Senate debates

Wednesday, 31 October 2012


Social and Community Services Pay Equity Special Account Bill 2012, Social and Community Services Pay Equity Special Account (Consequential Amendments) Bill 2012; Second Reading

11:53 am

Photo of Michaelia CashMichaelia Cash (WA, Liberal Party, Shadow Parliamentary Secretary for Immigration) Share this | | Hansard source

I rise to speak on the Social and Community Services Pay Equity Special Account Bill 2012 and the Social and Community Services Pay Equity Special Account (Consequential Amendments) Bill 2012. The coalition welcomed the finalisation of the long-running equal remuneration case which required Fair Work Australia to objectively consider the plight of employees in the social and community sector—or SACS, as it is known—where it was shown that there was a significant gap between the remuneration of men and women carrying out the work of equal or comparative value when compared with workers in state and local government employment. On 22 June 2012, Fair Work Australia published its final determination in what had been a long-running case in favour of the applicants.

The decision of Fair Work Australia's historic equal remuneration order will see around 150,000 SACS workers benefit from regular wage rises totalling between 23 and 45 per cent over an extended of period of time from 1 December 2012 until June 2021. This bill has been introduced in response to the FWA determination and, given the important role and services provided to our community by the social and community sector, care must now be taken to ensure that the benefits which are due to these workers are properly recognised. But, at the same time, we must ensure that services are not reduced or jeopardised and that jobs in the sector are not lost.

This bill will provide supplementation to community organisations who receive Commonwealth funding, directly or through a national partnership, to cover the Commonwealth share of the wage increase awarded by Fair Work Australia. The Commonwealth supplementation will be delivered through funding drawn from the special account by eight Commonwealth agencies and paid to assist employers who are directly or indirectly funded by the Commonwealth for the purposes of a program prescribed under the new legislation and who are required to make payments to their employees under the pay equity arrangements. The Social and Community Services Pay Equity Special Account (Consequential Amendments) Bill 2012 will make a consequential amendment to the COAG Reform Fund Act 2008 in relation to supplementation for programs funded under agreements with and payments to state and territories, such as national partnership payments and national specific purpose payments.

Whilst the coalition will not be opposing this legislation, we do have a number of concerns with it. The first concern that we have is in relation to the rushed nature of the legislation. After the introduction of the legislation on 10 October 2012, the government insisted that the bill pass the House of Representatives on 11 October. When we asked the government why there was such a rush to have this legislation passed, the government failed to provide any substantive reason for the rushed nature of this legislation other than to say it was urgent because of the 1 December 2012 commencement date.

Given that Fair Work Australia had made some preliminary determinations in May 2011, recognising that SACS workers were undervalued, and that the Prime Minister in November 2011 made an announcement that the government would set aside $2 billion in support of pay increases for SACS workers, it is clear that, despite the forewarning of Fair Work Australia in its earlier decisions, the government has been dragging its feet in bringing this legislation before the parliament. The legislation could have been introduced some months ago, soon after the decision of Fair Work Australia was actually published. The government's handling of this bill is another clear example of the chaotic and indeed shambolic nature of this government and its ever-present contempt for the Australian parliament.

The coalition also has serious concerns about issues affecting the implementation of this legislation. Labor has refused to date to guarantee that community service organisations will not close or will not have to reduce their services as a result of the cost pressures that the Fair Work Australia decision may cause. There is no doubt that equal remuneration is important. However, steps must be taken to ensure that equal remuneration is paid and, at the same time, we do not seek to effect reductions in costs which would decrease the significant and indeed critical services that these organisations provide.

Again, to date, the Labor government has refused to guarantee the people of Australia that there will not be a closure of services or a reduction in the services that are actually provided. Indeed, in the Australian newspaper recently, we have seen concerns raised in the community that this funding 'will lead to job losses and service cuts to programs for the nation's most vulnerable.' Even the full bench of Fair Work Australia expressed concern about the impact of this decision on some parts of the sector that provide services for which costs cannot be recovered, or which receive no government funding.

The coalition, unlike the government, harbours serious concerns that the government's plan to fund pay rises in the community sector may change the workplace landscape and fuel further wage pressures across the economy. The coalition also has concerns relating to the nature of the rubbery figures that the government has provided in bringing forward this legislation. Prime Minister Gillard attempted to dress up a political announcement by suggesting that the government was injecting $2.8 billion in funding into the social and community sector and that the government was doing this out of the goodness of their hearts. The reality is that the workers will be receiving their pay rises as a consequence of the decision of Fair Work Australia rather than an additional magnanimous handout from the Labor government.

In relation to this legislation, the fact of the matter remains that this is a government that is driven by spin rather than substance. As usual, the Prime Minister of Australia was trying to reinvent political history with her political announcement. In fact, when you analyse what is in this bill and what was previously promised by the government, you will see that the $2.8 billion actually represents a $300 million cut in Labor's previous promises to the sector. Let me say that again: if you look at what is in the bill that is currently before the Senate, and if you look at what was promised by the government when it was making its grandiose, attention-seeking statements, you will see that the $2.8 billion represents a $300 million cut in Labor's earlier election promises to the sector. First Ms Gillard announced a $2.1 billion financial boost; then she increased it by an additional billion dollars, before reneging on that promise and cutting it back to $3 billion; and today Australians are witness to yet another broken promise as the financial injection is further reduced to $2.8 billion. Again, in the scheme of things, that represents a $300 million cut to a sector that the Labor government consistently tells Australians it supports.

While many of the workers in this industry are covered by the ASU, some are covered by the infamous HSU. We all know the history of the workers who are covered by the HSU; they have already been ripped off by corrupt union officials. On top of being ripped off by corrupt union officials they are now facing a further $300 million cut from a Labor government. The workers in this sector must be totally disillusioned as they see the Labor government rip them off on one hand while on the other hand Labor continues to dish out millions of dollars in grants to union bosses. That is standing up for the workers, Labor-style!

Despite the government's continued rhetoric that it has consulted with stakeholders on this legislation the coalition notes that, ahead of putting its submission to Fair Work Australia, the government once again only consulted with union bosses—as is Labor style. It failed to consult with the providers of the services who may well be seriously affected by this legislation; it failed to consult with state governments who are responsible for the implementation of a lot of this legislation; and it failed, contemptibly, to consult with employees on the ground who are directly affected by this legislation. In its submission to Fair Work Australia the Labor government was also trying to short-change these undervalued workers. At clause 122 of the FWA interim decision of 16 May 2011, the summary of the Labor government submission noted in part:

Any increase in wages in the industry could impose significant cost pressures which could have adverse impacts on service delivery. Such impacts could be partially mitigated through improving the efficiency of funding and other arrangements between the Commonwealth and service providers. It also referred to the importance of collective bargaining at the enterprise level on improvements in pay and conditions, employment and productivity. It noted, however, that the cost to the Commonwealth of significant wage increases could still be considerable, even taking into account a phased introduction, and budget constraints mean that “any additional Government funding would likely come at the expense of other Government services”.

Let me just say that again so that the people of Australia are very clear on what is being said: because of Labor's budget constraints directly as a result of Labour's fiscal incompetence, 'any additional government funding would likely come at the expense of other government services'. Gross debt is now in excess of $257 billion when Treasurer Swan recently promised Australians that it would not exceed $250 billion by the end of this year. That is another Labor promise that he could not keep—gross debt has now exceeded $257 billion. This country has never seen figures like that in its history.

So while the Labor government was out on the hustings soft-selling the workers that were supporting them the reality was that, in its formal submission to Fair Work Australia, the Labor government was urging Fair Work Australia to recognise the impact on cost pressures that any increases would cause. I would like to know which Labor member of parliament, when they were gloating about the decision that had been made, actually went to the workers and said, 'Do you know what we said in our submission to Fair Work Australia?' I bet not one of them did.

In discussing this bill it would be remiss of me not to state for the record that under Labor the statistics involving pay equity in Australia today are an absolute disgrace. Statistics from the Equal Opportunity for Women in the Workplace Agency in August 2010 show that across Australia women's full-time weekly earnings are on average 17.3 per cent less than men's. When one considers part-time and casual work, the total wage gap between men and women is even worse: it is 35.3 per cent. And despite women making up approximately 45 per cent of the labour force, only 29 per cent of managers are women. What does this mean, in terms of actual financial figures? Female graduates who enter the workplace earn $3,000 on average less than male graduates. Women earn on average $231.40 per week less than men. If current earning patterns continue, the average 25-year-old male would earn $2.4 million over the next 40 years, while the average 25-year-old female would earn significantly less: $1.5 million.

As you would expect, the gender pay gap has a major impact on women's earnings over their lifetime. Women are 2½ times more likely to live in poverty in their old age than men, and by 2019 on average women will have half the amount of superannuation than men have. This is simply not acceptable and it is made more unacceptable because it is happening under a Labor government, the same Labor government that likes to stand up time and time again and say that it is the only government in Australia that (a) represents women and (b) represents the lower-paid in society. Based on those statistics that is a false claim to say the least.

There is no doubt that women in Australia have been disillusioned to find that, when they strip away the rhetoric of the Australian Labor Party, the facts expose a party with no clear agenda, a party with no policy coherence, a party driven exclusively by opinion polls and a party under which, ashamedly, the gender wage gap has worsened in recent years. In 2006, under former Liberal Prime Minister John Howard, the World Economic Forum listed Australia as 45th the world for wage equality between men and women for similar work. By 2009, under the great Australian Labor Party, which likes to talk about pay equity but in reality takes absolutely no action to effect it, Australia had slipped by a full 15 places. In 2009, the World Economic Forum listed Australia as 60th in the entire world for wage equity between men and women. This means that under Labor, Australia is even behind developing countries such as Sri Lanka and Tanzania in this important measure.

Why has pay equity lessened under a Labor government over the past few years? Why does pay inequality still exist, particularly in a country with so many highly educated and highly capable women? The answer is very simple and very, very disappointing: because Labor in its time in government continues to promote spin instead of promoting policy reform in the area of pay equality. At last the electorate is waking up to the reality of a Labor government and now understands that a Labor government is more concerned with its own survival than the survival of women who continue to suffer discrimination through pay inequity and pay inequality

Unlike the government, the coalition genuinely believes in supporting low-paid workers. We are disappointed that the government are once again using this place as their own plaything so that Prime Minister Gillard, the Minister for the Status of Women, Ms Collins, and Mr Shorten can take a decision of Fair Work Australia, which recognised SACS workers were being undervalued, and try and turn the proposed pay increases into a special one-off Christmas gift made possible by the sheer courtesy of the Labor government, when that is just not what the facts add up to.

The coalition will not oppose the bill, as I have already stated. But we have serious concerns about the way the government has tried to manipulate the SACS workers with false statements. We also have serious concerns about the way the government has tried to get the credit for the Fair Work decision when the government in fact in its own submissions actually urged formal restraint by Fair Work Australia. As I said when I commenced, the coalition has very serious concerns that the Labor government has refused to guarantee that under this legislation community service organisations will not close or reduce services as a result of cost pressures that the Fair Work decision may cause. I would be interested to see, when the minister is summing up this legislation, whether or not a Labor government is prepared to go on the record to put its money where its mouth is and give a formal guarantee to the people of Australia that services will not be reduced by this legislation. (Time expired)

12:13 pm

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

The Greens are pleased that this legislation has come before the parliament. From the beginning of the campaign by the ASU and others, including workers in the sector, the Greens have been supportive of the pay equity case. That is because we appreciate the value of the work of the not-for-profit and charity sector on which we have just had a lengthy debate in this chamber when discussing the Australian charities and not-for-profit commission. During that debate we talked a lot about the important role that charities and not-for-profits play in our civil society and our democracy. The sentiments expressed then have continued in the debate on this bill. Those not-for-profits and charities could not deliver the services they deliver without the work of those working in the not-for-profit sector. It has been well recognised that those working in the not-for-profit sector are largely women, and for decades they have been significantly underpaid and doing the work that they do because of their commitment to community and their commitment to the people they work with and support. So a lot of the work that has been done, let's face it, has been done due to their sense of commitment, their love for their work and their commitment to the people and the organisations that they work with.

Many of them have been working for very, very poor pay rates compared to what they could get, say, in the Public Service or in the private sector. Having worked in the not-for-profit sector I can speak with authority on this issue. You do the work because you love it but, I have to say, it does not pay the mortgage, the power bills or the rent—if you are not lucky enough to own your own home—and it does not pay the essential food bills. So the findings of Fair Work and this legislation are very important in trying to close that gap and give pay equity to these workers who, for so long, have contributed to a better Australia, have filled the gap when it comes to services that government has not provided, and have picked up after government decisions. Those workers who work in emergency relief organisations are filling the gaps.

As I have articulated in this place on numerous occasions, Newstart is $130 below the poverty line. Where do you think single mothers and single parents who are living below the poverty line get help from? They go to charities and the not-for-profit sector for emergency relief. It is the workers in those emergency relief organisations that are supporting these people through emergency relief, financial counselling, family counselling, mental health services and aged care—but most of the workers there are under a separate determination. These workers are the people who keep our society going. They are critical. Without them we would not have a well-functioning society—or a society that is functioning as well as it is. They are absolutely critical to the delivery of services and to our democracy. Civil society is an important part of our democracy.

The Greens indicated right from the start that we were supportive of that case, and I am pleased to see that we have now got to the point where we are discussing legislation that will deliver these outcomes—albeit that people are going to have to wait eight years. Although people do tend to stay for long-term periods in the not-for-profit sector, that is a long time to wait to see the final outcome of this legislation. Having said that, the Greens will be supporting this legislation. However, I do have some issues that I would like to traverse here. I would like to raise some issues that the Australian Council of Social Services has raised. Also, I indicate now that I have a few questions for the Committee of the Whole, which have been brought to my attention particularly by the not-for-profit sector, in terms of how this will actually operate. I do not have amendments, but if the minister can answer these questions in his summing up I will be more than happy to take those answers. If he cannot, I would like to traverse a couple of questions in Committee of the Whole.

I have been pursuing this issue over a series of Senate estimates. Some answers have been satisfactory and some have not been satisfactory. Subsequently, in discussions with the not-for-profit sector, I had concerns articulated to me about how some of this process is going to roll out. Having said that, as I said, we are supportive of the concept, but there are concerns about the process of how it is going to go roll out. While I do not share all the sentiments expressed in Senator Cash's contribution in this debate, I do share her concerns around how this will play out for the not-for-profit sector and ensure that they are still able to function in a viable manner.

ACOSS point out that they are supportive of this piece of legislation but they also have some concerns. They articulated in one of their briefing papers that one of the greatest challenges arising from the equal remuneration case has been to quantify the cost of the higher wages and ensure that representative government's supplementation funding will cover these costs. Recognising that there would be key challenges at the outset of the process, ACOSS have strongly advocated for a nationally consistent approach to government supplementation funding in responding to this case.

There we have an initial problem and there are a couple of issues that come up here. The way this is being delivered to not-for-profit organisations is that each government agency is going to be providing a letter of offer to each not-for-profit organisation or charity that it has a contractual relationship with. A number of not-for-profits have a lot of government grants—and we traversed in the previous debate the issue of red tape—across a number of agencies. While this deals with, I think, eight government agencies, some have regular, ongoing contracts with, say, three or four. So some organisations will be getting four different letters of offer from the Commonwealth. That is if the contract is directly with the Commonwealth. They will be getting four different letters. Admittedly, one letter will cover all the different grants an organisation has—which is better, I acknowledge than getting a letter about each grant—but they will still be getting three or four.

If they have a relationship with a state government that is part of a national agreement or a national partnership arrangement—and I traversed some of these issues in Senate estimates the week before last—the Commonwealth then negotiates with the states, not with the not-for-profit, even though the funding potentially is coming from the government via the partnership or agreement, as I understand it, and if the state is contributing some of the funding arrangement for that. That is another way that funding will be delivered. So you can see already that not-for-profits will be dealing with a number of entities over this. You can see why confusion is setting in. In my home state of Western Australia we have already had a process where the state government has put in a substantial amount of money. I have in the past taken my hat off to the Barnett government in this respect, in that they have already contributed a large amount of money to help the not-for-profit sector in the Western Australia. I acknowledge that it is not perfect, but it is making a significant difference and there has been significant progress made between the not-for-profit sector and the Barnett government over that amount of money. So here you have a sector that is already dealing with a state government in that process—which, I understand, has been quite long and complex.

I am not across the Queensland issue as much as I am across my home state's situation, but last year we were traversing the issue in Queensland because not enough money was being contributed to the process in Queensland. Some states have already made some progress. The New South Wales government was in the media a couple of weeks ago saying that it did not think the intended offer from the Commonwealth was enough.

However, I go back to where the individuals are with their negotiations with the Commonwealth. The not-for-profits get an offer from a Commonwealth department and it may or may not be adequate and they may in fact contest it. As I understand it, there is a process whereby they can contest that. I have now established through estimates—and I would like to know if this is in fact correct—that if I am not-for-profit A and I contest an offer from DEEWR, for example, it will not affect the offers that I have from the other agencies that I deal with if I am happy with the offer. Originally, there was a suggestion going around that if, as not-for-profit A, I contest that offer, that puts all my offers on hold.

Bear in mind that if I, as not-for-profit A, have three or four grants and am negotiating with three or four agencies at the same time, then I am also trying to work out what is going on through any grants, money or projects I have via a national partnership agreement where the money is being delivered via the state. Then I have to deal with the state over that process. So that is another complicating factor. These are the sorts of issues that I would like to get a bit clearer.

I think that is one of the reasons that ACOSS were strongly advocating for a more nationally consistent approach. They were also really clear that the full range of work undertaken by the not-for-profit sector needs to be taken into consideration and that funding needs to be delivered, determined and allocated through a transparent formula—and I have just traversed some of the complexities about negotiating this outcome.

I am not trying to minimise the fact that this is a complex situation, but it is very difficult for the not-for-profit sector to deal with this complex situation when what they are trying to do is deliver services to the community. This is time taken away from their real missions and real work.

The offer that the Commonwealth will be making will be based on their assessment of what work is undertaken by the organisation as part of Commonwealth related activities and under the industrial relations instrument. That is where it gets complicated for my home state of Western Australia, because Western Australia has not referred its industrial relations powers. So there is some disquiet and potentially some disagreement between what the Commonwealth have calculated as their contribution to the services that are provided by those workers that are employed under the federal industrial relations system.

I have traversed this issue in estimates as well, and I understand from the answers that I got in estimates, in particular from the discussion I had with DEEWR—it is all very well getting reassurance from DEEWR, but I would like the government to confirm this—that, regardless of how the Commonwealth has calculated the percentage of people employed by not-for-profit organisations in Western Australia that come under the ambit of this particular mechanism, if their calculation is wrong, they will still ensure that, if it is a higher percentage, all of those services will in fact be paid. So I am seeking government assurance on that particular point.

The other issue, which touches on the issue that I traversed before, is the implementation cost of this to not-for-profit organisations. I think this is where Senator Cash was going in terms of the impact it has on not-for-profits in terms of implementation. All the not-for-profits that I have spoken to—and I speak to a great many—support this mechanism. I am not for one minute saying the not-for-profit sector are not supporting this mechanism. But what they are very clear about is that there is an implementation cost around these particular issues. ACOSS termed it as an industry support package to ensure that there is additional support to the sector to be able to address this particular issue. I understand the government has not taken up that issue, but I would like to ensure that there is some measure of support for the not-for-profit sector to be able to engage in the ongoing process of negotiation, because it is very time consuming, particularly, as I understand from Senate estimates—and it would be good to have this confirmed—that offers will be going out some time in late November. I would like to confirm what the timing is for the offers that would be made through the state and federal negotiation process—the agreement/partnership process. What has been put to me by the not-for-profit sectors is they particularly would like to know—and it goes to that issue I raised earlier around appeals—the process by which services can appeal the offers made of government funding. They believe it needs to be an independent mechanism to determine the basis on which governments or departments determine services covered by the equal remuneration order, as well as to review the quantum of offers they have made. I would specifically like the government to address that issue.

They also have ongoing concerns that the process of supplementation funding by the Australian government should include an independent process of audit or evaluation throughout the life of the implementation period to ensure that the value of the equal pay decision is maintained. They appreciate—and I appreciate—that these bills are not specifically about that, but quite frankly we are not going to get an opportunity through this place to traverse these issues. They are fundamental to how this funding is going to roll out. They are fundamental to the ongoing viability of the not-for-profit sector.

I would appreciate the government answering those questions, if they can, during the summing up contribution. The not-for-profit community is vitally interested in these issues, in particular in my home state of Western Australia where we do have the added complexities of (a) not being part of the federal industrial relations system and (b) having already been through an equal pay equity process. I am not critical of that. Western Australia is in a lucky situation in that respect, but it does bring with it some additional complexities. I would like to traverse those issues through either the summing up or the Committee of the Whole. I promise I will do it very quickly.

12:31 pm

Photo of Don FarrellDon Farrell (SA, Australian Labor Party, Parliamentary Secretary for Sustainability and Urban Water) Share this | | Hansard source

I thank those people who have spoken in this debate. I will make a few comments about the legislation generally and then I will respond as best I can to the questions that Senator Siewert has asked me. We will see if that solves the problems. If not, then we will see what it will take to solve the problems.

This Social and Community Services Pay Equity Special Account Bill 2012 establishes a special account under the Financial Management and Accountability Act 1997, underpinning the Commonwealth's contribution of around $2.8 billion to Australia's social and community services workers following Fair Work Australia's historic equal pay ruling earlier this year. The Fair Work Australia landmark decision awards equal pay to social and community services sector workers in recognition of their tireless work for our community and details how those pay rises are to be delivered. Under the order, around 150,000 of Australia's lowest paid workers will benefit from substantial pay rises of between 23 and 45 per cent phased in from 1 December 2012. The vast majority—120,000—of the workers who will benefit from this order are women. These workers make a real difference every day to the lives of many vulnerable members of the community, taking on some of the most demanding jobs including counselling families in crisis, running homeless shelters and working with people with disabilities and victims of domestic violence or sexual assault. Around $2.8 billion in funding is being provided to meet the Commonwealth share of the costs of these pay rises for social and community sector workers. The pay increases are to be phased in over eight years in nine equal instalments from 1 December 2012 through to 1 December 2020.

The Commonwealth supplementation will be provided through funding drawn from the special account by eight Commonwealth agencies. It will be allocated to assist employers who are directly and indirectly funded by the Commonwealth for the purposes of the program prescribed under the new legislation and who are required to make payments to their employees under the Fair Work Australia order. The phased introduction recognises the complex funding arrangements in the sector which involve local, state and territory governments, not-for-profit organisations, commercial providers and the Commonwealth. A significant amount of funding will be provided to the sector through state and territory governments for agreements with the payments to the states and territories such as the national partnerships payments, the national specific purposes payments. This bill will enable funding to be paid to the COAG Reform Fund established under the COAG Reform Fund Act 2008 for this purpose.

Every day the social and community service sector delivers vital services to hundreds of thousands of vulnerable Australians. Not only are these workers deserving of a fair day's pay for a fair day's work, but properly valuing caring work and providing decent wages in industries dominated by women is an important part of keeping our economy strong and resilient.

There are some consequential amendments, assuming that this bill passes. I will comment on those before I start to respond to Senator Siewert's questions. The Social and Community Services Pay Equity Special Account (Consequential Amendments) Bill 2012 makes one minor amendment to existing Commonwealth legislation to complete the new arrangements. This amendment will insert into the COAG Reform Fund Act 2008 a note pointing out that an amount may be credited to the COAG reform fund under the new social and community services pay equity special account.

The first question of Senator Siewert relates to what the supplementation is covering. The response to that is a phase in over eight years as part of our equal remuneration order. The Commonwealth will pay direct funding through the Commonwealth and state agreements. The second issue relates to disagreements over the amount of supplementation and appeals. The response to this is that, if an organisation disagrees with an offer, they raise it with the relevant departments, provided there is evidence that their costs are higher than the government estimates, and then the government will recalculate. This information will be online in the next two weeks and in letters and offers.

The third question relates to Western Australia: has the government underestimated the costs involved in this? I know you are from Western Australia, so you have a special interest in this. The Australian government is committed to paying its fair share of the costs, and organisations will not be disadvantaged. The condition of the offers will be going out to all of the incorporated and public companies in Western Australia in November this year. The Commonwealth is negotiating with the states and the territories to deliver supplementation in a fair and transparent process.

Senator Siewert, I am sure you will indicate to me if there is something I have missed. If you require any further information, I am happy to attempt to provide that to you.

Question agreed to.

Bills read a second time.

12:39 pm

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

I would request that we go to Committee of the Whole. I will commit to try to get it done by the time we break at 12.45. I would just like to put some questions through the chamber that the minister could take on notice.