employees and independent contractors is the common-law test which has been applied in Australian courts and tribunals and developed over many years. Briefly, that means that persons engaged under a contract of service are employees and those engaged under a contract for services are contractors. An independent contractor is seen to be a person who contracts for services to be provided without having the legal status or protections of an employee, even if they are dependent upon that contract—for example, owner-drivers in the transport industry.

This common-law test is well known to be difficult and complex. Various criteria have been applied by the courts over the years. They include: the degree of control the worker has over the work; the degree to which the worker is integrated into the principal’s enterprise; whether the worker is providing their own tools and equipment; whether it is at the discretion of the worker to work, whether the principal has the right to dictate hours of work and whether the worker can refuse tasks; the provision of leave, superannuation and other entitlements; whether the worker has the right to delegate work; whether the worker provides similar services to the general public; and whether the worker is providing skilled labour or labour that requires special qualifications. Genuine independent contractors have always been considered by our courts and tribunals to be in commercial arrangements and are therefore subject to the provisions of commercial law or contract law. When called upon to test the validity of a claim to either employee or independent contractor status, the courts have applied the relevant common-law test. So affirming this status and the commercial status of independent contractors in this legislation adds absolutely nothing to the current regulatory framework.

But in picking up the common-law test—in adopting it—the bills bring with them all the same difficulties that have been experienced in common-law jurisdictions. Professor Andrew Stewart has identified the limitations of this approach. The fact is that any competent employment lawyer can take almost any form of employment relationship and reconstruct it as something that the common law would treat as a relationship between principal and contractor, thereby avoiding the effect of a wide range of regulation typically applicable only to employees, such as industrial awards, agreements, leave, superannuation and unfair dismissal laws. I want to make the point that this is indeed the experience of many of us who previously practised in this jurisdiction. It is a difficult process to go through a court and establish the nature of the relationship. It is certainly an area that is open to legal creativity and legal argument in representing the various parties.

Under this legislation, people who are genuine employees are at risk of being pushed out of an employer-employee relationship and at risk of losing whatever protections they have as employees. There are also at risk of having imposed upon them the additional burden of providing those things which genuine independent contractors would generally provide, with superannuation, taxation arrangements and workers compensation being among them. And the government’s so-called anti-sham provisions to prevent people from being pushed into that position are, frankly, themselves a sham. These provisions require vulnerable employees to effectively apply to a Federal Magistrates Court to seek a determination of that issue.

Labor have previously raised our concerns that these provisions will be completely ineffective in preventing sham contract arrangements from occurring. We have raised in particular the concern about the degree of intention or knowledge required by the contracting party and the extent to which that intention or knowledge would have to be established before a sham arrangement could be proved.

I understand, from our very quick analysis thus far of the amendments moved by the government, that the government may be seeking, through its amendments, to alter or possibly improve some aspects of the sham contract arrangements to deal with these concerns. I do not have advice yet, given the time frame, as to whether these deal with the entirety of Labor’s concerns. But, as I said, our concern is that the anti-sham provisions will be completely ineffective in preventing sham contract arrangements from occurring. These provisions will enable employees who are genuinely in an employer-employee relationship, and who are in a vulnerable position with unequal bargaining power, to be pushed artificially into a so-called independent contractor arrangement. This will see them at risk of having their employee conditions and entitlements reduced or removed.

I want to turn now to the state deeming provisions. The bills override all existing state deeming provisions contained in state industrial legislation which deem certain categories of independent contractors to be employees and override provisions granting employee related entitlements to independent contractors. For example, in New South Wales certain categories of workers are declared to be employees and are brought within the scope of the industrial relations framework, even though in common law they may be independent contractors. Those provisions cover a wide range of occupations including milk vendors, cleaners, carpenters, joiners, painters, bread vendors and outworkers in clothing trades—and the list goes on.

These state provisions seek to redress the unequal bargaining power of these categories of workers, which compromises their ability to negotiate working conditions. In fact, in many cases their working arrangements are not different in substance to those of employees. So these state deeming provisions have been introduced to offer protection to workers from effectively disguised employment relationships and the consequent disadvantages which flow from them.

The Commonwealth legislation overriding the state legislation is subject to a three-year transitional period and the preservation of existing deeming provisions for outworkers and owner-drivers. These provisions will not apply to contractor textile-and-footwear outworkers. The bill provides a three-year transitional period from the commencement of the legislation, and only deeming provisions in state industrial laws will be overridden. Deeming provisions will continue to apply to existing contracts for three years after the commencement of the act, and parties may leave this arrangement early if they wish, under section 33 of the principal bill. The direct result of overriding state deeming provisions will be to leave many vulnerable workers in an unfair bargaining situation and without access to basic entitlements.

The bill also provides an exemption in relation to existing New South Wales and Victorian owner-driver legislation. The New South Wales system includes basic regulatory protection for owner-drivers, including the ability to recover costs. It includes enterprise-specific arrangements for owner-drivers and does not apply to genuine independent contract transport companies, applying only to single-vehicle owner-drivers who are dependent contractors with one company. The New South Wales legislation allows for minimum standards to be created. The Victorian system uses small business models and uses Trade Practices Act protections, asking what rate owner-drivers would have obtained if they had performed that work as an employee. All contracts must list minimum hours and rates, if any, and dispute resolution is provided by the Small Business Commissioner. The legislation allows for the collective negotiation of rates.

Only New South Wales and Victoria currently have state based legislation dealing with the employment conditions of owner-drivers, although Western Australia is proposing to introduce legislation into its parliament shortly, and there is further discussion of such legislation in the ACT.

The government has said that exemptions under both the New South Wales and Victorian state legislation are to be reviewed in 2007. Can we assume from that that these exemptions will cease to apply should the government win the next federal election? The minister himself effectively said this in his second reading speech:

The purpose of the review will be to seek to rationalise these laws with the aim of achieving national consistency in this regard.

The bill also means that independent contractors will no longer be able to access state unfair contract laws. The bill creates a federal unfair contracts jurisdiction. However, the states’ tests in these jurisdictions are much broader than those contained in the bill, and much more easily able to be accessed. For example, the unfair contract provision that is proposed by the Howard government is significantly more limited than that which exists in New South Wales.

Unfair contract matters will also now be tried in the Federal Magistrates Court, which is a more formal jurisdiction. This is likely to add to the expense, length and complexity of arguments, and exposure to costs. Under these bills before the chamber there is no ability for employer organisations or trade unions to apply for an unfair contract review on behalf of a party, which is the case under state law.

The effect of this part of the bill will be greatest in states where existing regulation is most prevalent—New South Wales, Victoria and Queensland in particular. The parties to independent contract arrangements in these jurisdictions will see a sharp decline in the level of the regulation and fairness in their relationships. This provision treats all contractors on a purely commercial basis, regardless of whether they are outworkers, deemed employees or independent contractors.

Legislation in New South Wales and Queensland provides for state industrial relations tribunals to hear cases of unfair contracts and provide remedies. Concern has been expressed that overriding state unfair contract legislation would water down protection for both consumers and small businesses. In fact, the repeal of the provisions that exist in the states by this legislation effectively reduces opportunities for small businesses to claim that a contract is unfair. There is no effective federal unfair contracts legislation, and unconscionable contract principles under common law do not provide an effective remedy in most cases.

I was going to deal briefly with the outworker provisions in the textile, clothing and footwear industry. I notice that there are amendments to be moved by the government, although it is a little confusing as to what the effect of those will be. I note that the amendments speak of opposing some amendments, so I look forward to discussion of that aspect in the committee stage of this bill.

We are concerned about the regulation of outworkers in the textile, clothing and footwear industry. We are concerned that there is no provision in the government’s legislation to aid in the enforcement of state outworker laws. In our view, these bills will do little to protect outworkers without the proper application of state based outworker legislation. The legislation as drafted will have the effect of significantly weakening outworker entitlements, and anybody who has dealt with outworkers in this industry would believe that there is a compelling public policy case for ensuring that these people obtain far fairer conditions than they would otherwise have if there were no state deeming provisions.

The government have introduced this bill because they would like the community to believe that somehow a so-called independent contractors bill will be beneficial to small business and independent contractors. But it is becoming clearer by the minute that no-one actually wants this bill. There has been dissent on the government’s own back bench. There are senators opposite who found that there are provisions in the bill that serve no useful purpose. By the minister’s own admission last month:

… as a result of independent contracting legislation there won’t be, I believe, any change in the number of independent contractors.

We have also seen Ken Phillips of Independent Contractors of Australia—one of the key supporters of this extreme legislation—now saying that the bills ‘would seriously undermine the status of independent contractors’. This is bad legislation and it ought to be opposed.

6:23 pm

Photo of Andrew MurrayAndrew Murray (WA, Australian Democrats) Share this | | Hansard source

On behalf of the Australian Democrats, I rise to speak to the Independent Contractors Bill 2006 and its associated bill. The objectives of the Independent Contractors Bill are to: (a) protect the freedom of independent contractors to enter into services contracts, (b) recognise independent contracting as a legitimate form of work arrangement that is primarily commercial and (c) prevent interference with the terms of genuine independent contracting arrangements. The Democrats support these stated objectives but argue that the bill fails to achieve them in any meaningful way.

The main thrust of the bills is to exclude state and territory laws which deem as employees many independent contractors entering into commercial agreements with employers. The government’s view is that these state laws interfere with rights, entitlements, obligations and liabilities of parties to genuine independent contracting arrangements. The contrary view is that state laws are trying to resolve the difficult public interest and legal issues surrounding the nature and definition of employment and to ‘cover off’ important social obligations, such as standards of employment, that would otherwise be avoided—more on that later.

The bill appears to do little to further benefit existing contractors. If anything, the evidence is that it will disadvantage many independent contractors whose existing remedies under state laws will be overridden by new and much weaker national laws. It also seems likely—for instance, in New South Wales—that the bill will result in an increase in cost to genuine contractors who seek a review of a contract they consider unfair. Far from achieving its stated objectives, the bill actually fails to tackle the issue of who is a genuine contractor and who is a disguised contractor—in other words, who is a genuine employee. There is no definition of a genuine contractor. Instead, the bill relies on the common-law definition, which is subject to change over time as jurisprudence advances and is fraught with problems. Nor does the bill define who is not a genuine contractor—that is, who is an employee engaged as a disguised contractor.

The issue of what are often referred to as non-standard work arrangements and the use of such arrangements to undermine the employee relationship has been an ongoing concern of the Democrats. We have raised these issues many times before in this chamber and have on several occasions attempted to amend legislation to go some way to addressing our and others’ concerns. Non-standard work practices such as labour hire do play an important role in our modern economy, providing flexibility for employers and workers. For example, labour hire is useful in providing short-term or temporary labour or workers with particular skills or expertise. However, there is increasing evidence that non-standard work practices, including disguised contractors, are being used to avoid or undermine the employment relationship in order to cut costs and minimise tax obligations, superannuation, occupational health and safety and workers compensation obligations and the like.

The ACTU and others noted in their submissions to the inquiry into this bill the increasing number of disguised contractors. The ACTU estimate was that between 25 and 41 per cent of contractors are in fact dependent contractors—that is, they are dependent on one employer for their work. The APESMA submission noted a recent study that found up to 40,000 workers currently classified by the government as independent contractors actually do all their work for one employer.

I want to make it perfectly clear at this point that the Democrats support the democratic right of every person to have the freedom to choose to work for themselves or to operate their own business rather than work for someone else. However, the Democrats also support protecting the freedom of a worker to choose to be an employee rather than a contractor and believe that, if a person does work as an employee, they are entitled to the benefits of laws established for the protection and oversight of employees. It is the Democrats’ view that for a large number of contractors the notion of independence is a myth, and any choice and flexibility in their arrangements have been constructed for the benefit of those who hire them and not their own. The Democrats saw this bill as an opportunity to finally sort out the issue of who is a genuine contractor and who is a disguised contractor and hoped that statutory definitions that could provide clarity to employers, workers and the courts would be agreed upon. But upon sighting the bill we were bitterly disappointed.

Independent Contractors of Australia, in their submission to the inquiry into this bill, argued that the bill should be drafted in line with the June 2006 ILO recommendation, in particular subclause 8:

8. National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships, while at the same time ensuring that individuals in an employment relationship have the protection they are due.

Who could disagree with that? The independent contractors association also noted the importance of ILO clause 4(b):

4. National policy should at least include measures to …

(b) combat disguised employment relationships … noting that a disguised employment relationship occurs when the employer treats an individual as other than an employee in a manner that hides his … true legal status as an employee …

Sitting suspended from 6.30 pm to 7.30 pm

I was referring to clause 8 and clause 4(b) of the June 2006 ILO recommendations. The Democrats support both of these clauses that have been favourably quoted by Independent Contractors of Australia. We do not believe they are at odds. In fact, what the clauses suggest is that there is a need for a statutory definition of employment to distinguish between ‘true civil and commercial relationships’ and ‘employment relationships’.

And this is where our concern lies: there is a lack of an acceptable statutory definition of ‘employee’. Surprisingly, at least to the casual observer, this is a very difficult legal area to resolve. Contractors may be independent or dependent, both contractors and employees, and that can be with respect to a number of different working relationships all in the same tax year. The Democrats themselves have previously tried to have a definition of ‘employment’ accepted into federal law but it was rejected by the government. The Democrats recognise that this is a complex area but believe that the current situation is unsatisfactory and that a definition of ‘employee’ is the best solution. In the committee stage of these bills I will be moving an amendment to include a definition of ‘employee’ as proposed by lawyer and academic Professor Andrew Stewart in his submission to the House of Representatives inquiry into independent contracting and labour hire.

The Democrats recognise, as does Professor Stewart, that the definition does not have to be universal and that there may be particular policy arguments about why a particular type of worker should or should not be covered. Due to the special nature of owner-drivers and outworkers, they have been recognised by the federal government as genuine and desirable exceptions under the legislation before us. Our amendment proposes to also exclude these two groups from the definition of ‘employee’ until further consultation and examination has been done—and on this note the Democrats are pleased that the federal government has undertaken to explore the nature of these two groups further, although it is alarming that the owner-driver exceptions only cover two of our six states.

With respect to outworkers, after concerted and admirable advocacy by outworker representatives, considerable progress was made in resolving concerns arising from the bill. The consequential amendments expected to be moved by the government are welcome. The chair of the Senate committee is to be congratulated for her efforts in this regard, in conjunction with the committee members.

Both the ACTU and the CFMEU noted in their submissions to the Senate inquiry into this bill that the sham contract provisions accompanying the Independent Contractors Bill are weak and will be ineffective in stamping out sham arrangements. The ACTU noted that, although the onus is on the employer to disprove the element, the complexity of the issue means that this will not be difficult. Both the ACTU and the CFMEU argued that the employer could reasonably argue that they could not be expected to know for certain the true nature of the employment arrangements. This is another reason why a definition of ‘employment’ should be devised and legislated to make clearer to employers the true nature of the work arrangements.

Another key area of concern the bill raises for the Democrats is with respect to the public cost of employees being wrongly determined to be contractors. The ACTU in its submission to the inquiry noted the potential risk to society that this bill, and presumably other government labour policy, has. It stated:

The Federal government policy ignores the fact that shifts in the labour market have consequences for broader social and economic policy. The tax base, compulsory retirement savings, skills development and the management of risks involved with illness and injury at work are all linked to traditional employment relationships. The proper governance of these matters is jeopardised by the erosion of employment as the primary means of purchasing an individuals work.

The Democrats strongly support the right of Australians to determine whether they want to be in business for themselves or to work for someone else as an employee. However, we believe that someone who is in business for themselves also has a duty to meet the universal obligations that are imposed on employers in the public interest. These obligations imposed on employers are the requirements not just to withhold income tax or to provide for appropriate occupational health and safety but also to provide for employees’ futures through insurance against injury such as workers compensation and superannuation. An employee wrongly treated or classified as a contractor shifts the cost of injury and retirement onto the public as a whole unless that person makes specific and genuine provision for these matters. Fortunately, the bill may not have the effect of preventing state governments from deeming contractors to be employees for the purposes of workers compensation.

Because cost-shifting of this sort may well involve hundreds of millions of dollars of costs being shifted to the taxpayer, in our view the government has been negligent in failing to close the cost-shifting hole. When asked whether this bill should deal with contractor obligations to provide for superannuation and insurance, Mr Anderson from the Australian Chamber of Commerce and Industry argued that it was more appropriate to deal with this in issue-specific law, which the Democrats are not opposed to. But we note that the government has failed to table cognate bills to address this issue and to achieve this. To this end I move the Democrat second reading amendment, which has been circulated:

At the end of the motion, add

“but the Senate:

             (a)    notes that this bill does not require contractors to provide for their superannuation payments, workers compensation, and for income insurance, normally mandated to be covered by an employer;

             (b)    calls on the Government:

                   (i)    to investigate the issue of cost shifting from private to public as a result of shifts in labour markets away from employment relationships to contractual relationships, where the absence of a mandatory requirement for superannuation payments, for workers compensation, and for income insurance to be covered results in a significant new and long-term burden on taxpayers, and

                  (ii)    to report to the Parliament within the next 12 months outlining what solutions it proposes to this problem”.

                   (i)    to investigate the issue of cost shifting from private to public as a result of shifts in labour markets away from employment relationships to contractual relationships, where the absence of a mandatory requirement for superannuation payments, for workers compensation, and for income insurance to be covered results in a significant new and long-term burden on taxpayers, and

                  (ii)    to report to the Parliament within the next 12 months outlining what solutions it proposes to this problem”.

Concerns were also raised about the unfair contract provisions of the bill. The new provisions override the jurisdiction of industrial relations tribunals in New South Wales and Queensland in relation to unfair contracts. The explanatory memorandum argues that nationally consistent laws are preferable, which the Democrats do not necessarily disagree with; however, we note that the laws under both the Queensland and New South Wales jurisdictions were considered by a number of the submissions to the Senate inquiry into this bill to be fairer and stronger than the bill’s provisions. Like the recent trade practices amendment to third-party representations, this bill prevents a union or any other association making an application on behalf of a contractor to the court. The Democrats remain vehemently opposed to these sorts of provisions that deny freedom of choice for workers and offend basic rights and liberties.

In addition, the bill does not provide express power for the court to order compensation directly. Instead, the process inserts an additional, costly and time-consuming step into the enforcement process. The bill only allows the court to address these issues if the matter is still afoot and not after it is terminated. The bill does not give the court the express power to examine a contract that has become unfair because of the conduct of a party. When unfairness has been found by the court, the bill only allows the court to amend the contract and not make a monetary order, in the first instance. Many of the provisions reduce procedural fairness and add extra cost for the contractor and to the system. I will be moving some amendments to this bill to improve these unfair aspects of the new contractor provisions.

Furthermore, the Democrats are concerned about the hostile nature of this bill with respect to states and states’ relationships. We agree that national legislation is needed in this area to deal with the complex issue of employment and contracting. However, this bill is regarded as hostile by a number of state governments and concerned organisations and is not the consequence of consultation, agreement and negotiation with the key players—those being the states, business, unions and key representative bodies. In a federal system, national legislation that is unilaterally constructed is far less likely to survive than legislation that has the broad support of state governments and affected interest groups. While it is now clear from the recent High Court decision with respect to the Work Choices legislation that the federal government will have no problem with this bill—or, it seems, any other bill—overriding state laws, it seems likely that a change of federal government in the future would result in this bill being repealed or substantially amended. A hostile federal legislative move has therefore little to recommend it in the medium to longer term.

The Democrats are concerned that with this bill it will now seem even easier for many businesses to hire Australians as contractors, not employees—not just for cost savings but because it will save them from having to cope with the complexity and flaws of the new federal industrial relations Work Choices system. That is hardly desirable if the consequence is that wages and conditions are seriously and detrimentally affected; if superannuation, workers compensation and income insurance will no longer be covered by employers and will not be covered by the new contractors; and, when previous employees move into contracting arrangements, the state—namely, taxpayers—will have to pick up those costs.

As I stated in my minority report on the inquiry into this bill, the Democrats believe that the bill is likely to mean further uncertainty. This bill means an increase in disguised contracting, greater reliance on common-law litigation, reduced protection for the increased number of contractors and the shifting of costs from private to public. This bill, like Work Choices, started with a good intent but has ended up a mess. Unless our amendments are agreed to, we regret the Democrats will be unable to support these bills, despite the fact that we do support the idea of national legislation.

7:41 pm

Photo of Grant ChapmanGrant Chapman (SA, Liberal Party) Share this | | Hansard source

The bills we are debating this evening, the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, are landmark pieces of legislation. They will work to complement the suite of new workplace relations laws under Work Choices and were proposed by the Howard government prior to the 2004 federal election in our paper Protecting and supporting independent contractors.

This legislation intends to reflect the principle held by the government that genuine independent contracting relationships should be governed by commercial and not industrial or workplace relations law. It is for this reason that the bill stands apart from the workplace relations legislation we passed earlier in the year. The object of this legislation is to protect the freedom of independent contractors to enter into services contracts. In this we are reminded that everyone’s life opportunities are diminished by restrictions on the freedom to work. We should provide an appropriate framework for individuals to pursue the lifestyle of their choice. This is to be achieved in this legislation through the recognition of independent contracting as a legitimate form of work arrangement that is engaged in on a commercial basis. This legislation prevents interference with the terms of genuine independent contracting arrangements.

Under the principal bill, independent contractors are defined, as has been accepted under common law, as holding a contract for services. They are different from an employee who holds a contract of service. It is through this definition that independent contractors can be broadly defined yet subject to effective protections which an individual could expect under a commercial contract.

Clause 3 sets out the objects of the bill: firstly, to protect the freedom of independent contractors to enter into services contracts; secondly, to recognise independent contracting as a legitimate form of work arrangement that is primarily commercial; and, thirdly, to prevent interference with the terms of genuine independent contracting arrangements. I have to say this legislation is particularly important in the light of moves by state Labor governments—such as the Rann Labor government in my home state of South Australia a year or two ago—to prevent genuine independent contracting arrangements from coming to fruition and force people back into an employer-employee relationship which they did not want.

The ideas relevant to this legislation were brought down in the International Labour Organisation recommendation entitled ‘National policy of protection for workers in an employment relationship’, which was handed down in June of this year. In spite of the fact that independent contractors are not formally recognised by the International Labour Organisation, it has responded to the challenges presented by the growth in independent contracting. It effectively has endorsed the status of independent contractors by declaring that employment law should not interfere in the commercial relationship. Clause 8 of the ILO recommendation states:

National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships, while at the same time ensuring that individuals in an employment relationship have the protection they are due.

This recommendation, from a well-known arm of the United Nations, lends legal credence to the argument that the rights of independent contractors are worthy of being guaranteed under specific laws. It enshrines as customary what this legislation sets out to achieve: the right of all individuals to pursue working relationships as they please. The recommendation by the ILO is to be expected, given the growth of independent contractors both in the Australian economy and, indeed, across the world. The Productivity Commission estimates that independent contractors currently account for somewhere between 800,000 and maybe as high as 1.9 million people in our workforce. The work of independent contractors contributes to a range of strategic industries. Workers in the transport, textile, clothing and footwear, construction and information technology industries will be affected beneficially by the implementation of this legislation, and the industries in which they operate will become as productive as possible following the implementation of the bill.

All independent contractors will be engaged under transparent agreements that will protect their interests, preserve their rights and penalise the dishonesty or misfeasance of any party. The bills will introduce a single piece of legislation for independent contractors across the nation, supplanting the inconsistencies that currently exist under state laws. These distinctions mean that drivers in some industries are employees while in others they are contractors. One who installs window blinds may be considered an employee whereas one who installs a bathroom sink may be a contractor. The Howard government believes these arbitrary distinctions between industries and particular forms of work are a disincentive to entrepreneurship, restricting what the employee may rightly expect of themselves. Following the implementation of a three-year awareness program, the affected individuals will be required to become independent contractors or be defined as employees before the changes are fully implemented. This will encourage those who provide independent services to expand their operations if they choose, while not forcing their hand. It will provide a source of dynamism to the Australian economy that ensures individuals are able to pursue their lifestyle and working ambitions as they choose.

The Labor opposition has raised concerns that retaining the common-law definition of ‘independent contractor’ may lead to some workers being unfairly distinguished as contractors. Certainly, the definition of ‘independent contractor’ remains broad in the bill—and appropriately so—but within that broad definition appropriate safeguards have also been provided. In state deeming provisions being overridden, independent contractors are protected from the provision of sham contracting arrangements. The Office of Workplace Services will be empowered to ensure employers do not disguise the role of an employee as that of an independent contractor in order to avoid their legal obligations. In addition, there will be penalties for employers who knowingly make false statements in order to persuade employees to become independent contractors. Hence, independent contractors will be only those who are legitimately engaged as such from the outset and, in turn, as the economic climate requires.

The dynamism that will be underpinned by this amendment will ensure Australia remains at an economic optimum and internationally competitive in an economy increasingly requiring the work of independent contractors, given the developments in technology. The expectations that are placed on parties within services contracts will be fair and clarified and vociferously enforced by the Office of Workplace Services. The current regime of state based anti-avoidance measures that compel contractors to undertake the work for which they are contracted will be abolished. This follows the intention of the government, as was set out under Work Choices, to provide greater choice for all individuals to pursue the working arrangements most suitable for them.

An exception under the provisions of this legislation has been made for certain owner-drivers and also for textile, clothing and footwear outworkers, who are, due to the nature of their industries, required to fulfil contractual arrangements because businesses have to guarantee that their deadlines will be met. In addition, these same outworkers will be guaranteed minimum wages and conditions across the country, as they are seen—by some—as particularly disadvantaged in terms of their skills and, in the case of drivers, their transient lifestyle. This, in my view, is a contentious aspect of the legislation. I certainly welcome the minister’s commitment to an inquiry next into whether owner-drivers in New South Wales and Victoria should remain excluded from this independent contractor legislation or whether they should come under its umbrella. It is my belief that they should operate under this legislation and I hope that that proves to be the outcome of the promised inquiry. In my view, it would have been preferable for their exclusion from the provisions of this bill to have been the subject of a sunset clause, after which they would have come under its provisions unless further legislation removed that sunset provision following the promised inquiry. The legislative procedure relating to the inquiry should have been reversed, with further legislation required to exclude New South Wales and Victorian owner-drivers from its provisions, rather than, as will be the case, further legislation being required to include them.

Despite this shortcoming, I believe that the bill is a major step forward and that it will ensure that contractors have the capacity to flourish. It is essential to overcome the inconsistencies of state laws which unfairly place contractors under industrial law and which undermine the potential of our economy and of the individuals within it to prosper. This amendment is a clear and succinct response to the growing role of independent contractors in the labour market. It enshrines in law the right of individuals to engage in contracts for their services. All individuals undertaking the same service should be subject to the same rights and obligations. Therefore, as I said, the legislation is a major step forward—despite that particular shortcoming which I addressed—and on that basis I commend the bill to the Senate.

7:51 pm

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

I rise to speak to the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Regardless of all of the fairy floss we want to put around this bill, it is designed for a couple of reasons that I cannot for the life of me see will aid contractors out there in the workplace. Before I say anything else in contributing to this debate, I do wish to put an angle on this. I am tonight speaking not only as a proud Labor senator for Western Australia but also as an ex-contractor in the transport industry. On that I welcome any commentary from the other side. I am prepared to debate this bill to the end of the sitting week because I think that I can bring angles to this bill. A lot of honourable senators on the other side would not have the same insight into independent or dependent contracting, most certainly not in the transport industry.

This bill is designed to take away any employment relationship between an employer and a subcontractor. It will also take away any ability for contractors to bargain collectively with or without the union. That certainly will have devastating effects upon groups of subcontractors which rely upon third parties to negotiate on their behalf. In the transport industry—more than any other industry, for honourable senators opposite—truck drivers normally do engage third parties like the Transport Workers Union. I think a lot of senators could appreciate that the life of a truck driver is not about sitting around a yard all day waiting to negotiate rates and conditions with an employer. They are actually out in the truck trying to pay off anything up to a $300,000 or $400,000 loan, which normally has the family home tied to it. Also this bill, unfortunately—this is where it really does irk me—will override any state and territory laws.

But I must say from the bottom of my heart that I do support contracting. I think that contracting is a wonderful opportunity for working men and women to use their skills in their chosen fields to improve lifestyles for themselves, their families, their partners, their children or whomever. There have been some rewarding times. I know that from my own experience. I had some fantastically rewarding times through the Western Australian boom in the eighties. That was given to me because I was able to become a contractor with one of the largest transport companies in Western Australia. Why did I and a lot of other contractors—truck drivers in particular—become contractors? I will tell you why—because in the good old days we were engaged by companies under awards that came with all of the good stuff like overtime and penalty rates.

I see that the Government Deputy Whip is having a giggle. You might enlighten me, Senator Parry. You might have been a truckie in your past life too. I welcome your contribution to this debate, although I did notice that your name is not on the speakers list. In fact, I would like to see a lot of honourable senators on the other side putting their names on the speakers list because I would be interested to hear their thoughts on why this bill should go through and what is so darned great about it.

It was the wise men in the accounting departments of the transport firms who thought, ‘What is it costing us to get our freight delivered around the country and how can we do it cheaper?’ That is why contractors evolved in the transport industry. It was because of volatile fuel prices. Also, unfortunately, employees had to be paid wages when they were spending 20 or 24 hours—all day and all night—behind a steering wheel. The only cheaper way was to offer it to the world, get subcontractors in and turn a blind eye to fatigue management, weight restrictions and anything else. Not all companies were like that. Unfortunately, over the years, as margins get tighter, the grubbier element comes to the surface like cream, I suppose—although I would not like to allude to them as cream; they are certainly not cream. But there have been wonderful opportunities in the trucking industry.

I am looking forward to Senator Troeth’s contribution as chair of the Senate Standing Committee on Employment, Workplace Relations and Education. Her good work and the work of the rest of the committee for the outworkers was fantastic. But, Senator Troeth, I think there is one very important part missing. We will get to that.

We had a number of submissions given to us in this fine building on 3 and 4 August this year. But there were a couple of contributions that I certainly have grave concerns about, and I had grave concerns about them at the time, because the mistruths were just mind-boggling. We had the likes of the Australian Chamber of Commerce and Industry. We had the unions putting their side of the story. We even had a group of owner-drivers who came down from Sydney to put their arguments to us. The way it was done was very professional. But there were some shockers. One of the shockers was the Australian Industry Group, represented by Mr Smith. Once we went through the normal questioning and answering procedure, he made a couple of comments. I asked him a question and he did confess something. I would like to quote from the Hansard. Mr Smith from the Australian Industry Group said:

We are not a major player at the present time in the road transport industry but we do have some members in that industry.

I was trying to find out just how many members they did have. What it boiled down to was this—Mr Smith said:

As I have said, our organisation represents thousands of companies—manufacturers, for example—that are extensive users of transport services. They have a legitimate interest in the arrangements in place within the transport industry, particularly if those arrangements have an impact on prices and so on, so I think there is another party that is legitimately involved in this debate.

So there you have it. They want to see this bill come through because they want to keep their prices down. Their members are users of transport. It took a bit of waffling, but we finally got to it. This is what this bill is all about. This bill will certainly not improve the lifestyle of Western Australian owner-drivers in the transport industry or, for that matter, that of Queenslanders or South Australians or owner-drivers from the ACT.

There was another amazing contribution, if I can use those words, from a gentleman who purported to represent a mob called the Independent Contractors Association. Well, well—what an interesting website they have. I will not go on too much about the quality of their submission, but I would like to lead on to some of the replies that Mr Ken Phillips gave. Mr Ken Phillips was questioned by Senator George Campbell as to the make-up of their association, where they had come from and how many people they represented. I will quote some excerpts again if I may. Senator Campbell asked Mr Phillips:

You currently have about a couple of hundred voting members; is that correct?

Mr Phillips said, ‘Yes, we do.’ Then he was asked what fees they paid. He said that they pay a token fee of about $5. That led Senator Campbell to ask:

How many of those members are owner-drivers?

I go to the remarkable answer from Mr Phillips, from the Independent Contractors Association, who is out there screaming from all the tall towers in this country, ‘What a wonderful piece of legislation this will be.’ His response was:

I have never asked. I do not know.

Senator Campbell asked him:

What information do you require when they seek membership?

Mr Phillips answered:

They put in an application. We have a look at it, give them a phone call and have a chat.

He added: ‘Anyway, we haven’t knocked anyone back.’

That interesting crowd, the Independent Contractors Association, espouse to represent owner-driver truck drivers. I think that is absolutely amazing. They do not even know how many damn owner-drivers they represent; they do not even know if they have any owner-drivers! It is not hard to work out that it is just a front for the HR Nicholls Society and also the Australian Chamber of Commerce and Industry. I suggest you go to the website and find out who is who. Once you have paid your $5 you can get that information.

Some positives have come out of the submissions. I know about the good work of the Transport Workers Union in New South Wales and Victoria, under the leadership of the Federal Secretary, Tony Sheldon; the Assistant National Secretary, Mr Michael Kaine; and Miss Naomi Rowe from the New South Wales branch. This place was inundated—as a lot of senators and members would remember, dating back to the change in the balance of numbers within this chamber. Truckies were walking the hallways, knocking on every door that had a handle on it and knocking on doors that did not have handles. They had the opportunity to put their argument forward as to why they did not want to see this bill passed and why they wanted to capture and maintain some of the state conditions and laws that they have in place.

Briefly, those in New South Wales have had contract determination for some 30 years. Contract determination was entered into with the union negotiating for the subcontractors if those subcontractors wanted the unions to negotiate for them—no-one was ever forced into it—but it was also done hand in hand with the major road transport association and employers there. These truck drivers are engaged in myriad sectors within the transport industry: couriers, wharf transport containers, freezers, general, steel and concrete. They have about 170. I know that Senator Hutchins will make a very good contribution about what has been happening in New South Wales. My colleague Senator Hutchins had major input into the conditions of owner-drivers in that state for a number of years prior to becoming a senator. That was done—fine; no worries.

The Victorians have similar legislation. The Victorian legislation is the Owner Drivers and Forestry Contractors Act. The state government in Victoria commissioned the industry to come back with a survey—to do some serious investigating into why so many owner-drivers were going broke in Victoria. It found a wonderful—and I use that term very loosely—list of reasons. The report said that major disadvantages existed and that legislation was required, because the Victorian owner-drivers, like owner-drivers in the rest of this country, are not price setters; they are price takers. They have experienced declining rates over the last decade and increasing business overhead costs; they experience significant periods of unpaid waiting time; they often experience flat or all-in rates that do not compensate for labour, let alone delivering any profit on significant capital investment or reward for risk; they experience a significant information imbalance compared with those who engage them; and they are able to be terminated without notice or with minimal notice but are unable to effectively challenge termination of their contracts on the basis of harshness or unfairness.

As a result of that—with the assistance of the Victorian government; the employer body, the Victorian Road Transport Association; and the Transport Workers Union of Victoria—the inquiry passed the Owner Drivers and Forestry Contractors Act 2005. At the committee hearings on 3 and 4 August there were two very good submissions. One was by the Victorian branch of the Transport Workers Union and the other was by Mr Phil Lovel from the Victorian Road Transport Association. They answered questions and were most upset. They had done a lot of work. I think this work goes back about 10 years. They had been trying to get this legislation up. They were most indignant: how dare the Australian Industry Group, the Australian Chamber of Commerce and Industry and the Independent Contractors Association try and come over the top of not only the Victorians but also the New South Welshman and the Western Australians and say that their state counterparts in Victoria, who had assisted in negotiating this new contractors act, had no idea, no right and should get out of it. What the heck would they know about the transport requirements of owner-drivers and, I might add, companies that engage contractors in Victoria? What would they know? They are the national body, they know better than anyone, and they do not want to see that happen. Those two bodies were most upset that this bill was going to be passed that would override all the hard work that they had done.

In all my years of being engaged in the transport industry, it is not too often that we have actually had both wings of the transport industry—and by that I mean those representing the employers and those representing the owner-drivers—coming hand in hand and saying, ‘Hey, we need assistance from a government,’ let alone had a government that is more than happy to provide that assistance. That is now in place. I will add that, through the hard work of Senator Troeth, those two states will maintain and keep their legislation for now, so the contractors in those states can still be engaged under the two—

Photo of Gavin MarshallGavin Marshall (Victoria, Australian Labor Party) Share this | | Hansard source

I worked hard too!

Photo of Glenn SterleGlenn Sterle (WA, Australian Labor Party) Share this | | Hansard source

I am sorry. Senator Marshall has walked in. Senator Marshall, I was going to say that I know how hard you worked. I did not see you come in. I apologise for that. To channel it down, I experience most of my angst on this in my home state—that wonderful state where the economy is booming: Western Australia. I happen to know the people who were engaged in the negotiation of the legislation in WA—a fine bunch of men and women.

What happened in Western Australia is that about three years ago there was a massive stoppage by owner-drivers because they had come to the end of their tether. I am talking about owner-drivers who were engaged in long-distance, metropolitan and short-distance work around Perth and in Western Australia, ranging from small two-, three- or four-tonne vehicles up to road-train and triple road-train operators with 90-tonne payloads running between the ports in the northern half of Western Australia and into the Northern Territory. The price of fuel, amongst other things, was absolutely killing them. They were at the stage where they were wondering whether they would continue in the industry. If they left the industry, they were wondering what the heck they would do with the $300,000 bucket of nuts and bolts they had parked out on the driveway one day a fortnight and how the heck they would make the payments for it. Unfortunately, they found themselves on a collision course with the banks, and the family home was on the line. They had nowhere to go but to keep working, until, one day, they said, ‘Enough is enough.’ To get those truckies, with those sorts of debts hanging over their heads, to actually say that they were not going to put the key in the ignition and they were not going to start that engine because they could no longer afford to work was really something. Marriage breakdowns were occurring along the way too.

They convened a meeting on a Sunday, and I know for a fact that about 400 owner-drivers at the meeting said, ‘We are going to stop the state unless we get legislation similar to that in New South Wales and Victoria that protects us from unscrupulous employers who are screwing the living daylights out of us.’ As it turns out, the majority of the people screwing the living daylights out the trucking industry are the wonderful multinational companies that happen to have a large presence around the state of Western Australia, particularly in mining, along the coast and in the fuel, gas and oil sectors. These are the companies that, at the end of the day, threaten the trucking industry and say that owner-drivers must dance to their tune regardless of the costs, because they are not interested.

With the great work of the Transport Workers Union of Western Australia, who represent 2,000 owner-drivers, and the Transport Forum of Western Australia, which is the peak transport employer body in Western Australia that represents some 700 transport companies, and with the assistance of the Gallop Labor government, they developed some legislation that would protect these owner-drivers from unscrupulous employers, give them an avenue for dispute settlement, provide them with a safe, sustainable minimum rates charter and allow them to recoup the costs they incur in running their vehicles. As you would appreciate, when we started whingeing about the $1.30 or $1.40 a litre that we had to pay here 12 months ago, imagine what the truckies are paying up in Halls Creek or Kununurra, where they are putting 1,800 litres of fuel in their vehicles—and their returns are one kilometre per litre—and you can understand the pain that they were going through. And some of them have to wait 90 days to get paid.

All this negotiation was done and it was done in good faith. People did not have guns held to their heads to make them negotiate a safe, sustainable rate and a code of conduct that would look after these subcontractors. It was done in consultation with both sides of industry and with the assistance of the Western Australian Labor government. And for that, we have a bill, which I am led to believe is in the upper house in Western Australia as we speak, called the Road Freight Transport Industry (Contracts and Disputes) Bill.

The worst thing, though, will be if this obnoxious piece of legislation before the Senate tonight gets through this chamber. I am really hoping the moon and the stars will align tonight and the Western Australian senators might think, ‘Oh my gosh, what are we doing to those subcontractors in Western Australia?’ and that they will have the gall to stand up and say, ‘This legislation is wrong; we are heading for a major catastrophe in Western Australia if our laws are overridden by this piece of legislation tonight.’ Not only that but if the industry does not have the ability to say, ‘We need to pay safe, sustainable rates to these owner-drivers; we need to protect them from unscrupulous employers and major users of transport,’ the conditions on our roads will deteriorate in terms of safety for other road users—let alone the fact that the Western Australian transport industry is losing subcontractors in droves. They cannot afford to run these operations, so why would they enter this industry to get done over by this piece of legislation? (Time expired)

8:12 pm

Photo of Judith TroethJudith Troeth (Victoria, Liberal Party) Share this | | Hansard source

After that extremely colourful interpretation of this legislation by Senator Sterle, I think it is perhaps time that we put some coherent statements and facts and figures around it. These two bills, the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, implement the government’s 2004 election commitment to protect and support independent contractors, whom the government regards as an extremely important sector of Australia’s working population. The proposed legislation recognises independent contracting as a legitimate form of work that is primarily commercial and that, as such, should be regulated by commercial and not workplace relations laws. I would like to go through some of the major aspects of the bill and then I would like to look at some of the most commonly asked questions about this bill and provide some answers.

Firstly, deeming: the Independent Contractors Bill will override state laws which deem certain classes of worker to be employees and which provide employee like entitlements to independent contractors. The government considers that these laws unnecessarily interfere in commercial relationships. But I do want to point out that the proposed legislation will not affect taxation legislation or the definition of an employee for the purposes of tax. Similarly, the proposed legislation will not affect the operation of state and territory laws regarding workers compensation, occupational health and safety or superannuation. These bills will specifically preserve state laws that deem outworkers to be employees, and I will have more to say about that later; provide specific protections for outworkers, and I will also be referring to that; and provide specific protections for owner-drivers in New South Wales and Victoria. For other independent contractors who have previously been deemed to be employees, there will be a three-year transitional period to give businesses and workers time to adjust to the legislation when it is passed.

The Independent Contractors Bill expressly preserves state and territory laws that protect outworkers, and, where outworkers are not covered by laws of the state or territory providing some form of remuneration guarantee, the provisions of the bill will provide for a minimum rate of pay. The bill will not override protections for owner-drivers in New South Wales and Victoria, the only two states with such legislation. The government believes that protections applying to owner-drivers in those two states should not be disturbed at this stage. The Minister for Employment and Workplace Relations has announced that a review of owner-driver arrangements will be undertaken, with a view to achieving nationwide consistency if possible. That review will begin in 2007.

Finally, over the next four years, $15 million will be spent on providing information and assistance to those affected by the legislation. That was announced in the 2006 federal budget. The bill will replace existing unfair contracts jurisdictions with one single federal unfair contracts jurisdiction, and it will make the existing federal unfair contracts legislation—currently in the Workplace Relations Act—more accessible by providing that unfair contract remedies may be sought in the Federal Magistrates Court as well as in the Federal Court. That will minimise costs and court time for all parties involved in proceedings.

The Workplace Relations Legislation Amendment (Independent Contractors) Bill will protect employees from sham or disguised employment arrangements, such as where an employer misrepresents an employment relationship as an independent contracting arrangement. Civil penalties of up to $33,000 will apply to employers who deliberately try to avoid their responsibilities through the use of sham arrangements. The bill will also set out penalties which will apply to employers who engage in certain threatening or deceptive behaviour and make employees change their status to independent contractors. The Office of Workplace Services will investigate alleged sham and deceptive conduct cases and enforce the provisions as required.

There are some frequently asked questions about these bills. They have been asked by the opposition. They have been asked by groups in the community. I would like to look at some of them, such as: why does the Independent Contractors Bill not recognise dependent contractors? The term ‘dependent contractor’ is used by some commentators to refer to a worker who is, at common law, an independent contractor who provides a service to only one entity or primarily to only one entity. Proponents of ‘dependent contractors’ consider such workers to be employees.

The term ‘dependent contractor’ incorrectly assumes that a contractor who performs work for primarily one entity is financially dependent on that entity and is in an unequal bargaining position as compared to their principal. That ignores the reality that independent contractors may be comfortable performing work for one principal or being engaged on a long-term contract. For instance, IT professionals or contract engineers tend to be engaged on more complex and longer-term contracts than, for argument’s sake, independent contractor fruit pickers, and they are highly skilled professionals who are in strong bargaining positions.

The common law does not recognise the existence of ‘dependent contractors’. At common law, there are employees on the one hand and independent contractors on the other. So, consistent with the common law, the government also does not recognise the existence of dependent contracting. We consider that to adopt and use such a concept in the bills would blur the distinction between commercial arrangements and the employment relationship.

Some people have also asked why the Independent Contractors Bill does not use a statutory definition of an independent contractor. Again, the bill relies on the common-law test to distinguish an employee from an independent contractor. Under the common law, the totality of the circumstances surrounding the working arrangement is taken into account to determine whether the arrangement in question is an independent contracting arrangement or an employment relationship. That test has been firmly established by the courts and applied over many years. It considers a broad range of factors such as the ability to control a worker, hiring, training, location of workplace, who supplies tools and equipment and so on. The government does not consider a statutory definition to be desirable, as it would be less flexible than the common-law test.

Another question asked is: why does the Independent Contractors Bill override state deeming provisions? It will override state and territory laws that deem, or effectively force, certain classes of independent contractors to be employees. These laws, we believe, undermine the status of independent contractors and inappropriately draw them into workplace relations systems. Deeming takes no account of individual preference. It reduces choice and flexibility available to parties when choosing working arrangements that suit individual needs and personal circumstances. That choice has been the hallmark of the legislation enacted last year by this government through the workplace relations bill. I refer to the minister’s second reading speech, made in the other place, in which he said:

State deeming laws have become so absurd that they can result in completely arbitrary distinctions—an independent contractor who drives a bus can be deemed an employee, while a taxi driver is not; or a person who packages goods under a contract for services is deemed to be an employee if they do so at their home, but not if they do so on business premises; a blind installer is deemed to be an employee but a plumber is not.

So, there we have it. Those sorts of circumstances undermine the legitimate desire of many business owners to increase efficiency through the use of a flexible workforce that can be increased or reduced to meet the operational requirements of the business.

On the other hand, state and territory laws will not be overridden to the extent that they apply to outworkers. This is because outworkers are a particularly vulnerable class of workers. The provisions of the bill that override state and territory deeming provisions will not disturb the operation of chapter 6 of the New South Wales Industrial Relations Act or the Victorian Owner Drivers and Forestry Contractors Act. The government considers that these state laws should continue to operate until a more comprehensive review of all state and territory owner-driver laws can be undertaken and, as I said, this review is scheduled to commence in 2007.

What laws does this bill override? This bill would exclude the operation of state and territory laws that deem independent contractors to be employees or that provide employee like entitlements to independent contractors for the purposes of a workplace relations matter. State and territory laws that deem independent contractors or provide them with employee like entitlements for matters that are not workplace relations matters are not excluded. Workplace relations matters are defined in section 8 but broadly include laws relating to employees and employers in substantially the same way as they are treated under the Workplace Relations Act or state and territory industrial laws. Workplace relations matters do not include, for example, laws about superannuation, workers compensation, occupational health and safety, taxation and consumer rights.

This bill will also exclude the operation of state and territory unfair contract laws, and these laws allow contracts to which independent contractors are a party to be amended, varied or found to be void on an unfairness ground. Instead, the bill will establish a new federal contract review jurisdiction. State and territory laws that allow the review of contracts to which independent contractors are a party on grounds other than unfairness grounds are not overridden by this bill. An unfairness ground does not include state and territory laws that relate to matters that are defined not to be workplace relations matters. This means that contract review mechanisms in, for example, consumer rights laws are not overridden by the Independent Contractors Bill.

I would now like to move to the part of the bill that protects outworkers. As has been remarked previously, these are largely workers at the end of the production line in, largely, the textile industry, although other industries are involved. The government recognises that outworkers are a vulnerable class of workers within Australian workplaces and deserve additional protection. The government has been and remains committed to ensuring that state and territory laws that afford protections to outworkers are not overridden by federal legislation. Last year, when we were putting through the Workplace Relations Act, both in the committee hearing and in this chamber, as chairman of the Senate Employment, Workplace Relations and Education Committee, I was particularly concerned that this particular group of workers be not disadvantaged by either omissions from the Workplace Relations Act or sections that would harm them. I am very pleased to say that, as a result of extensive negotiations carried out by my committee at the time of the passing of the Workplace Relations Act, and as a result of the hearings of this committee, we were able to ensure that, in the government’s view, outworkers are sufficiently protected. I would like to thank every member of my committee, including the deputy chair, Senator Marshall, for their cooperation in ensuring that we devoted sufficient time to hearing the concerns of the outworkers. I hope that that group of workers consider that their concerns have been effectively looked after by the government.

FairWear, which are one of the groups concerned in negotiations, and the Textile, Clothing and Footwear Union of Australia raised concerns that the current provisions did not achieve the policy objective that I have just outlined, so, with the agreement of the government, the department consulted with the outworker representatives to see that those protections remained undisturbed. In the Senate committee report, we recommended that provision be made for that protection, and I am delighted to say that the government has taken into account those recommendations.

During the committee stage, the government will move amendments to the Independent Contractors Bill to: (1) amend paragraph 7(1)(c) to ensure that anti-avoidance laws that prevent a person from contracting out of minimum terms and conditions for outworkers are not overridden; (2) amend paragraph 7(2)(a) to clarify that state and territory laws that protect outworkers are not overridden; (3) remove part 4 of the proposed legislation, as it is considered not to have any application to outworkers and imposes unnecessary regulatory burdens on persons who engage outworkers; and (4) repeal part XXII of the Workplace Relations Act for the same reason. Outworkers related amendments will also be moved to various provisions of the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, and those amendments are consequential on the more substantive stages. I have already mentioned the review of the owner-driver’s legislation, which I think is very satisfactory. I commend the bill to the Senate.

8:28 pm

Photo of Steve HutchinsSteve Hutchins (NSW, Australian Labor Party) Share this | | Hansard source

I want to speak this evening on the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. I had the opportunity to sit on the Senate Employment, Workplace Relations and Education Committee when it went through the various aspects of the bill. The committee dealt with a variety of witnesses who appeared before it and who presented their case as to what they wanted from this legislation.

It is a good sign for us in the Labor Party that, once again, ideology has gripped the government. It is always a sign that a party is starting to concentrate more on what it sees as its place in history than on the practicalities of the maintenance of government administration when it lets ideology take over. The fact that the government has presented legislation that, in essence, does not allow individuals to become members of or be represented by trade unions is again another sign of its ideology. As I said, I think that is a good sign for us in the Labor Party because, while the government is concentrating on its place in history, we will certainly be making sure that it does become part of history at the next election.

I had a long association of dealing with the issue of contracting and contractors in my previous occupation. As you would be aware, Acting Deputy President Crossin, for 18 years I was a full-time official of the Transport Workers Union of Australia’s New South Wales branch. I ended up being the secretary and also the national president of that organisation. I remember clearly when I first joined the organisation on St Patrick’s Day in 1980. My old boss then—his name was Edward Clarence McBeatty—said: ‘One thing you should remember about truck drivers is that they are politically conservative but industrially militant, and never mix up the two. They may take direct action on behalf of their wages, conditions or rates, but that does not necessarily mean that they will vote the way you would like them to at a general election.’ I always used that test in my old branch of the TWU in how to approach small business men who, of their own volition, joined trade unions—particularly lorry owner-drivers.

The association of the union with owner-drivers goes back a long way. When the union was formed in 1888, there were men who owned their own horse and cart at the meeting at Trades Hall in Sydney. From that period on, when trade unions and industrial awards were being formed, owner-drivers who had particularly worked around the waterfront, in the sugar houses and in carting concrete and excavated and building material often not only were subject to direction and control by one employer but wore uniforms that they were required to wear by that employer, their wagons were painted in the colours that the employer required along with the company’s logo and, in fact, the employer would often tell them the sort of equipment they wanted them to provide. These owner-drivers were subject to their employer’s direction and control. This became more and more prevalent for those men after World War II, when a lot of surplus army equipment was available and people started to get more involved in the road transport industry in what was called in that period the Department of Main Roads.

From that period on, the New South Wales branch of the union sought to represent the interests of the lorry owner-drivers through legal mechanisms. I recall meeting Sir Jack Sweeney, who was their QC at one stage. His junior was Neville Wran. On two occasions they made appeals on behalf of the union to the Privy Council in London to represent owner-drivers to make sure that they could be legally enrolled. There were mechanisms to ensure that that occurred in legislation through to the sixties. In fact, when Sir Robert Askin was a Liberal Premier of New South Wales, he started to enact more and more legislation to make sure owner-drivers were represented. That continued in New South Wales right through the variety of Liberal governments, from Sir Eric Willis to Tom Lewis, Nick Greiner and John Fahey.

That is the history that has always been there with that particular union, so I am a bit concerned—even though Senator Troeth has said this evening that there are aspects of this legislation that will not apply to owner-drivers in New South Wales—that, in the amendments that were presented five minutes before the bill saw the light of day, there was one clause that would remove the right of owner-drivers in New South Wales to make or vary contract determinations. I hope that the minister will clear that up in reply—whether it is just a drafting error or whether it will be dealt with in other aspects of the legislation. But if that is the case then that negates the arrangements that were entered into by the TWU and the government to exempt at this stage the provisions of this bill for lorry owner-drivers in New South Wales and in Victoria.

I do not share the confidence of Senator Troeth on the changes to the legislation in the areas of deeming, unfair contracts and the transferring of those powers in New South Wales and Queensland jurisdictions to the federal jurisdiction. I mentioned earlier that a lot of legislation that has been helpful to owner-drivers in New South Wales was carried whilst the coalition was in power in that state and was often carried unanimously by both houses of the parliament.

In 1994, particular legislation was introduced into the New South Wales parliament to provide a mechanism to protect goodwill payments for owner-drivers, particularly in the concrete industry. That bill was, as I recall, introduced as a private member’s bill by the Labor member for Auburn, Peter Nagle, and was supported by the then IR minister John Fahey and his successor Kerry Chikarovski. In essence, that bill allowed owner-drivers involved in contract disputes with their major employers—in this case, it was the concrete companies—to go before the New South Wales industrial commission and seek to argue a case as to whether there was an unfair or unconscionable contract. That saved a lot of men in particular and their families a lot of money and a lot of heartache in that period when those companies were restructuring. It allowed for the swift and not all that costly resolution of significant contract disputes between the concrete companies—those multinationals—on the one hand and lorry owner-drivers in painted colours on the other. It meant that the difficulties which had transpired, and which transpire in other states, no longer occurred.

In my last contribution here in parliament on this issue, I spoke about the situation only a few years ago concerning Boral. Boral in New South Wales wanted to change its method of contracting and remuneration for their lorry owner-drivers. By virtue of the fact that the owner-drivers had an opportunity to go before the New South Wales commission and to use the unfair contracts legislation that was available to them in that state, they were able to seek a reasonable outcome to the dispute between them and their company. Unfortunately, in Canberra, another group of owner-drivers employed by the same company never had that opportunity. In fact, a lot of those men lost a lot from it. I understand that some lost their homes. They lost a lot of money as a result of the dispute. I mentioned that one of the sacked owner-drivers has been a security guard here in this building. It is not beer and skittles, as we might have been led to believe by Senator Troeth.

There are significant difficulties in what is being proposed by the federal government in relation to taking these powers away from the states, where there is appropriate legislation, and putting it in the hands of the Federal Magistrates Court. That is going to make it more legalistic, more complex and more inaccessible to men and women who fall into contract disputes with major companies. That will lead to the denial of justice. I know that some coalition colleagues have an ideological bent about trade unions, and one can accept that. That is a thing that sometimes has started some of them up. But in the end this is going to lead to unfairness and to a denial of justice for men and women if they are put in this position.

In my old organisation we saw the example of what happened with Boral here in Canberra as opposed to Boral in New South Wales. The people in New South Wales were able to achieve a satisfactory result for both sides as a result of being able to go through the New South Wales jurisdiction. In Canberra, the men were broken because they did not have the money to compete with Boral. In the end, some lost their homes and they all lost their businesses because they did not have the opportunity to match Boral dollar for dollar in legal costs. If we transfer these decisions from a jurisdiction that allows for them to be dealt with inexpensively, that attempts to make it non-legalistic and that attempts to make sure that the outcome works to another jurisdiction—as is being proposed under this legislation—then it will become a case of, ‘If you can afford justice, you will get it.’ A former staffer of mine once said that he was told that the British system of justice, and I suppose that is what we have, is a Rolls Royce system of justice—the only thing is that you need to own a Rolls Royce to get full access to it. If that is what is being proposed here, then it is terribly wrong. I hope that some coalition colleagues go back and have a think about it because that would not be in the public interest. It will be a denial of justice.

The deeming aspects of this legislation change the situation as well. Under New South Wales and Queensland law, there are certain provisions to prevent sham contracts. They have been put in there over the years. We heard from the New South Wales representatives that these pieces of legislation have been in place for 45 years, so they were in place during two significant periods of coalition government. In New South Wales, the coalition under Askin, Lewis, Willis, Fahey and Greiner did not seem to think that it was worth while to change them. But we have now got that prospect presented to us. If we change strong deeming provisions that prevent sham contracts then we are going to deny justice to people who are probably not in a position to demand it. The people who are probably going to be most vulnerable in this situation are not going to be the people in the cities but the people in country New South Wales and country Australia. Once again, I hope that that will lead to a bit of a rethink from some of the National Party senators and some of the senators from the coalition who come from outside the metropolitan areas.

Two other things worth mentioning came out of the inquiry. The first was that, as a result of changes to the personal services income tax in July 2000, the income test for a contractor is much stronger. The ability to claim benefits and to deem yourself as a contractor has been significantly reduced. So, if this legislation goes through as it is proposed, we could find men and women put in positions where they are deemed contractors for the purposes of this act—and I will come to how that occurs—and yet with that not meaning anything to the Taxation Office. And Senator Marshall may be able to help me with that in his contribution. So in fact you can be deemed a contractor under this legislation yet not get access to the benefits of being a contractor because of the July 2000 ruling. You can still be taxed as an employee by the Australian Taxation Office because they will not accept whatever is said in the mechanism that is being proposed.

The other thing is that, if you are a person who wants to put someone on a contract, all you have to say is, ‘I genuinely thought he or she was a contractor.’ And that is it; that is the defence in the law. You do not have to do anything else. From my recollection of the hearings and from other stuff I have read, you do not have to do anything else other than to make that claim, and that is sufficient for this bill to be in operation.

There are two other things I want to mention in the brief time I have left. I think Senator Marshall may comment more widely on this because he asked these questions in relation to the operation of minimum wages. On 4 August Senator Marshall asked Mr Pratt from the Department of Employment and Workplace Relations:

Is it possible under this proposed legislation that an independent contractor can be paid less than the federal minimum wage?

Mr Pratt answered, ‘No.’ Senator Marshall went on to ask:

So what provisions of this legislation give any protection to people under the age of 18 entering into an independent contractor relationship? Is there any?

Mr Pratt said, ‘No.’

I have outlined my concerns about this legislation. I think that this is going to be a terrible piece of legislation that will be unfair and unjust on probably the most vulnerable members of the working community in this country. There is no protection for them from being forced into contracts—as much as the government may say there is—because all an employer has to say is, ‘I genuinely thought they were,’ and that is the defence.

There is no advantage for the contractors in taxation. There is no minimum wage for them. In fact, I alluded earlier to child labour—Senator Marshall was concerned about the vendors outside a VFL ground in Victoria—and there does not seem to be any particular protection for children.

So what is this all about? I go back to my original point, and that was that this is about ideology gone mad, which has consumed this government since it got control of the Senate. And, as I said earlier, it may mean that, as a result of the government worrying about their place in history, they probably will make their place in history because of silly moves like this.

8:48 pm

Photo of Gavin MarshallGavin Marshall (Victoria, Australian Labor Party) Share this | | Hansard source

I also rise to speak in this second reading debate on the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Let me, at the outset, commend Senator Hutchins on his contribution to this debate. It comes from practical experience and an understanding of the way working relationships operate in the workplace and how this quite evil and pernicious legislation will be used to drive down the wages and conditions of working Australians. It seeks to follow the false mantra of this government, which constantly confuses productivity with profitability, because all that can be demonstrated in this legislation is a way to reduce the wages costs for employers, with no measurable offsets to improve productivity. It is simply a cost-cutting exercise to increase profits.

The principal bill, the Independent Contractors Bill 2006, seeks to exclude state and territory laws which deem as employees many independent contractors entering commercial agreements with employers. In the government’s view these state laws interfere with rights, entitlements, obligations and liabilities of parties to genuine independent contracting arrangements.

Most of the other measures contained in the principal bill are qualifications to the overriding provisions. These include the introduction of transition arrangements for those workers previously deemed by state and territory laws to be employees but who would now be independent contractors, and the retention of existing protections for outworkers and road transport owner-drivers.

The principal bill also enables application to be made to a Federal Court for the review of services contracts on the grounds that they are harsh and unfair. At the outset, that is what the government has sought to do with this bill. We do not have a problem with genuine contracting. Where there is a genuine need, a genuine contractual arrangement that forms genuine contracting is not a difficulty for us. But this legislation allows genuine employees from genuine employee-employer relationships to be established as so-called independent contractors. The policy aim of the Independent Contractor Bill 2006 is to turn as many employees as possible into contractors. It seeks to recognise independent contracts as bona fide workplace relationships which, in effect, turn natural employees into contractors. This places the worker at risk of reduced or even removed employee entitlements and conditions.

I heard Senator Troeth today assure the Senate that the Independent Contractors Bill did not affect taxation legislation, superannuation legislation, workers compensation legislation or occupational health and safety legislation. But Senator Troeth simply misses the point. While the bill does not interfere with those legislative requirements, it does enable people to be removed from an employee relationship into an independent contractor relationship, which removes the obligation of the employer to provide those provisions. It puts the onus back on the independent contractor themselves to provide those provisions and, more often than not, in circumstances where they are then simply not applied.

There are so many examples for those of us who live in the real world where people have been forced into independent contracting arrangements against their will, because it is cheaper for the employer to deem them as independent contractors, where they simply do not cover themselves for workers compensation; they do not apply any occupational health and safety standards to their own workplace, because they are the ones who have to provide it; they do not pay themselves superannuation; and they do not provide for their retirement incomes and, thus, that burden ultimately is transferred back onto the rest of the community.

Senator Hutchins mentioned this—and following up on what Senator Troeth said earlier: it is absolutely true that the taxation legislation will not view people that have been deemed independent contractors under this legislation as independent contractors. The Taxation Office has a very different arrangement. It is an arrangement that is much more in the real world and understands what is happening in employee-employer relationships out in workplace. The Taxation Office certainly will not deem most of these non-genuine independent contractual arrangements as independent contracting arrangements. It will simply deem them as employees and tax them accordingly. I guess that demonstrates, probably as much as anything else, the flaws in this bill.

It is the view of the government and employer organisations that share a close association with this government that industrial relations are greatly simplified by arrangements that put employees on to AWAs—Australian workplace agreements—or turn them into contractors. The Work Choices legislation is intended to encourage the first of these trends, and the Independent Contractors Bill is intended to encourage the later development. It is part of an ideological attack on organised labour in this country; that is what this is really about.

I heard Senator Murray earlier talk about what the government had stated as its objectives in terms of this bill. He went through a very detailed and comprehensive argument demonstrating how the government had completely failed to deliver on any of those stated objectives of the bill. The reason the government has failed to do that is that the bill is not about achieving those stated objectives; it is about taking people off good employment conditions where they can organise and provide for themselves decent working conditions and decent wages.

We have seen already, with the introduction of Work Choices and AWAs, massively high percentages of those agreements remove penalty rates, shift loadings, annual leave loadings, public holidays and much more. That has been spoken about a lot in this place already. In terms of deeming people as independent contractors, we do not even see the basic fair pay condition standard that the government has set as fair pay; it would be better described as the ‘low-pay standard’. But even with those low-pay standards that the government has legislated for—those five basic minimum conditions—if you are deemed and forced into an independent contracting arrangement that is not genuine, there is no standard whatsoever. Under an independent contracting arrangement, you can be paid less than the guaranteed minimum wage. How much less? Technically, down to zero—and that is absolutely legal.

Do you need to have annual leave provisions if you are an independent contractor? No, not at all. Do you need to have superannuation provisions if you are an independent contractor? Not under any requirement of this piece of legislation before us today. Do you need to have sick leave? You do not. Do you need to be able to demonstrate that you have some understanding and knowledge before you are put into one of these employment arrangements? Of course not.

We have seen examples where schoolchildren have been declared independent contractors when they are working as vendor sellers at football games, with no provision for safeguards of any minimum standards. It is pure exploitation. This seems to be the underlying philosophy that this government wants to force down the throat of the working people of this country. It is based on a false premise. It is based on a view that is clearly wrong—that an individual employee, whether they are deemed as a contractor or not, has the same bargaining power as an employer. That is based on a lie. That is simply not true. An individual worker in any circumstance does not have the same bargaining power as the employer who is employing them. Of course, that will lead to great exploitation and great abuse.

There were many concerns about the whole process of this bill. At the time of the bill’s referral, the minister’s office attempted to restrict the scope of the inquiry by, among other things, preventing consideration of how contractors and employees would be defined in the bill. This was considered by Labor senators and minor party senators to be such a fundamental issue that it could not be excluded from consideration. The minister was apparently advised to follow the precedents set in the committee’s consideration for the Work Choices legislation in November 2005. However, on this occasion, the Senate’s adoption of the Selection of Bills Committee report referring the Independent Contractors Bill, which set no limits on its brief, foiled the minister’s attempt.

However, the minister tried to avoid us highlighting one of the major flaws in this legislation. This bill fails to tackle the issue of who is a genuine contractor and who is a genuine employee. This legislation does not define the term ‘independent contractor’ beyond its meaning under common law. It deems that contracting relationships should be recognised under common law, not industrial law. Therefore, an independent contractor is considered to be a person who contracts for services, thus denying them the legal status and the associated protections of an employee. However, a high proportion of subcontractors are employees for all intents and purposes. They work exclusively for a single firm in continuous engagement. The government bases its support for a common-law underpinning of this legislation with regard to distinguishing between employees and contractors on the grounds that the courts over time have developed a multifactor test to make this determination.

But during the committee inquiry we received a submission from the New South Wales government which quoted an opinion by Professor Andrew Stewart. It says:

The fact is that any competent employment lawyer can take almost any form of employment relationship and reconstruct it as something that the common law would treat as a relationship between principal and contractor … thereby avoiding the effect of a wide range of regulation which is typically applicable only to employees, such as industrial awards, registered agreements, leave and superannuation legislation and unfair dismissal laws.

This arrangement places burdens on the employee that would normally be the responsibility of the employer—that is, superannuation, taxation arrangements and workers compensation—and leaves the subcontractor vulnerable to exploitation. That is it in a nutshell. That is what this legislation is actually designed to do—remove those obligations from the employer which would normally be theirs under an employer-employee relationship and transfer all those obligations back to the independent contractor as an individual, whether compensated for or not, whether they choose to be a self-employed businessperson or not. They have simply no choice when the employer decides that that is the preferred employment arrangement that the employer will employ people under.

In his own submission to the committee, Professor Stewart further noted:

By engaging a contractor, a firm may be spared the cost of providing leave and superannuation entitlements, of observing any award obligations, and perhaps too of insuring against work related injury. They may also be relieved of any exposure to unfair dismissal claims or severance pay in the event of terminating the arrangement, and a contractor is far less likely to belong to a trade union.

And that is of course the nub of the issue with this legislation. Professor Stewart continued:

Even if higher nominal pay is provided than would be the case for an employee performing the same work, the firm is likely to end up ahead … if the firm can find a way to hire someone who in practical terms works only for the firm and is under its (more or less) complete control, yet who is legally characterised as a contractor, the firm has the best of both worlds

Professor Stewart again has quite accurately described the intent and the effect of this legislation.

The government has attempted, but simply failed, to overcome this burden on workers through the provision of penalties for employers operating sham contracts. But this provision in the bill is in itself a sham. What it provides for is an individual worker having to go to the Federal Court to get a determination on whether they are a contractor or an employee. What a ridiculous proposition. For example, if you have a cleaner in a school who is deemed by the employer to simply be a contractor and the cleaner disputes that and says, ‘Not really; you tell me when to work and when to come, you tell me the wages I am going to get paid, you monitor my times, you tell me how to clean—I am an employee,’ see what happens when he pops off to the Federal Court.

I went and got a quote from Slater and Gordon to find out how much an action by a worker in the Federal Court would cost if it was going to be defended by an employer. Their written advice back to me was that it would be a minimum of $30,000 to get a determination in the Federal Court. So to simply determine whether or not they should be deemed a contractor the employee has to first find $30,000 to go to the Federal Court against the employer. Even if you get a decision in your favour, because there are no unfair dismissal laws anymore, under the Work Choices legislation you become an employee. You are then covered by the Work Choices legislation, and we all know that without the protection of unfair dismissal legislation the employer can simply concoct a reason and then terminate your employment. So the sham contracting provisions in this bill are themselves a sham because they are unworkable. They are inaccessible for the vast majority of people which this sort of legislation will affect. The whole process itself is a sham.

There should be a cheap and readily available system available to workers to pursue disputes. This is similar to the measure we saw in the anti-choice provision in the amendments to the Trade Practices Act that sought to prevent unions from bargaining on behalf of collective groups and businesses. The independent contracting legislation forbids unions acting collectively on behalf of independent contractors if they are deemed to be in that position. The CEPU in their submission to our inquiry said:

… such provisions appear to us to have little to do with protecting the interests of contractors, who may legitimately wish to seek the assistance of unions in work-related matters, and more to do with the Government’s determination to quarantine all such workers from the industrial relations system.

With all of this government’s industrial relations legislation we see the anti-union, anti-organised labour, anti-collectivism ideology coming through time and again.

This legislation also aims to override state and territory laws which consider as employees independent contractors who enter into commercial agreements with employers. The government perceives that these state and territory laws interfere with the rights, entitlements and obligations of those who enter into contract agreements. This bill creates a federal unfair contracts jurisdiction which overrides all provisions in state based industrial relations legislation which consider independent contractors to be employees. It also overrides provisions which seek to redress reduced bargaining power and protect the conditions of contractors. It does little to protect workers and it is more about overriding the states’ ability to protect groups of workers which they deem vulnerable.

One of the interesting things—and Senator Troeth talked about this—was the outworker provisions. It was recognised by all members of the committee and the government that those workers are in an extremely vulnerable position. They cannot negotiate in any meaningful way with their employer, so the government has agreed—and I welcome this—to exclude them completely from the provisions of this bill, and that is great. It recognises on one hand that there are vulnerable workers but on the other hand tries to say there is only one group of vulnerable workers, and that is simply not true. You only have to look around at the cleaning professions. These are people who work long hours under incredibly arduous conditions in a very competitive environment because it is generally considered to be a low-skill, low-educated occupation, where there is the ability to turn over staff and have people compete against each other for those conditions.

This government fails to recognise the inequity in the bargaining power between employees and employers and, as I said earlier, it tries to do this in the following ways: by destroying trade unions, smashing any organised labour and making workers vulnerable, firstly, through Work Choices and, secondly, through the introduction of independent contracting legislation.

9:08 pm

Photo of Rachel SiewertRachel Siewert (WA, Australian Greens) Share this | | Hansard source

Although I am going to specifically address the issue of the Independent Contractors Bill 2006 shortly, I would like to draw the Senate’s attention to the last-minute inclusions in the amendments presented today—several hours ago—of changes to the Workplace Relations Act which go well beyond what this bill is purported to be dealing with, well beyond what the Senate inquiry looked at and well beyond what we were led to expect to be dealing with in the amendments.

I feel like it is groundhog day,as it is almost a year to the day when we were debating the regressive Work Choices legislation. We are once again having amendments fobbed off on us at the last minute when we have no time to adequately consider either the extent to which they apply to this bill or the broader ramifications they have for the Workplace Relations Act.

The government have reached a new low in their approach to the Senate and the contempt in which they hold this place. Maybe they thought they could sneak these amendments in under changes to the Independent Contractors Bill. Not only is the government using this bill quite plainly to get at employees to make them independent contractors, which undermines their rights; they are using it to have another go at introducing changes such as the stand-down provisions, encouraging people to trade their sick leave and not ensuring employees record everybody’s work hours—and the list goes on.

The amendment on stand-downs looks at providing employers with an extensive and wide-ranging right to stand down employees without pay at any time during which an employee cannot be usefully employed. It goes through things like a downturn in work, a breakdown in a piece of machinery, a strike or industrial action or any stoppage of work for any cause for which an employer cannot be reasonably held responsible. This is wide open to interpretation. It is not clear exactly how far employers can take this or under what conditions employment might resume. What happens if there is a power blackout and everyone is stood down indefinitely? What happens if you travel out to a remote mine site and the equipment is not working; are you stood down and do you have entitlements to accommodation and transport? What happens if an employer fails to maintain equipment like they are supposed to do? Once again, the employees are held responsible.

This is an absolutely outrageous piece of legislation. It is clearly open to not only interpretation but abuse. We have already seen how employers blatantly abuse the Work Choices legislation. The government might as well scrap all AWAs, scrap all employment requirements and say, ‘Go for it, guys.’ I would suggest that these provisions leave it wide open for unscrupulous employers to dump staff whenever it suits them, with the employees’ only recourse being to pursue expensive legal action. Of course, if you have been stood down without pay, your chances of being able to pursue legal action are very poor. It is likely to impact most on employees who are low paid and in unskilled positions and those who are unable to take any action and fight this piece of legislation.

It is also unclear whether people who are stood down will be able to claim some form of income support. So they are stood down without pay, and we do not know whether they will be able to claim income support. Tell me how that is fair to workers. Tell me how that is family friendly. You go into work expecting to work for the day and there is a piece of equipment down: ‘Sorry, there’s no work. You’re stood down.’ How ridiculous is that?

Section 245A deals with the entitlement to cash out an amount of paid personal or carers leave—it is on page 25 of the government amendments. This provides for the ability to cash out personal leave, which can include sick leave and carers leave. It is unlikely to help very many workers and has the potential to disadvantage many, particularly those who are caring for children or family members. This is not a piece of family-friendly legislation and it does little to redress the current imbalance between work and family life. It threatens to make things substantially worse. Australia is already facing a care crisis. Things are set to get worse with an ageing demographic, and carers already tend to be one of the more disadvantaged groups in our community. Carers need to use more of their personal leave and family leave to meet their care responsibilities. These changes will systematically prejudice workplaces against people with family and care responsibilities and put pressure on Australian people to cash out their leave.

Carers leave and personal leave are things that many employees do not think they will need until they are hit with a serious illness or family crisis; if they have been pressured and encouraged to cash it out, they will have no recourse. While there is a minimum amount kept in reserve, it is unlikely to be enough if you or your loved ones are in crisis and need care or if you have a sudden serious illness. Younger workers in particular—again, those already disadvantaged by Work Choices—are likely to think that they will not need illness or sickness cover. They are the ones that are highly likely to be encouraged to think it is a good thing to cash out their leave.

Sick leave was never supposed to be tradable. It is supposed to be there in case of emergencies if you are sick. It is likely, as I said, to encourage particularly young people and also those on low incomes, who might think they will get a slight advantage, to cash out their sick leave. What happens when they do get sick? It will encourage people not to call in sick when they are sick, which in turn will lead to a drop in productivity, not only their own—which they will probably get in trouble for—but also that of other members of the workplace who catch the sickness or the illness because the person came in sick. Medical experts have repeatedly said it is best for people to stay home as soon as they start feeling sick. It is better for the person—the worker—and it is better for the workplace.

There are other amendments in this legislation. Of course, due to the time constraints—we have had these amendments for only a small amount of time—we have not had time to go through them. I am sure there are other hidden little beauties in the bill that we will be shocked to discover when we get more time to discuss it. We will no doubt be debating those during the committee stage.

I now turn to the issue of the Independent Contractors Bill 2006. In 2004, as part of the federal election campaign, the government stated that, if re-elected, a coalition government would introduce an independent contractor act to prevent the workplace relations system being used to undermine the status of independent contractors. Well, that is certainly not what this bill does. This bill undermines employees. It is clearly designed as another plank in the federal government’s approach of undermining workers’ rights and treating workers as just a commodity. It is likely to impact on a growing number of Australians as more employees are forced into independent contracts. Already, there is estimated to be, I would say, over a million people already under some kind of individual contract, and this is likely to increase significantly with the passing of this legislation. This legislation is not delivering what I think some people thought the government intended to deliver. As I said, it is about undermining workers rights by forcing employees into being independent contractors, taking away their entitlements and basically making inaccessible many of the provisions that they as workers should get.

The bill purports to move the contracting relationship as far away as possible from the realm of employment and to place it as far as possible under commercial regulation. The bill seeks to exclude state and territory laws which deem as employees many independent contractors entering commercial agreements with employers. It is the government’s view that state laws interfere with the rights, entitlements, obligations and liabilities of parties to genuinely engage in independent contracting arrangements. The bill supposedly retains existing protections for outworkers and road transport owners and has, the government maintains, a provision for service contracts to be reviewed on the grounds that they are harsh or unfair. But that is only possible by application to the Federal Court. The Federal Court is hardly easy for workers to access. Having to go to the Federal Court would put anybody off the very idea of seeking a review, let alone having the money to do it.

The bill does not define the term ‘independent contractor’ beyond the current meaning under the common law. The problem with this is that independent contractors will not receive the same entitlements in doing their job as an employee. The independent contractor is seen as a person who contracts for services, and is not afforded the same legal status as an employee. The bill also overrides the deeming provisions contained within state and territory industrial legislation which deem certain categories of independent contractors to be employees and provisions which bestow employee related entitlements on independent contractors. Those deeming provisions provide independent contractors with their basic employment conditions beyond those required federally under the existing legislation. Again, the bill is about undermining employees. Those safeguards will not exist when this legislation is passed, except for owner-drivers in New South Wales and Victoria and, potentially, some outworkers—that is dependent on the extent of the government’s amendments, which, of course, we have not had time to check out.

The House of Representatives Employment, Workplace Relations and Workforce Participation Committee report titled Making it work noted the difficulties with the common-law distinction between employees and independent contractors. Common law has a number of mechanisms available to it in determining whether a person is an employee or is performing work under another type of arrangement. The report recommended that, when drafting independent contractor legislation, the government maintain the common-law approach to determining employment status but distinguish between employees and legitimate independent contractors.

In addition, the report recommended that any new legislation adopt components of Australia’s legislative income tax assessment alienation of personal services income tests to define independent contractors. The Taxation Office has a number of criteria which a person has to satisfy to claim taxation status as an independent contractor. The bill does not implement that recommendation. The minister argued that the test is a self-assessment and therefore able to be easily manipulated by a person to arrive at a desired outcome. But the question that should be asked is this: if it is good enough for the tax office to require criteria to determine if a person is actually independently contracting then why is it not for the independent contractor legislation? It is interesting—more than interesting, I have to say—that yet again the government has been given advice through parliamentary process and has not listened to it.

The relationship between an employee and an employer is not equal. This is even more so when the person is earning a livelihood as an independent contractor and has no fallback or no-one to stand up for their rights. This legislation should protect the vulnerabilities of people who are not always able to negotiate fairly with employers. It does not. Employment and workplace advocates have expressed concern at the growing incidence of independent contractors in Australia. They are concerned that the independent contracts are issued to advantage companies—big surprise!—and are being used as a means of not providing employee entitlements such as superannuation, training, occupational health and safety requirements, sickness leave et cetera. These responsibilities fall to the independent contractor. The reason the government wants to do this is to make it easier and easier for employers and harder and harder for workers.

Ensuring a better definition of ‘independent contractor’ as well as defining it by common law and entrenching it in taxation assessment is essential. It should be harder for companies to offer independent contracts as an alternative to taking on employees. Because of the limited protections afforded to people who work in industries that run on independent contractors, such as truck drivers and workers in the textile and footwear industry, state governments have introduced deeming legislation to ensure that workers have protection under their state based industrial relations systems. A number of states consider that many of these workers are dependent contractors or are actually disguised employees—that is, they do not have an independent say in choosing to independently contract; it is all they are offered. In other words, they are disguised employees.

Deeming in the context of employment law involves the power to declare people who work under a contract for service, such as independent contractors, to be employees. This means that the independent contractor is then able to access the state based safeguards, ensuring that they receive basic pay and conditions which they would not otherwise be entitled to. Despite the many submissions received from the many inquiries into workplace arrangements over the years, and despite the reports available to them, the government have failed to provide the protections that independent contractors—or, more importantly, those disguised employees who are forced to become independent contractors—need. They need these provisions.

The ACTU, in their submission to the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation inquiry into independent contractors and labour hire arrangements, commented that non-standard work arrangements are increasingly being used to undermine the employment relationship and the protections offered. The growth of these forms of work has also contributed to the lack of skills development and has serious implications for the management of occupational health and safety. Occupational health and safety is an area of utmost importance and I believe that all Australians feel passionately about it. Independent contractors are vulnerable in this area and there should be greater mechanisms in place to protect them from workplace hazards and safety concerns.

This bill does not address the issues faced by working Australians who are forced to independently contract their labour. The bill, as I said, not only fails to adequately define ‘independent contractor’ but also does not address concerns that employers may be using contract arrangements to avoid employment obligations. As I said, it does nothing to address occupational health and safety concerns to ensure that people working under independent contracts are adequately protected, nor does it look at trying to avoid taxation liabilities. There is no provision for appropriate amounts of superannuation to be paid to independent contractors or to clarify workers compensation responsibilities.

Whilst it is good that the bill retains specific protections for owner-drivers in New South Wales and Victoria, the government has taken a selective approach to the way that it is dealing with these issues. It is good that it has moved to protect New South Wales and Victorian legislation. However, it leaves other states which may want to bring in this type of legislation—Western Australia has legislation pending, as does the ACT—out in the cold. It is not in the nation’s interests to not adequately protect a vulnerable group of workers such as owner-drivers, who are the lifeblood of transport—they transport many goods within Australia. It does not adequately protect them. It puts increasing pressure on those people. Unless the government protects others beyond New South Wales and Victoria, it takes away their right to collectively bargain. It takes away their safety provisions. It does not adequately protect these so-called independent contractors who are essentially only working for one employer. Whilst I appreciate that the government has chosen to protect owner-drivers in New South Wales and Victoria, it would be offering exactly the same level of protection to the other drivers in the other states if it were genuinely trying to ensure that those provisions are there for all owner-drivers.

In summing up, I would like to make the point, yet again, that the government has reached a new low in the way it is dealing not only with this legislation but also with the amendments to this legislation. I feel like I am in Groundhog Day. We are being forced to consider a raft of amendments dumped on our desks just before dinner—literally as we are about to walk in and debate this legislation. This is exactly what happened with the Work Choices legislation. It was dumped on our desks as we were walking into the chamber to debate that regressive legislation that has far-reaching implications for all workers in Australia. Again, a year later, we have exactly the same thing. We are being forced to consider, at very short notice—or with no notice at all—legislation that has far-reaching ramifications for the workers of Australia.

9:28 pm

Photo of Helen PolleyHelen Polley (Tasmania, Australian Labor Party) Share this | | Hansard source

I rise to speak on the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Can I first compliment and concur with those who have spoken already in this debate who are opposing this bill. I congratulate them on their contributions. Let us be blunt: these laws are just the latest attack by this arrogant government, by Mr Howard and Mr Andrews, on Australian workers. In even allowing these laws to be debated, they are sticking the boot in yet again and saying resoundingly and finally to workers, ‘You are on your own.’

This legislation will negatively impact on many workers and will add even more intricacy to the Howard government’s already extremely complex industrial relations legislation. Recently we have seen the government trying to back-pedal slightly on their unfair industrial relations changes. It is obvious that the Prime Minister is getting a whiff of an election year.

The Senate Standing Committee on Employment, Workplace Relations and Education report on this bill unanimously recommended that part 4 of the bill, relating to clothing outworkers, be removed completely. Part 4 of the bill will create a new category of worker—the contract outworker. This section of the bill will ignore the fact that outworkers would previously have been afforded employee like protections. It also has the potential to create confusion regarding the appropriate classification for outworkers. It would allow unscrupulous employers the opportunity to reclassify their workers and thus avoid awarding them any entitlements they would otherwise be entitled to.

With this legislation, the government are doing what they do best, and that is deceive. They are trying to create the impression that these laws will be beneficial for small business and contractors, but that is completely wrong. These bills seek to force genuine employees out of employer-employee relationships and create sham independent contracting arrangements which will reduce their entitlements, conditions and protections. Does that sound familiar? It is becoming increasingly obvious that this government’s preference is to simplify industrial relations by putting as many employees as possible onto Australian workplace agreements, with the Work Choices legislation, or turning them into contractors with these bills.

Contractors are an important part of Australia’s workforce and Labor recognises that. Contractors are versatile and diverse. It is true that many industries rely on the services of contractors. Estimates vary on exactly how many contractors there are in Australia—around 800,000 to two million contractors in 2004. This is a range of between eight to 20 per cent of the entire Australian workforce. Regardless of the final figures, that is a very large percentage of Aussie workers. Labor’s concern is that these bills will allow employers to designate certain types of employees as contractors simply for the financial advantage of employers.

The number of submissions received by the committee from all areas of the workforce indicates just how much concern there is about this legislation. As is typical of this government—we all know the history since 1 July last year; it continues to abuse the powers in this place and the committee system—the minister attempted to restrict the scope of the committee’s inquiry before it even began. As mentioned in the opposition senators’ report on the bills, the minister attempted to prevent consideration of how contractors and employees would be defined in the bill. Obviously, this is a fundamental aspect of the bill and could not be excluded from consideration during the inquiry. However, the Senate’s adoption of the Selection of Bills Committee report referring the Independent Contractors Bill to the committee had no limitations and thus the inquiry was allowed to continue unencumbered—surprisingly, even with the best efforts of this arrogant government.

Of particular concern regarding this legislation is the fact that all contractors will be treated the same. A submission to the inquiry from the Australian Workers Union stated:

Of the million Australians currently deemed ‘contractors’, University of Melbourne research suggests up to 40 per cent do all their work for one boss —they are ‘dependent contractors’ not ‘independent entrepreneurs’. A dependent contract is one where one party is not truly independent, and work under the contract is in reality performed in a similar way to work under a contract of employment. Compared to truly independent contractors these workers tend to be those who are more vulnerable in the labour force—they work in lower skilled occupations; are young; and female.

The AWU submission goes on to state that the bill is really designed to provide an opportunity for employers to designate employees as independent contractors and thereby reduce the entitlements of the employees and the financial obligations of the employers. The AWU said:

Protections under the legislation like under the WorkChoices legislation will not deter employers from such practices as the incentives will be too great.

As a result of this legislation, workers will be faced with the burdens of their own superannuation and workers compensation—burdens which usually, and quite rightly, fall on the employer.

These laws are just another nail in the coffin, compounding the Howard government’s extreme industrial relations legislation. They will override state based employee deeming provisions and unfair contracts legislation. This is yet another step in the Howard government’s seemingly never-ending crusade to wrest powers away from the states. The people who will be hurt by these laws are ordinary working Australians: electricians, drivers and cleaners. They are being hurt because of one man’s ideological agenda. What is perhaps even worse is that the laws target workers who are already in an inferior bargaining position and would already be starting off on the back foot. But that is becoming a habit of this arrogant government: it targets the people in society who require help the most.

Workers or small businesses who want to take further action against an unfair or sham contract will have to go through an expensive court process. That is not really an option for most workers who will be hurt most by this legislation, but that is just the way the government and employers want it to be. These laws will keep up the hurt for Aussie workers—the hurt that began with the unfair, extreme Work Choices legislation that Mr Howard did not believe was worth mentioning to voters before the last election. Perhaps it just slipped his mind. What cannot be allowed to slip our minds here today is the fact that these bills will dissipate protections and entitlements for workers who are already in an inferior bargaining position.

The AWU said:

By allowing contractors who are dependent on a single business for work to be ‘deemed’ as employees, industrial tribunals have ensured these workers have had access to superannuation, workers compensation and some legal recourse when treated unfairly. Under the legislation these rights are lost. Independent contractors will be by definition outside employment regulation and protections of industrial instruments such as awards, health and safety legislation, long service leave legislation and superannuation.

This arrogant government is intent on taking Australia down the low-wages, low-skills road. Under this legislation, independent contractors will be responsible for their own professional development.

Australia is in the grip of perhaps its worst ever skills shortage, but this arrogant government does not like to be reminded of that. The skills crisis that this government has created is holding back our economy, but still it make no moves to fix it. In fact, it is doing all it can to make it even worse by introducing legislation like this. This legislation will cause skills development and training levels to fall and will compound the already critical skills shortage in many industries.

In its submission to the inquiry, the Transport Workers Union of Australia said:

The unfair contracts provision of the Independent Contractors Bill envisaged a system which in a number of key respects is inferior to the current NSW and Queensland provisions which it will override.

Should we be allowing inferior legislation to be passed in this place? No, we most definitely should not. What is even worse about this legislation is that it will override any future state or territory owner-driver transport laws and also put at risk existing laws. We have seen more than enough bad legislation from this government. This is not just legislation; this involves people’s lives. Everything the Howard government is trying to achieve with these bills is wrong. Australians are dealing with more pressures than they ever have before—high petrol prices and rising interest rates at a time when housing affordability is at its lowest. All the while, Mr Howard is continuing his crusade to knock down wages, strip away workers’ conditions and eliminate entitlements. Enough is enough.

Labor are completely opposed to this bill but concede that we do not have the numbers in this place to stop this bad piece of legislation proceeding. As such, we will support the amendment relating to outworkers in the hope that it will take away some of the evils contained in this bill.

9:39 pm

Photo of Anne McEwenAnne McEwen (SA, Australian Labor Party) Share this | | Hansard source

I also wish to speak on the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. I note also that a substantial number of government amendments to the bills were circulated in this chamber at approximately 4.30 this afternoon—90 minutes before debate commenced on the bills. I note also, like previous speakers, how arrogant and contemptuous it was of the government to drop a large bundle of amendments into the chamber without warning and without even notifying the shadow minister responsible for the bill. It is an attitude of disrespect for the processes of the parliament that we have come to expect from the government, and we particularly expect it when the subject matter of the legislation is protections for working people or attempts to take away those protections. Perhaps some of those government amendments have taken on board some of the concerns of the Senate committee that had a brief time to conduct its inquiry and report on the provisions of both bills. I look forward to further explanation of the government amendments during the committee stage of the debate on these bills.

Together, these bills comprise yet another plank in the government’s agenda to make the Australian labour market a deregulated free-for-all where the vulnerable get exploited and the powerful get away with it. The central principle of both bills is that so-called independent contracting relationships should be recognised and supported and that the appropriate mechanism for regulation is not the industrial relations system but the more legalistic and more expensive commercial law system. The bills add more complexity to an already overly complex industrial relations system. Another intention of the bills is to override the deeming provisions in state laws that were introduced by state governments to allow people who are genuine employees to have an accessible tribunal where they can go to pursue their rights and entitlements.

It is true that the government signalled its intention to introduce legislation along these lines, dealing with independent contractors, prior to the 2004 federal election. However, the Australian public was not clamouring for the independent contractor act before the election, and those of us in the Labor Party cannot actually recall legions of employees begging to be freed from the confines of the employer-employee relationship for the free-wheeling life of self-employment or for life as an independent contractor. In the Labor Party we did, and we do, support people having the genuine choice of either working for themselves or working as an employee. Labor did, and do, support the protection of genuine contractors from unfair contracts. However, the government’s 2004 policy document was a masterpiece of misrepresentation and ideological dream-speak. You know that when a government like this one talks about ‘flexibility of hours’ and ‘freedom to move easily between workplaces’, what it really means is that you will have to work ridiculous hours for no penalty rates and you will have no job security at all, because it believes you should be able to be sacked for no reason at all.

That is what we have seen in the Work Choices legislation, or the ‘no choices’ legislation, and that is the so-called flexibility and freedom this government wants to promote and encourage. These bills encourage a situation where even otherwise well-intentioned business owners and employers are forced to compete against each other, not by improving productivity but by driving down labour costs. It is the same ideology that underpins the so-called Work Choices legislation, the ‘no choices’ legislation. Take away the protections that should be part of the employee-employer relationship and take away the measures that attempt to redress the power imbalance in the employment relationship. Encourage people out of a regulated system into a deregulated system where the only safety net is what you are able to individually extract from the person who pays you.

If you have the skills that are needed by the employer or the organisation seeking to engage your services, and if you have language and savvy to negotiate, you will do okay. If you are not in that position, you will just have to take what you are given. You might get ripped off by whoever is paying you, and you may even have legal redress provided under this legislation. But, if you are a cleaner or a courier driver on a low income, will you really be able to afford to mount a legal challenge? Will you be able to afford the legal fees and, more importantly, if you are self-employed or a contractor, will you be able to take the time off work necessary to pursue such a case?

There are provisions that are intended, I presume, to give people who are subject to unfair contract arrangements the ability to pursue a remedy. But you have to ask: why is it that the government was keen to introduce this legislation at all? Who wanted it? It was not the average Australian working person who, if the legislation is passed, will be at risk of being turfed out of a genuine employment relationship with the benefits and protections that that offers—turfed out of employment because there are no unfair dismissal provisions anymore and forced into so-called contract arrangements.

Who wanted it? It was not those outworkers and owner-drivers who were protected by the state legislation that this federal legislation seeks to override. It was certainly not the TWU, the Transport Workers Union, which, on behalf of its members, put to the former Senate Employment, Workplace Relations and Education Legislation Committee the case for giving owner-drivers the right to be able to bargain collectively and to pursue remedy for unfair contracts in a relatively user-friendly arbitration system. Even some of the government’s own members heeded the TWU submissions and understood that a race to the bottom in the transport industry was going to have devastating effects on safety on our roads, not just for the drivers but also for those of us who share the roads with them.

Who wanted it? So far, the Australian Chamber of Commerce and Industry has been in favour of it, although it did not go far enough in the first take for ACCI. However, in my experience, any legislation that remotely offers any protection at all for working people is probably too much legislation for ACCI. What is the government’s justification for this legislation? The government’s 2004 policy document, which I referred to earlier, is telling in this regard. It states:

The Coalition Government is determined to protect the rights of independent contractors. We will not allow union officials to strip these enterprising Australians of the right to choose how they live and work.

It goes on to say that the government:

... will not permit unions, industrial tribunals or State Labor governments to attack the freedoms of independent contractors.

There you have it—the trifecta: mention unions, industrial tribunals and Labor state governments all in one sentence, then throw in a gratuitous ‘freedom’or two, and that is about the sum total of the government’s justification. Never mind that it was the unions that fought for and won protection from exploitation for owner-drivers and outworkers. Never mind the fact that it was unions and Labor governments that won those protections. The very fact that unions were involved means that those protections must, in the government’s eyes, be bad and therefore, according to the government, we must destroy them and, along the way, do what ACCI wants.

The government says this legislation will be good for small business. You have to ask: how? How will it help those owner-drivers, who are small business people? Labor support Australians who genuinely want to start their own businesses. Labor have already issued our blueprint for small business—our five-point plan to help small business get ahead. Our plans include helping small business to save time and money by cutting down government red tape and by giving them financial assistance to improve their business skills. We know that a lot of people prefer to work for themselves, and we will help them do that successfully. But Labor do not support legislation that encourages sham self-employment or contract arrangements.

This government goes on about the fact that independent contractors are flourishing in the Australian marketplace. We get figures ranging from 700,000 to over a million Australians—or even two million, if you believe the Independent Contractors of Australia. This is presented to us as a good thing, but it completely ignores the long-term outcomes of initiatives that take Australians out of traditional employment relationships, employment relationships that include the provision of industrial benefits such as superannuation. With Australians already undersuperannuated, anything that increases employment which is not accompanied by compulsory superannuation will see too many Australians reach old age or retirement age with insufficient income to sustain a decent lifestyle. Lack of superannuation is just one of the facts of life for too many people working as contractors.

What is the reality of life for many so-called independent contractors? I can give a couple of examples that are within my family. One is that of a courier driver. He provides his own vehicle and of course his own ABN, and his daily routine is to turn up at the workplace of one supplier of medical goods that he has worked for a couple of years. He loads the parcels for delivery and takes them to clients of the supplier. I suppose the flexibility and freedom in this arrangement is that he can decide which route he takes to take to deliver those goods. And, of course, it is the most economical route, because he has to buy his own petrol and the price per parcel delivered has not risen in line with the increase in the price of petrol.

He has no particular issue with the supplier for whom he delivers. They are a reasonable company, a family company, but he does have difficulties with the arrangements under which he works. He is not qualified to do much else except to drive a van and deliver parcels. He is at an age at which it is difficult to train for something else, and there are many other people in his situation. He has to earn a living and the supplier wants to maximise profit, so the courier driver takes what is on offer. But the reality is that he has no sick leave and no annual leave, he has no employer superannuation contribution and he does not earn enough to put enough into self-funded superannuation.

He goes to work when he is sick because he cannot afford to take the day off. He puts off having dental treatment and preventative medical appointments because to take time off work costs money. When his elderly father, who is in an aged care facility, needs assistance or is admitted to hospital and there is no-one else to go with him, the courier driver is obliged to help his parent and loses a day’s pay because of it. If his van is off the road because of a breakdown or regular service, he loses wages because he cannot work or because he has to hire a replacement vehicle. This is not a matter of choosing that kind of income earning arrangement. It is what is on offer when you are relatively low skilled and have to earn an income in competition with others in a similar situation. The government’s 2004 election policy document stated:

They—

independent contractors—

opt for the flexibility of hours, the freedom to move easily between workplaces and, frequently, the higher rates of pay.

Where is the freedom and flexibility for that courier driver?

I have another example. This one involves a much younger person. She is a university student and works in the usual kinds of occupations that students typically seek out when they are looking for an opportunity to earn money to support their studies and pay their HECS debts. In this case, she was offered a job working in hospitality, specifically working on weekends and at nights, waitressing at a function centre where weddings and other events of that nature are held. On accepting the work offer, she was told that she had to have an ABN before she started work because she would be working as a ‘contractor’. An ABN is easy to get via the ATO website. Armed with that, she went along and worked as a waitress. The only difference between this work and working in another establishment, where she would have been called an employee, was the way she was paid and the entitlements she did not get—an amount of money that was not taxed and was not subject to superannuation or penalty rates and that the employer did not have to pay employment related taxes on.

Again, I am not overly critical of the employer. They are about making money and they will use whatever legal framework they legitimately can to maximise their profits. What Labor is concerned about is the misuse of available laws to increase the number of people who are, for all intents and purposes, employees who should be employed under industrial laws but who are called ‘contractors’ so that the employer can avoid the obligations due to employees. Would-be employees need protection; the world of work is not a level playing field. What is an 18-year-old who needs a job supposed to do in this situation? Would they say to the employer, ‘Thanks, but I don’t want to work under those arrangements; I want to be engaged as an employee and paid the award rate and have all the other entitlements and rights of an employee that you are denying me’? Is the 18-year-old going to pursue an unfair contract litigation in a civil court? I do not think so. I think the government needs to get real.

In fact, the government have already acknowledged the potential for abuse of contractor arrangements, because they have taken into account the legitimate concerns raised by unions about particular groups of workers—outworkers and owner-drivers—and accommodated some of those concerns in their legislation. The government attempt to sell this unwarranted and unwanted legislation by saying that it gives people the freedom and flexibility to enter into arrangements of their choice. They already have that choice. No law prevents anyone from working for themselves as a contractor if that is what they want to do—and no-one is saying that that is not the case. Labor supports choice, and it is truly galling to hear those on the other side say that they are promoting choice in this legislation when it is their ‘no choices’ Work Choices legislation that says, ‘Take this AWA or take nothing.’ They have a funny concept of freedom and choice on that side of the chamber.

This is another piece of legislation that is driven by the government’s overwhelming hatred of unions and fairness. It excludes unions from the process of representation for no good reason except this government’s ongoing pathological and pathetic hatred of the notion of working Australians banding together in unions and helping each other improve their bargaining power and working conditions. This is another bit of legislation that will override the states’ legitimate role in providing protection for working Australians. This is another piece of legislation that tilts the balance of power further towards those who already have it and puts those who are most vulnerable at risk of being exploited. It gives me great pleasure to say that Labor opposes these bills.

9:55 pm

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party) Share this | | Hansard source

I stand tonight to support the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. In the very short time I have available, I want to make some general comments about the importance of this legislation, the importance of building a spirit of enterprise and the importance of encouraging entrepreneurialism in this country. Like the government, I have a vision for Australia—that is, one where small business is encouraged to prosper and do well, where jobs are grown, where wages increase and where we have a strong economy. As a result of the independent contractors legislation, we are providing a foundation of support for creativity, support for ensuring reward for effort and support for encouraging initiative by individual Australians—men and women alike—who are then likewise able to support their families, support their children, through the services they provide.

The Labor Party insist on using a one-size-fits-all approach to their policies and to their opposition to both these pieces of legislation. The Labor Party have a policy that would abolish Australian workplace agreements—a policy that would abolish choice for Australian working men and women. Not only do they wish to abolish choice and AWAs altogether from the industrial relations landscape in this country; they have a view that is not only moribund and antiquated but stuck in the 20th century. Their approach is to oppose for opposition’s sake, and they are fixated on, and stuck with cement boots in, history.

Our government wishes to move on. We wish to provide flexibility and choice to the Australian men and women of this country. One estimate from the Productivity Commission was that about 800,000 to 1.9 million Australian men and women make up the independent contractors of this nation. That is a lot of Australian families who can benefit under this legislation, and this is an attack by the Labor Party on those Australians. Sadly, the Labor Party wish to oppose the legislation we are putting forward tonight. What happened in 2004 was that those independent contractors and the groups that represented them said, ‘We want legislation, and we want protection,’ because the Labor state governments around this country were trying to rope in those independent contractors by saying, ‘You have a commercial relationship but we do not recognise it. We will deem you to be covered by our industrial relations legislation.’ That is unfair and unconscionable. That is why this legislation, including the principal bill, the independent contractors legislation, is before this parliament, and the amendments to it refine it and improve it. It will ensure a spirit of entrepreneurialism and a spirit of enterprise that this government wishes to enhance and encourage in this country. Tomorrow I will continue my remarks with respect to the merits of both pieces of legislation.

Debate interrupted.