Karen Grogan (SA, Australian Labor Party) Share this | Link to this | Hansard source

The committee is considering the Fair Work Amendment (Protecting Penalty and Overtime Rates) Bill 2025, and amendment (1) on sheet 3408, moved by Senator Kovacic.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I was waiting for an answer from the minister as we finished up previously. If the minister would like to answer the question.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I remember that, but I don't remember the question! Would you mind re-asking the question.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Does the minister accept that this bill may lock employees out of choosing arrangements that, for them, balance flexibility and their own financial security?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

The Fair Work Commission general manager's 2024 report into individual flexibility arrangements paints a starkly different picture to the one that the minister has set out at the table in this debate. The report observed the following:

… IFAs were not utilised more widely due to a limited understanding and awareness of the entitlement. There was also a concern by employers that an IFA could be unilaterally terminated by the employee, leading to uncertainty.

The data is equally telling. Between 2021 and 2024, most people involved in making or responding to IFAs had experience with only a handful of them, 46 per cent reported just two to 10 arrangements, 15 per cent reported between 11 and 20 arrangements and only 10 per cent had experience with as many as 51 to 100 arrangements. Across multiple sectors, interviewees described the practical difficulty, and indeed the rarity, of actually implementing IFAs. Their words speak for themselves:

IFAs were an area that was often asked about, but more occasions than not, this did not translate into actually implementing the IFA.

Another interviewee said:

… I've worked for this business for 7 years and I can't even remember when we do IFAs … we just don't do them.

Another responded:

I don’t think IFAs have been used properly or they are used in the wrong context. So, I've seen that probably the understanding of when an IFA should or shouldn't be used hasn't always been consistently applied a lot of the time.

A union official conceded that the complexity of IFAs deters employers. They said:

Employers routinely refuse. And I would say that the main reason they refuse is because they don’t understand it. It's too hard. I've got enough things to think about.

Employers also pointed to termination provisions and the uncertainty of passing the better off overall test, particularly when non-monetary benefits were concerned, stating, 'There was uncertainty around the status, and of a non-monetary benefit as whether it was sufficient to hold the validity of an IFA, and so, for that reason, combined with the unilateral termination provisions there was a reluctance to use them.'

The report further highlighted that in some cases enterprise agreements clauses themselves deliberately narrowed the scope of what an IFA could cover, further restricting their practical utility. Against that backdrop the government's repeated assurances that vulnerable workers, particularly women—as I outlined earlier—retain flexibility through enterprise agreements, and IFAs ring quite hollow.

Minister, were the commission's findings showing that the IFAs are rarely used, highly complex and create legal uncertainty considered by the government when they were drafting this bill?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

The point I was making, where this question comes from, is that there remains the ability for workers to enter arrangements with their employers which change terms of employment beyond what is set in an award. That can be done through IFAs. That can be done through collective agreements.

So I'm not saying that every employee who wants an individual arrangement has to pursue an IFA. The point is that there are arrangements in place for employers and employees to come to agreements. But what we're doing here is talking about awards.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Could you outline for me what that mechanism is outside of an IFA or an EBA.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

There are a number of ways that employers and employees can enter agreements around terms of employment: EBAs, IFAs and common law contracts. That is all still possible and not interfered with through this bill. This bill is about protecting penalty rates in awards.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

To be clear, outside an EBA and IFA, is the mechanism a common law contract?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

They are the mechanisms I can think of that allow for agreements to be reached, yes.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, the Fair Work Commission's own report makes clear that IFAs are areas often asked about but, more often than not, 'this did not translate into actually implementing the IFA'. The commission acknowledges their limitations. Does the government disagree with the commission's findings?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I've got no comment to make regarding the commission's findings. This is not a bill about IFAs; this is a bill about awards.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, I note the IFAs, and I'm asking questions about them, because in the previous session you spoke to me about IFAs being the solution for flexible arrangements. I'm putting to you now that IFAs are not actually a practical solution. I want to get a picture of whether you believe that that is the case or not.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I don't think I went as far as saying that IFAs were the solution, I was putting it forward as an example of a way that employers and employees can reach agreements that provide different terms to the award. I've obviously given some other examples where that can be done as well.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I note that during the hearings the department also pointed to IFAs as a particular solution. I'm trying to understand why something that the commission themselves has called problematic is being pointed to both by the minister and the department as a particular solution. You have said this bill will protect vulnerable workers, particularly women—this is where we led into the conversation around IFAs—while still affording them flexibility via IFAs. But the Fair Work Commission's report shows that IFAs are too hard for many employers, rarely implemented and easily terminated. If the very mechanism you are relying on to deliver flexibility has been found to be so ineffective, how can IFAs genuinely safeguard that flexibility in practice?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Again, I'm not saying that IFAs are the way for people to get that flexibility. They are an option, as are the other mechanisms that I was talking about before. Again, we need to remember that what we're talking about here is a bill that prevents the Fair Work Commission from cutting penalty rates in awards. If employers and employees want to go and make different agreements, they're entitled to do that through that range of mechanisms. This is about the many employees across the economy who are employed in line with the award. This gives some security that in future their penalty rates cannot be taken away from them under the award.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, earlier you told the chamber that the bill won't impact IFAs. Based on the conversation—the questions and answers we're having now—if your government isn't addressing the unworkability and barriers to entry identified in the commissioner's own report, can you explain to me how, in practical terms, IFAs are meant to deliver genuine flexibility for workers, particularly in the case that I outlined earlier? How can an IFA be used to deliver that flexibility, as one of the solutions that you offered?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Again, this is not a bill about the structure of IFAs. I am simply making the point. I accept what you've said—that there have been reservations expressed about IFAs. Perhaps people might like to choose other mechanisms, such as enterprise bargaining agreements. God forbid—maybe they'll even make an agreement with a union, as well as individual workers. It's simply an example. The other point that should be made is that after this bill is passed it will remain possible for exemption rates to be included in awards. The point is that the awards will not allow for penalty rates to be cut.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, stakeholders told the Fair Work Commission that IFAs are confusing, are rarely implemented and create uncertainty. For the benefit of the workers you say could rely on IFAs to obtain flexibility, could you explain step by step how an award-reliant single mother in a clerical role under the Clerks—Private Sector Award, not covered by an enterprise agreement, is to enter into an IFA to finish at 3 pm to collect her children and then make up the hours later from home with a working-from-home agreement instead of working penalty rate late shifts. In doing so, can you also explain to me how her employer is to navigate the better off overall test, the written documentation requirements, the risk of unilateral termination and the general confusion and reluctance to use IFAs that your own department's report identified. How do they do that?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not going to give a step-by-step process on how someone enters into an IFA. The Fair Work Commission has plenty of explanatory materials on their website for those who choose to do so. The more these questions get asked, the more I question whether the opposition actually supports the principle of this bill, which is simply about protecting penalty rates in awards. That's what it's about. If you question that, then you are saying that penalty rates should be able to be removed from awards. I'm surprised that that's the position of the opposition.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Thank you, Minister. I accept your concerns because this is very confusing, and it's even more confusing for those that want to implement or retain agreements that they do have, particularly where their circumstances may not meet a blanket set of circumstances. That leads me to think about flexibility. Did the government consider how this bill might restrict working-from-home arrangements currently under consideration in the clerks award test case?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm pleased to see that the Liberal Party has changed its position on working from home and is now the guardian of working from home. Congratulations! Welcome to the club. I seem to remember you were one of the more sensible voices on that matter, Senator. This bill will have no impact on working-from-home arrangements.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

How does the minister justify compliance obligations that may require intrusive recordkeeping of hours for employees working remotely?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

There are no new obligations on employers here relating to recordkeeping or anything else.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Does the minister accept that many employers could refuse to offer working from home to avoid breaching recordkeeping obligations?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

How does the government reconcile this outcome with the widespread demand from employees for greater flexibility in working hours and location when multiple employer groups suggest that this actually will impact the ability to work from home? Should there have been greater consideration as to whether this is an unintended consequence of the legislation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, earlier, when I was asking questions in relation to IFAs, you spoke about enterprise bargaining being another option, another alternative for businesses to enter into and, I think you noted, 'heaven forbid', perhaps engaging with the union. Could you tell me, Minister, how the government expects small and medium businesses who are already struggling significantly under a compliance workload and a cost-of-doing-business crisis, to afford the cost and time burden of enterprise bargaining as the only way to perhaps secure customised pay arrangements, given it appears that IFAs might be a problem.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

It's a matter for every business whether they want to enter into an enterprise agreement or not, and, as you know, many businesses choose to pay on the award. All that this will mean is that a small business who currently pays their employees in line with the award today will continue to pay those employees in line with the award tomorrow, when this bill is passed and when it commences. It's just that the award, in the future, won't be able to remove penalty rates. As long as they want to keep paying the award, then that's what they'll do. The kind of businesses that you're talking about, I think, are those who largely pay in line with the award now. As long as they keep doing that, there are no new obligations for them.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Why does the bill effectively push small businesses towards union representation as the default in bargaining processes? We've established that IFAs are rarely used. The alternative is to have particular agreements. As I outlined earlier with my case of the single mum that had a specific agreement with her employer that could now be retrospectively captured under this legislation, the option for them is to go to the EBA. Why isn't there a process where they can continue the arrangement that is beneficial and acceptable to both of them without engaging with a union for that purpose?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

All the existing arrangements remain unchanged. Those who wish to pay their employees in line with the award will continue being able to do so. Those who wish to take a job that pays award wages and has award conditions will be able to do that. Those who wish to do an enterprise bargaining agreement, with or without a union, can do so. So nothing changes in that respect.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I think it may change based on the potential retrospectivity of the bill. Given it can take a small business somewhere between six to 12 months to negotiate an enterprise agreement and the cost of that is somewhere between $30,000 and $70,000, does the government consider that to be an affordable and reasonable pathway for flexibility for a small business and their employees? It's fine if you're a large retailer, a major bank or a large institution, but, if you're the local cafe, retail shop, vet, dentist or any small business that is relied on for people's day-to-day needs outside of major institutions, is that fair? Is that reasonable and affordable in your view?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No-one is forcing a small business to enter an enterprise agreement. Plenty of small businesses pay in line with the award, and I suspect that will be the case after this bill's passed.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I'm trying to understand why we are then legislating in a way that pushes those small businesses into those costly bargaining processes rather than allowing those simpler, direct arrangements with their own staff and with the people that they deal with on a day-to-day basis. Why can't they just do that?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We're not pushing anyone in any different direction. We're simply saying that you can't cut penalty rates in awards.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

The Bills Digest says that your bill may make it more difficult for enterprise agreements with rolled-up rates of pay or annualised salaries to be approved. To quote directly from the digest:

The Bill also does not provide protections for penalty or overtime rates in enterprise agreements. However, existing requirements concerning the approval of enterprise agreements, alongside the new measures in the Bill, may make it slightly more difficult for enterprise agreements that include 'rolled up' rates of pay or annualised salaries to gain approval in the future.

Throughout the inquiry into this bill, the government and unions insisted that, if workplaces want flexibility, they can achieve it through enterprise bargaining.

Why is the government now making it harder for workers and employers to include flexible arrangements in enterprise agreements?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Well, there are two parts I think your question around why we are doing this. The only impact I can think of that this would have on the Fair Work Commission is that they will clearly need to benchmark what penalty rates equate to in someone's wage versus a rolled-up rate and that—oh, looking sharp, Senator Sharma!

The TEMPORARY CHAIR: We're all getting dressed up for the ball.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Wait 'til I get changed!

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Well, it's in your hands how long you have to get changed. Sorry, I've lost my train of thought. The only impact I can think of that this will have on the Fair Work Commission in terms of the time it will take and the complexity of approving EBAs would be to compare what the penalty rates would work out to versus what a rolled-up rate might be and how they compare. So, sure, that's a little bit of work, but the commission does that sort of thing all the time. I think your actual question in the end was effectively, 'Why are you doing this?' As I said before—because we think penalty rates matter.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

My question was more around the flexibility element. In answering your questions before about where this line of questioning is coming from and if we actually oppose penalty rates, I again reaffirm, as I have multiple times, that we do not and we do not have any issue with protecting penalty rates.

What we're also trying to do is ensure we protect workers' rights to flexibility, which is something that has become significantly important to Australian workers, particularly as they navigate a cost-of-living crisis and a housing crisis. That flexibility is such an important element of making everyday life just that little bit simpler when things are already very hard. So the question was around why it is now more difficult to negotiate flexibility or flexible arrangements as a result of this legislation, because it must now be done with an IFA—which, we have made very clear, are difficult, complex and rarely used—or an EBA.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

It comes down to the principle that drives this policy, that we took to an election and that was supported at an election, which is that penalty rates matter and that people who work those unsociable hours should be compensated more for doing so.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Do you also assert that flexibility matters?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Not when it comes to cutting people's wages.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Do you think people have the right to choose a pay arrangement for themselves where they counter the financial benefits and the flexibility elements, including the security of ongoing regularity of income?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We think it's important to preserve, for all workers, penalty rates when they work unsociable hours.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

In the prosecution of this bill, there's been commentary around 'closing the loophole' in relation to the legislation. How does the minister respond to the Law Council of Australia's view that there is no loophole allowing underpayment through rolled-up rates?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

They're entitled to their view, but we took this policy to an election, and the Australian people voted for it.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I'm trying to understand your answer in terms of the Law Council of Australia's view in relation to a loophole not existing. Does a loophole actually exist, or is it a hypothetical loophole?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I can't explain why the Law Council chose to express that view. I certainly don't recall, as the former minister on this portfolio, talking about this as a loophole.

Certainly, we have talked about some of our previous legislation as closing loopholes, such as same job, same pay and such as the fact that there were no minimum rates for gig workers et cetera, but I couldn't explain why the Law Council have said that.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I think it's because the explanatory memorandum, from memory—and I would have to check—notes a reference to a loophole, so there would have been some reference from the government in relation to that. Would you have anything further to add?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Again, I don't know exactly why those words were used in the explanatory memorandum, but, to the extent that there is a loophole, what we're talking about is the fact that, under the current law, without this amendment, it is possible for awards to be varied in a way that leaves workers worse off through the loss of their penalty rates, notwithstanding any additional compensation they receive. I've already put to you some evidence that was presented by at least one union, which demonstrated that would be the effect for workers in the retail sector.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Thank you, Minister. I note your comment that there were concerns that it was possible for awards to be varied in a way or for payments to be varied in a particular way—rather than it actually happening. So it's a hypothetical. Why legislate in response to a hypothetical concern, whether or not that's a hypothetical union concern, rather than real decisions of the commission?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

All parties are entitled to put forward evidence of what they factually say will be the effect of a variation to an award, and that's what's happened here. I might remind you, Senator, that before the break you were putting a number of hypothetical cases to me.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I was, and they were hypothetical cases in relation to how the legislation might work, based on hypothetical scenarios. I think that that's reasonable and fair. Again, we have the Fair Work Commission, whose role and purpose is to protect workers. Can you explain to me how the government justifies undermining the independence of the Fair Work Commission through this bill, effectively taking away the ability for the Fair Work Commission to make these decisions if and when they occur or when they come to them. Why aren't they given the ability to continue to do the work that they're already doing?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think I answered that question earlier today in saying that of course the Fair Work Commission retains the ability to make its own decisions but that there are plenty of other sections within the Fair Work Act that set parameters for the Fair Work Commission in making its decisions, and this would be a new one.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

We have a problem with productivity in our country at the moment. We had a productivity roundtable last week, which has been much publicised, raising a couple of very interesting ideas. The empty bedroom tax, I think, was one of those, which has been discussed here today.

We'll go back to general productivity. Could you please help me understand and explain to me how the government reconciles this bill and the potential impacts of this bill with the fact that Australia's labour productivity is at its lowest level in 60 years, particularly as we've outlined the potential impacts to Australian small businesses.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm very glad you asked me this question, Senator, because this gives me the opportunity—an opportunity I haven't had for some time, since changing portfolios—to say that one fundamental difference between the Liberal Party and the Labor Party when it comes to productivity is that the Labor Party does not accept that cutting people's wages is the route to higher productivity. There is plenty of factual evidence that backs up that position. The decade prior to our coming to office, when the coalition pursued a strategy of wage suppression, delivered the lowest productivity growth over a decade that we had seen in Australia for 60 years. So, if cutting wages or keeping wages low were the route to higher productivity, then we would have seen the coalition deliver much higher productivity than the lowest productivity growth over a decade that we had seen in 60 years.

The way we get higher productivity growth in Australia is not by cutting wages but by investing in people, through competition reform, through the renewable energy transition and through the various other things that the government is doing to lift productivity.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, no-one is suggesting that we cut wages, but it's an absolute fact that this legislation will create more regulation that Australian businesses, particularly Australian small businesses, need to navigate. Australian small businesses are already spending 15 hours a week navigating compliance and red tape, which is just under 40 per cent of the standard working week. So could you explain to us why the government has ignored the Business Council's warning that the bill will divert resources from productive work into compliance for those businesses.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I utterly reject that. It's no secret that there are issues on which the government and the BCA disagree. I did note the BCA statement yesterday welcoming my announcement that we will be accelerating EPBC reforms, so thank you to the BCA for that, but there are other issues we disagree on, including workplace relations. There is no reason to expect that this will add any further compliance costs to small businesses, because it is about simply maintaining current arrangements for award based workers rather than allowing their penalty rates to be cut in future. If employers employ people on the award rate now, they can continue to do so into the future; it's just that in the future the penalty rates can't be cut.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, I note your disagreement with the BCA on this matter. Speaking about another industry group or industry employer, ACCI, their evidence suggests that small businesses will face repetitive manual reconciliations based on this legislation, only to deliver lower pay outcomes. How do you respond to that, particularly given that this is yet another significant employer group that is pointing to the challenges or the unintended consequences, perhaps, of this legislation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I don't agree with that view.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Why introduce legislation that will make rostering more rigid and complex rather than enable flexibility? Australians want flexibility in their work. We have these employer groups, many of whom sat in particular forums you had and were at your productivity roundtable last week, and whom, as you say, you agree with on many things. This is a very important or significant impact on Australian businesses. Why would you not consider their comments, their views and their warnings—I think it would be best to note them as warnings—that this will make it harder for Australian small businesses, particularly in relation to reporting and rostering?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

As I say, I don't agree with their views. More importantly, those employer groups opposed this policy when it was announced during the election campaign. The Australian people had their say, and we're simply delivering on a commitment we made to the Australian people.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

These are warnings from Australian business groups—the same groups that attended the Treasurer's productivity roundtable last week—but their views are being dismissed in the drafting of this bill. Their concerns, their views, their warnings, whatever you want to call it—you're basically saying they are wrong. Could you tell me what you actually need from them to actually accept that what they are saying might have some validity, or did you just dismiss it out of hand?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I don't think I said I dismissed it; I said I disagree with their views. We could not have been clearer before the election what we intended to do here. In fact, I think I remember announcing this policy on Easter Sunday. Was it Easter Sunday? It was certainly over the Easter holidays. I remember all the employer groups disagreeing with it, opposing it, campaigning against it. The Australian people had their say, and now it's our role to fulfil that commitment.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, do you consider it still your role to follow through with a commitment if it has become clear that there are potential risks and unintended consequences that make the legislation difficult for employers and employees to navigate?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I place a very high premium on governments delivering on their commitments, and everyone in our government does as well. I don't think it's exactly a surprise to hear, with the greatest of respect, employer groups opposing changes to workplace laws that are about protecting workers' wages. The same groups opposed every part of our workplace relations reform agenda in the last term of office. Senator Cash went as far as saying it would send us back to the Dark Ages, that it would empty supermarket shelves, that it would close down Australia—all the usual hyperbole you get from Senator Cash. She has moved onto a new portfolio but maintains the hyperbole. All of those statements proved to be wrong. Employer groups have a role to play. They represent the views of employers. I get it. They're not always right.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I think no-one amongst us is always right. I guess that is the question that I'm asking you. Rather than asking if you agree or if you think the employer groups are right, my question is actually: do you have concerns that perhaps there are some issues with this legislation? Despite the fact that you went to the election with it and that the intent is to deliver, if it does create problems for workers and employers, particularly as it impacts flexibility and productivity, should we not pause to see whether we should make appropriate amendments to ensure that that does not occur?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No, we shouldn't—and I welcome the member for Goldstein to the better chamber! No, we shouldn't. What we should do is pass a law that delivers an election commitment that we made to the Australian people, that the Australian people voted for and that will protect voters from having their penalty rates cut.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Respectfully, Minister, it is not our job to wave through election promises in this chamber. This is the chamber of scrutiny, and it's a job that I think we all take very, very seriously. That comes to the core of my questions, and I want to ask that question again to you. I acknowledge and understand that it's an election commitment. It was taken to the election. You have won the election; you want to deliver on that promise. But the scrutiny that has taken place in this chamber and in the committees of this chamber has shown that there are potential issues and potential unintended consequences that could impact the flexibility for Australian workers in the arrangements that they have negotiated with their employers. If that has occurred, and if that has become clear, which it has via the evidence in the inquiry, should we not take pause to make appropriate amendments to ensure that what we are delivering to the Australian public is fit for purpose and delivers on their needs?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

The government does not accept the views that were presented to the inquiry and for that reason would not be supporting the types of amendments that you're suggesting. It's obviously a matter for you and your party to decide whether you're convinced and would support those amendments.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, how do you respond to Clubs Australia's concerns that section 135A as drafted could invalidate longstanding above-award pay provisions in the clubs award?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We don't agree with that view, and existing arrangements will continue. It's only if they're varied; the only thing that will change here is the inability of someone to seek to vary an award. If there's an award in place today, it will remain in place tomorrow.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, do you accept Master Builders Australia's evidence that the protections the bill seeks to introduce already exist following earlier amendments to the act?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

There are lots of things that you don't seem to agree with. We have the Business Council, we have ACCI, we have employer groups, we have Clubs Australia and we have Master Builders all providing warnings and flagging concerns in relation to this legislation, none of which have been considered or accepted. Could you tell me why we risk freezing modern awards into static, outdated instruments that fail to reflect the nature of contemporary work and contemporary workplaces?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I don't think we do risk freezing modern awards. There are provisions which remain in place for modern awards to be varied on the application of a party. What we are saying as a community—and the Australian people agreed when they voted for this policy—is that penalty rates are special and deserve to be protected.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, how does the government then justify drafting legislation that, again, may unintentionally reduce the wages of managers and staff who are currently on above-award arrangements?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

If they are the arrangements that those employees or managers are paid under, they would continue. This is this point about retrospectivity. We're not changing arrangements that exist right now. What we're saying is that, in the future, if an employer wanted to vary an award in a way that cut penalty rates, that would not be possible to do. But, if a manager is receiving particular arrangements now under the award, that stays in place.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

My next question relates to the ones that I'm ready asking. I'm trying to get an understanding of how this legislation was drafted and the thinking behind it. Why would we legislate to prohibit mutually beneficial award variations, where an employee and employer have said: 'This works for both of us. Let's do this'? Even in the simplest of circumstances, why would we actually say to them: 'You can't do that. We will determine for you, via this legislation, what your arrangements can be'? Why insert legislation into a mutually beneficial arrangement between an employee and employer, particularly as it relates to flexibility?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

There are a couple of ways I will answer that. For starters, I don't accept that those arrangements are always mutually beneficial in the sense that both parties win. As I've already said to you, there has been evidence produced that shows that the elimination of penalty rates, even when rolled-up rates are provided, would still see workers' pay go backwards. So it might be beneficial to the employer, but it is not beneficial to the employee to have their pay go backwards. More broadly—and, again, I know I've said this or similar before—the current laws make all sorts of rules about the sorts of things that can and can't go in awards. We've got the National Employment Standards, below which people cannot be paid. We as a parliament and as a community have decided that some things are sacrosanct, and we say, and the Australian people said, that penalty rates are sacrosanct as well.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Just so I understand, are you saying that the government and, if and when the legislation passes, the parliament have said that certain things are sacrosanct, and that that means an Australian worker who seeks to negotiate an arrangement with their employer that benefits them for a variety of different reasons, like the hypothetical woman that I described earlier, can't have that, because ideologically that is unacceptable and sacrosanct?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

It is still possible for those sorts of arrangements to be reached between employers and employees. We're back to where we were half an hour ago, going through the options there.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

KOVACIC () (): Respectfully, via an IFA or an enterprise agreement; is that what you're suggesting?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm advised that, even when these changes pass, it is possible to pay an employee a higher rate. What you can't do is pay them a lower rate and cut their penalty rates and have them go backwards. That would be the practical effect of this.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Just to clarify: a lower rate compared to what—for themselves or a hypothetical circumstance?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

As I've said a number of times, it's still possible to have exemption rates or rolled-up rates in awards and in agreements that are reached at the workplace level. If a particular employee on an award would have received, let's say, an extra $10 an hour for their shift through penalty rates, what's not possible, following this legislation, is for them to get $5 extra an hour through a rolled-up rate. You can reach an agreement that pays $10 or more; you can't go below that. That's what we're saying here.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, are you able to tell us why the bill uses the phrase, 'The Fair Work Commission must ensure', rather than 'may ensure', when this drafting risks compelling the commission to alter existing terms rather than it exercising its discretion?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I've already made the point several times that it's not unusual for the Fair Work Act to provide parameters for the Fair Work Commission to make its decisions around. We're saying here that, in practice, the commission must not allow for penalty rates to be cut. That was the position we outlined before the election and that's the position we now seek to implement.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, I acknowledge your comments around setting parameters for the Fair Work Commission and I acknowledge you have said that previously, but the drafting doesn't set a parameter; the drafting says the Fair Work Commission 'must ensure' rather than 'may ensure'. Could you explain to me how that is setting a parameter? That is, in my view, defining an outcome.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I've said a few times now that there are other provisions within the Fair Work Act which, if you like, dictate to the Fair Work Commission what they must do. In fact, section 134, which sets out the objective of modern awards, starts with subsection (1):

The FWC must ensure that modern awards, together with the National Employment Standards, provide a fair and relevant minimum safety net of terms and conditions, taking into account:

(a) relative living standards …

(aa) the need to improve access to secure work …

(ab) the need to achieve gender equality—

and so on. The provision we're seeking to introduce here is hardly the first time that the Fair Work Commission has been told that it must do certain things or must consider certain things. That's one example. I'm sure I could pull out dozens more.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, why has the bill failed to define what constitutes a reduction in remuneration, given it's been so prescriptive in other elements, particularly in the context of narrowing overtime hours or reclassifying allowances?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

That is exactly the type of thing that would be left to the commission to determine using its discretion. They have to consider all of those things that you've just given as examples to determine what amounts to a loss of remuneration or whatever the term exactly was. They've got to do those calculations, rather than being told, 'This is how you've got to work it out.'

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I guess that's what confuses me—this imbalance of discretion versus prescription. We have a Fair Work Commission that already has the remit of protecting penalty rates. We're saying, 'We don't trust you or believe you're capable'—effectively—'of protecting penalty rates under your current function so we're going to legislate.' But for other elements you're saying, 'No, no, use your discretion to be fair and reasonable.' Can you help me understand why it's one case here and another case in relation to the reduction in remuneration question that I asked prior?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I guess the distinction is that we use the word 'must' in the act when we are setting out the principle that the commission must take into account. The way it works that out and the way it reaches its decision is a matter for its own discretion. That's probably the simplest way I can explain that distinction.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, are you able to tell us why the bill doesn't clarify how annualised salary provisions are to be assessed against penalty and overtime entitlements, leaving this open to confusion and speculation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm advised that existing section 139(1)(f) on annualised salaries will continue to apply.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Earlier we discussed the ACTU statements in relation to retrospective operation. I'm curious to understand why, in the drafting of the bill, there was no clause expressly excluding retrospective operation, given that the ACTU has acknowledged that it could be applied and given that industry groups have indicated that this is a potential unintended consequence. Surely it's a simple way to navigate this potential problem.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

In my experience it's not typical drafting practice for legislation to say that things don't operate retrospectively, because it's unusual for legislation to operate retrospectively. That's why, on occasion, you see legislation say it is going to operate retrospectively. If it doesn't say that, it operates prospectively. That's the case in all legislation that we consider.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Just to clarify finally, you don't have concerns, given the ACTU's acknowledgement that it could be applied to existing awards and effectively be retrospective?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Why does the bill's drafting not distinguish between legitimate above-award arrangements and unlawful underpayment, which are two very different things—thereby risking the capture of arrangements like the clubs award provisions that I spoke to earlier?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Sorry, I was momentarily distracted by another dashingly dressed senator—and, no, I'm not talking about you, Member for Goldstein; I know you thought it! They're one of ours, actually. Sorry, what was the question again?

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I'll try and remember how I said it. Why does the bill's drafting not distinguish between legitimate above award arrangements and unlawful underpayment, which are very different things—thereby risking the capture of arrangements like the clubs award provisions that I referred to earlier this evening?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

There are a couple of fundamental points where we aren't on the same page, and this includes the clubs award as well.

If an award allows for workers to be paid certain amounts as penalty rates and certain amounts as base pay, that will continue into the future, and any variation won't require payment by an employer of underpayments for things that have happened in the past. This bill is about changing arrangements for the future. If an award at the moment allows for people to be paid certain penalties and certain base rates of pay, that will continue into the future until the award is varied.

When it comes time for the award to be varied, what we're saying is that penalty rates can't be taken away in that award. This retrospective argument is, with respect, wrong, and I know it's largely employer groups who are making that argument. It's not about saying that what people were paid five years ago was wrong and you've got to repay them for an underpayment. It's about saying what you will need to pay them into the future.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Noting your comments that the employer groups are wrong and that the employer groups represent employers, many of them large employers as well, there is clearly confusion in relation to the operation of the bill. Why would we not then simply articulate that it is not retrospective in the drafting of the bill? Wouldn't that make it simpler? We've had a long discussion here about whether it is or whether it isn't, and there are a lot of concerns and there is clearly a lot of confusion. Why would we not just do that? Why wouldn't we simplify this piece of legislation and make that crystal clear?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Every piece of legislation that this parliament considers operates prospectively unless it's said otherwise.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Why then, given all of these concerns, wouldn't the government consider a regulatory impact statement for this legislation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

It's not imposing any additional burdens on employers.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Why is the bill drafted in a one-size-fits-all manner without exemptions or carve-outs for small businesses, despite the obvious and disproportionate compliance burden of additional legislation on small businesses?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think I answered that at the very beginning of the committee stage, which is to say we don't distinguish between employees of large or small businesses when it comes to penalty rates.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

At a time when productivity is at a 60-year low, which I referenced earlier, Australians deserve policies that lift output and not something that, as I noted before, is one size fits all and stifles flexibility. Since your government came into office, productivity in this country has fallen by more than five per cent. Australians are working harder, but they're taking home less, and it is tough. Whether you're an every day Australian or a small-business owner, things are very challenging. Many workers prefer the stability of a higher income and more consistent salary base, as I've articulated before. It helps them with budgeting, with growing their superannuation, with their borrowing capacity and with avoiding income volatility in Centrelink payments. These are all things that are very important to Australians. Again, I go to the question of a regulatory impact statement and the fact that the government hasn't conducted one. Why would you expect the parliament to be asked to legislate on this blind, without that impact statement?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

As I said before, this bill does not impose any additional obligations on employers, and I couldn't agree with you more about the need to lift wages in this country. That's exactly what Labor's workplace relations reforms have done over the last three years, and every single one of them has been opposed by the coalition.

(Quorum formed)

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Again, I'm referencing the lack of a regulatory impact statement and the fact that one was not done before introducing this bill. What concerns me is—and I would really like to get a deeper understanding of this—given that the inquiry evidence in particular has now highlighted that there are a number of problems and there is confusion and a clear divide between the evidence from employer groups and unions as to the operation and function of this legislation, why wouldn't you get that regulatory impact statement? Given that the problems that you're trying to seek are hypothetical and untested, why not just proceed to that point and take away the confusion and concern? As you articulated earlier, your view is that the employer groups are wrong. Why not use a regulatory impact statement to actually prove that they're wrong?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

The Office of Impact Analysis determined a formal policy impact analysis was not required for this reform as the bill does not impose new obligations on employers and instead focuses on the parameters of the commission's decision-making powers.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

And has your view changed or been altered at all, given the inquiry evidence which, I'm assuming, was after the advice from the department?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

My view has not changed.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Can I confirm that that advice was provided prior to the inquiry evidence?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Yes.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Shouldn't the inquiry evidence then be paused for the government to go back to the department and say, 'Are you sure you've got this right?'

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We were not persuaded by that evidence.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

You were not persuaded by the evidence of organisations who were then invited to the productivity round table put together by the Treasurer to seek guidance on the productivity of this country or the impacts to productivity in this country? So their information is useful in one environment, but when it comes to concerns in relation to this legislation the government is unmoved?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We didn't make it a compulsory rule of being an attendee at the round table that you had to agree with the government on every point. We included a cross-section of views. But we were not persuaded by the evidence from those groups. As I say, it's not unusual for employer groups to oppose changes that Labor governments make to workplace relations laws.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, what is the government's estimate of the bill's impact on productivity, noting that we had the productivity round table just last week?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not aware of whether any particular work was done on that for this bill. I make the point I made before: if coalition parties or employer groups were correct in saying that lifting wages or stopping wages from being cut was the way to lift productivity, then we wouldn't have seen the worst decade in 60 years of productivity growth under a coalition government which suppressed wages. Suppressing wages did not lift productivity growth under the coalition. It is not the way to lift productivity growth, and it's not the way that this Labor government intends to seek productivity growth.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

That's raised a number of questions in my mind, the first of which is: did the government consult the Productivity Commission in the drafting of this bill?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No, but they were entitled to make a submission in the way that every other Australian organisation was.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

In the inquiry evidence that didn't move the government to reconsider whether we needed to make any changes to the bill. In relation to productivity, let me think about this. The Productivity Commission was not consulted, there was no modelling done in relation to the impact on productivity and the most significant piece of work the Treasurer has done since the election has been the productivity round table. So we have a piece of legislation before the parliament that we are speaking about now that was subject to an inquiry where a large portion of the evidence suggests there are problems with this legislation, particularly as it relates to impacts on productivity, particularly for Australian small businesses, yet the government is saying: 'There is nothing to see here, everything is okay and there are no impacts from this. We don't need advice from the Productivity Commission and we didn't need to discuss the impacts more broadly.' Can you help me understand how those two fit together, because that doesn't make sense to me at all.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm pleased to see that at least one member of the coalition is embracing the fact that the government held a productivity round table. Senator Kovacic obviously attaches quite a lot of importance to the productivity round table. Unfortunately, the shadow Treasurer didn't seem to think so, and I think multiple coalition figures—probably including the ones sitting up the back there—talked about it being a talkfest. Good on you for seeing the benefit of bringing different views together. It's a bit like how there's been a conversion on work from home from some members—although not from the member for Goldstein, who regards it as apartheid, given the remarks he made in the media recently. Some people have got a little bit of learning to do, including about modern history. Be that as it may, there is no evidence whatsoever that cutting people's wages delivers higher productivity growth. In fact, there is evidence to the contrary; it's called the Abbott-Turnbull-Morrison government.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

With respect, Minister, my question didn't relate to cutting people's wages. It related to the productivity round table, and I note that it has been referenced as a talkfest by many. I would suggest that the answers to the questions here this evening suggest that perhaps it was more of a talkfest than a productivity round table, because a key piece of legislation that this government took to the election as an election commitment—which you articulated earlier was very important to deliver—was not raised or assessed with the Productivity Commission. There was no financial or economic modelling done in relation to it and it wasn't discussed at the round table. And the people that you did invite to the round table and who you note may or may not agree with you but could provide a contest of ideas and could scrutinise what's been put forward—just hasn't happened. Why do you not want proper and appropriate scrutiny of this legislation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm now not sure whether you support the productivity round table after all, Senator. You've fallen back in line!

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

We'll keep you guessing!

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Primarily, that sort of analysis is not needed because it doesn't change existing arrangements and it doesn't impose new obligations on employers.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

The problem is that—and I acknowledge and understand what you are telling me—evidence to the inquiry of this parliament, of this Senate, gave us different information. Some of the information is in line with what you have stated, but there was a significant amount of evidence contrary to that. So I would like to understand why that would not be considered, particularly the unintended consequences around productivity and flexibility and the impacts to both workers and small business before the passage of this legislation. Why go blindly and say: 'We're not listening to you. You're wrong; we're right,' despite significant evidence to the contrary that was quite credibly presented?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I don't think I ever said that we didn't consider that evidence. We just disagree with that evidence.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Could you tell me how and in what manner it was considered?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

The very smart people sitting to my left spend a lot of time trawling through evidence that's provided by Senate committees. I'm sure the minister considered that evidence as well, and the ultimate result was that we didn't accept that evidence. We decided it was a good idea to deliver on a commitment that the Australian people voted for to stop penalty rates being cut.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Could I ask if there was a briefing from the very capable people who went through the evidence to suggest that there were concerns there, or was it very much, for want of a better description, a tick-a-box exercise?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

The very capable people sitting beside and behind me considered the evidence so much that an amendment was made to this bill in the House of Representatives to clarify some of the points that employer groups raised. I think that's pretty good evidence that it was considered.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Could you confirm if that was before or after the Senate inquiry?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'll clarify that, but I guess the general point I'm making is that people's concerns have been listened to. Sometimes they've been acted on and sometimes they haven't. That's how it works.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

My point of clarification—and I would like you to come back to it—is that the amendments in the House were not triggered, let's say, by the Senate inquiry. So I would like to get an understanding of when those amendments were made relative to the inquiry and the report from that inquiry.

We've talked about the different work that was done and the modelling. I'm confirming that the government didn't commission any economic modelling before introducing this bill. Could I also confirm that the government didn't model the compliance hours and costs that small businesses could potentially face under this bill?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not aware of any such modelling occurring, and that would be because there is no additional burden being imposed on employers.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Now that there is significant evidence from the Senate inquiry suggesting that there may potentially be a burden to small businesses and that that could be an unintended consequence of this bill, would you consider that modelling should be done before the passage of the bill to ensure that Australian small businesses aren't placed under even more pressure than they already are under?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Will the government commit to measuring the bill's effect on employee earnings including by using actual payroll data within six months of operation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We monitor wages all the time, so of course wages will continue to be monitored.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

My specific question was to measuring the bill's effect on employee earnings. Will you commit to measuring that within six months of operation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think what I said earlier was that the evidence shows that, since we made previous workplace relations reforms, Australian wages have risen in real terms for seven quarters in a row for the first time in many years since we saw the real wage falls under the coalition. I would expect that we will keep track of what wages are doing after these laws pass, in the same way that we've kept track of the impact on wages of our previous reforms.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, will the government ensure the bill does not have a negative impact on workplace flexibility, including on work-from-home uptake and rostering?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Again, all of those issues are monitored through regular reporting, and we will clearly keep an eye on that.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

If the bill truly benefits Australian workers and Australian small businesses, why not welcome an independent regulatory impact statement to prove it, as I asked before? Why not actually clear the air on it and leave no doubt? Can I have an understanding of why that is something the government simply refuses to do?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I refer to my many previous answers.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Okay. Minister, does the commission already have obligations under section 134 of the Fair Work Act to ensure employees are fairly compensated for working unsociable hours, weekends, nights and public holidays?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Yes, they do, but this bill will strengthen those obligations.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Why wouldn't you trust the Fair Work Commission, the independent umpire, to ensure that these protections continue to be in place, as they have been?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

That's because our view and the Australian community's view is that penalty rates should be protected.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Yes, I understand that, and we believe that penalty rates should be protected as well; we're not suggesting that they're not protected. The Fair Work Commission already has the remit of protecting penalty rates.

I'm trying to understand why, effectively, the government is duplicating these protections in legislation instead of trusting the Fair Work Commission to do their job.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

It is the responsibility of the Fair Work Commission to protect pay rates. At the moment, the Fair Work Commission does have the ability to cut penalty rates. We don't think that's right, and the Australian people don't think it's right either. That's why we're seeking to amend the bill.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Has the Fair Work Commission cut penalty rates in the last three years, or has there been an attempt to cut penalty rates in the last three years?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not aware of the Fair Work Commission having done that in the last three years, but I certainly remember them doing it under the former coalition government. That's true; they did. There are live applications before the commission right now seeking to cut penalty rates.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I think I also give you the example in 2016 where an SDA agreement caused penalty rates to be cut, but that's not what we're talking about here. You mentioned the current cases. Do you know how many current cases there are before the Fair Work Commission that are actually seeking to reduce penalty and overtime rates?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm aware of two, being the retailer award matter and the banking and clerical award.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

If there are two, is that not then the government legislating for a problem that doesn't exist, given that the Fair Work Commission has a clear capacity to deal with two applications before it?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm actually advised that it's three separate applications: retail, banking, clerical—all separate. I don't think it would be right to label that as a problem that doesn't exist. I think it's a very real problem for the tens of thousands, if not hundreds of thousands, of workers who are paid under those awards.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

My question related to whether you feel that the Fair Work Commission is not capable of dealing with those two matters before it. I will change my question: do you not feel that the Fair Work Commission is capable of dealing with those three matters before it, and that it requires a legislative change?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not going to express an opinion about the Fair Work Commission. We think that it's important that the commission be asked and required to not cut penalty rates, in exactly the same way as the act requires and directs the Fair Work Commission on a whole range of other matters. If that logic were correct, Senator, then we would be sitting here tonight removing a whole range of provisions from the act which require the Fair Work Commission to do certain things. We're not doing that, because the parliament does set parameters for the Fair Work Commission, and this is another one.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I'm not sure that that's quite accurate, but I will continue. Under proposed section 135A(1)(b), could common award provisions like annualised wage arrangements or time off in lieu be prohibited unless they guarantee that no employee is ever financially worse off under the strict penalty and overtime rates? I will be clear here: so that no employee is ever financially worse off.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think I said earlier in the debate that annualised salaries can continue to occur. What can't occur after this bill is passed is cutting penalty rates.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, can you guarantee for Australian workers that this bill will not reduce their flexibility, particularly where that flexibility is the greatest priority for them in terms of their employment arrangements, particularly in the example I used before, of the single mum who has particular care needs for her family?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think I've answered that question several times.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

This is another question that came through in the inquiry. If a penalty or overtime rate itself remains unchanged but the circumstances in which it's supplied are narrowed, would that be treated as a rate reduction under proposed section 135A(1)(a)? In other words, if the hours of work change but the rate doesn't change, will the bill see that as a reduction?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

This is exactly the kind of matter that would be up to the commission to determine.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

How do they determine it, if you've legislated that they 'must' do something? That's confusing to me, because you've been prescriptive to them in the application, and you've said that a regulatory impact statement wasn't required because the bill was about how the Fair Work Commission operates. That doesn't make sense to me. Which is it?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We've established that the word 'ensure', as in the 'Fair Work Commission must ensure', is used in this act 71 times. So, in the past, the parliament hasn't been shy of requiring the Fair Work Commission to do certain things—and this will make it 72, I guess.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I guess I haven't met many shy people in this place, so I'm sure that that's not a surprise at all. Perhaps I'm not articulating myself properly. Through this bill, the government is giving the Fair Work Commission a directive, as opposed to letting them use fair and reasonable measures of their own judgement, yet you can't explain how they're going to be directed. That's confusing to me. And I guess it's confusing to the employer groups and the others that provided evidence in the Senate inquiry that suggests that this could potentially be problematic.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

It's not unusual in this legislation for the Fair Work Commission to be effectively told that they must do certain things or that they must ensure certain things. It's also not unusual for the Fair Work Commission to be then given discretion to determine a whole range of things. That's what will happen here too.

Senator, I might just make the point that you have said several times that the coalition supports penalty rates. We're entirely able to vote on this bill right now, if you support penalty rates. This has been going for a while, and we've been going round and round in circles. It feels a lot like holding up a vote on penalty rates.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

In scrutinising legislation, I take my role as a senator very, very seriously. I actually very much enjoy my committee work. I think that it is a critical component of what we do here, and I don't take it lightly. I don't believe that scrutinising any kind of legislation suggests that you don't support it. What it means is that we are asking the appropriate questions to ensure that the laws that are passed in this place are fit for purpose and don't create problems and challenges for those people who we're here to represent.

I acknowledge that this may be frustrating for you, but I do have more questions. When applying proposed section 135A(1)(b), is the commission required to consider only actual patterns of work, or must it also account for extreme or hypothetical scenarios? I used the example in a different set of questions earlier today of a worker who maybe just works on Sundays or a worker who just works on public holidays.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I answered that question hours ago, and I refer to my previous answer.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I don't think we answered that particular question.

In cases such as annualised wage arrangements, how would the commission reconcile the requirement under section 139(1)(f) to include safeguards against disadvantage with a stricter requirement in proposed section 135A(1)(b) to guarantee no loss of remuneration? Which of these two would take precedence?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

All of that is a matter for the commission.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Surely, in the drafting of the legislation, we've considered if there are two competing clauses and which one is a priority—or are you suggesting that that was not considered in the drafting of the legislation?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No, I'm suggesting that the commission has discretion to interpret the legislation and apply it.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Are you able to share with us the government's view or your belief in how you would intend or think that it would operate, or do you have no view whatsoever as to how this element of the legislation you're putting forward would be effectively implemented?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I don't think it would be appropriate for me to suggest how the commission would apply that.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I'm not asking how the commission would apply it; I'm asking what the government's intent would be in terms of the legislation.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

We don't regard those clauses as competing; we regard them as consistent.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

The Fair Work Commission's live work-from-home test case is exploring how to remove barriers to flexible working. Can the government guarantee that this bill will not prevent the commission from refining penalty rate constructs to enable work from home?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think I said before that this doesn't have any impact on work-from-home arrangements.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I'm going back to the question earlier today in relation to nondisclosure agreements. Are you able to tell me the number of nondisclosure agreements that were entered into as part of the consultation process on this bill?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

My understanding is that no new NDAs were entered into for the purposes of this bill. I think what I said before was that NDAs are entered into as part of an annual arrangement with the parties who participate in that process, and that agreement then applies for whatever consultations occur over the course of that 12 months.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I've spoken before about the regulatory burdens that small businesses in this country are experiencing, particularly the constant stream of new compliance burdens from this government. I spoke as well about businessowners spending some 15 hours a week on compliance time, taking away from serving their customers, from hiring staff, from growing their business or even, heaven forbid, from spending time with their families on the weekends. Unlike large organisations, these small operators cannot readily absorb this resource drain or these costs, and the result is fewer jobs, less competition and more market power being handed to big business instead of small business. COSBOA and other business groups invited to the productivity round table/talkfest have warned that this bill will discourage employment and drag down productivity. These are important things to worry about.

You've said you cannot say how many small businesses will be impacted or what the real cost will be. I think it's unfair to assert that none will be impacted, because it is clear that there is a retrospective element to this bill, whether the government wants to accept or not, and these businesses are facing record insolvencies, high compliance obligations and rising operational costs. I can talk through some more words around that, but what I'm trying to say to you here is that things are really, really hard for Australian small businesses.

It's tough. They're struggling. Many are struggling to stay afloat. Many business owners are not taking salaries or payments themselves, in order to ensure that they can keep their staff, keep their doors open and keep serving their community. What we're worried about is the fact that this legislation adds yet another layer of confusion and complexity.

I acknowledge that you say that you do not accept or do not agree with the evidence provided at the Senate inquiry. But there was substantive and compelling evidence that suggests that small businesses will be significantly impacted by this legislative change. That's what we're trying to do with these important amendments—protect, and ensure we protect, those businesses. In protecting them, we're actually protecting Australian workers, because, if an Australian small business closes its doors, then that employee loses their job. It's not one versus the other.

I owned a number of small businesses for a number of years. One of my key priorities was to ensure that my employees were well paid and happy and that their work arrangements suited them. I had a number of people with flexible work arrangements, and that is really important. Small businesses aren't the bad guy here. I have a concern that this is being labelled as one versus the other. We are trying to protect the interests of Australian small businesses, which are entirely consistent— (Quorum formed)Ultimately, what we are trying to do is protect Australian small businesses, protect Australian workers and ensure that their right to make mutually beneficial agreements remains, particularly as it relates to flexibility and working from home.

I have asked you this question in a different frame before, but I will ask you now differently. Given the evidence that has come out from the scrutiny via the Senate inquiry, will the government look at doing some modelling as to the potential impacts to small business of this bill, particularly in hours and dollars, as it relates to compliance burden?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

As I said earlier, we will continue to monitor all of these impacts in the way that we ordinarily do, but what we're seeking to do is deliver on a commitment that we made to the Australian people and that the Australian people voted for.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I understand that, and it is very noble to deliver on a commitment. That commitment was made prior to the House moving the legislation through based on a Senate inquiry, and that Senate inquiry has raised concerns. We need to understand that the scenario we have today is somewhat different to the scenario that we had when the promise was made. So my question is around whether you will now consider it, given it wasn't considered before the passage of this legislation—rather than moving forward.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No. Employer groups opposed this policy when we announced it. They opposed every change we made to workplace relations laws in the last term. They opposed it during the Senate committee. They will oppose it, I predict, after the law is passed. And the committee recommended that this bill be passed.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

There was also, I'm told, a very good dissenting report attached to that committee decision, which highlighted the many concerns. I think it's important again for us to note that that compelling evidence clearly stated that there was going to be significant compliance burden for Australian small businesses. Are you concerned that the risk of this compliance burden could actually force many Australian small businesses to cut staff or hours because of potential complexities that arise from this bill?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

No, I'm not, partly because the same groups said that every other piece of workplace relations reform we passed would cut jobs, send businesses broke et cetera. It didn't happen, and I predict that those warnings will prove to be untrue as well.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Minister, I find that deeply troubling. Are you suggesting to me that we are currently not seeing record small-business insolvencies, particularly in the construction sector and hospitality?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

My recollection of the figures is that, in percentage terms, the number of insolvencies that we're seeing now has not gone up. I can pull the figures out when we resume tomorrow that show, in fact, that it compares quite favourably to what we saw under the coalition. Of course, there are small businesses that become insolvent. That has happened, unfortunately, for those businesses forever. I mentioned some figures in question time today that showed that the number of small businesses in Australia is actually higher now than it was when we came to office. So I understand there are insolvencies, and that's really difficult for the businesses going through that and the people who work for those businesses. But there's no evidence to suggest that the government's changes have led to those insolvencies in the way that some people claim.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Just for my own clarity and understanding, Minister, are you suggesting that this government is not currently presiding over record small-business insolvencies?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

Again, I'll get you the exact figures tomorrow, but my recollection is that, in percentage terms, the number of small businesses becoming insolvent has not increased. I'll get you the correct figures tomorrow. You can look at raw numbers. There are more small businesses in Australia now than there were two or three years ago. It's therefore not surprising that there are more small businesses insolvent. But, in percentage terms, the figure is not as unfavourable as you're suggesting.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I would be interested in you providing those figures and the basis for that assessment, Minister, thank you. Did the government make any assessments or considerations as to whether this bill would accelerate consolidation towards big business in our country, leaving small-business operators unable to compete, effectively throwing their hands up in the air, unable to take any more?

Matt O'Sullivan (WA, Liberal Party, Shadow Assistant Minister for Fisheries and Forestry) Share this | Link to this | Hansard source

Before I give the call to the minister, I remind the chamber that we have about four minutes left before adjournment.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I think your question was whether I accept that proposition, and the answer is no.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Apologies, Minister. I asked whether or not the government assessed whether the bill would accelerate consolidation towards small businesses, with small businesses effectively giving up, saying it's too hard.

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not aware of that having been assessed.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

Did the government conduct any work or any assessment to quantify how many employees could potentially lose flexibility to negotiate higher base pay in exchange for rolled-up penalty arrangements?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not aware of that having occurred. What I am aware of, and to clarify something I said earlier in terms of the number of employees who would benefit from this bill, is that the current matters before the commission, the three different awards—there are 443,500 employees covered by the retail award; the banking, finance and insurance award; and the clerk's award. That's 15 per cent of award-reliant workers, and they are exactly the people whose penalty rates are currently under threat from the application being brought by employer groups. They're exactly the people who will benefit from these laws.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

This bill represents the 36th major change to the Fair Work Act since this government came to power in 2022. Of the 35 major changes thus far, 34 disproportionately affect small businesses—like a cafe, say, with five employees—just as much as they do a large corporation with 10,000 staff. Do you think that is fair? Do you believe that small-business owners are coping with this fast pace of change? Do you believe that it is reasonable to expect them to take on the burden of yet another regulatory change without the appropriate impact statements and assessments being made?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

As I've repeatedly said, we think that what's important is that we deliver on a commitment that we gave to the Australian people, that the Australian people voted for, that penalty rates should be protected in awards.

I've actually been provided with those figures that I was talking about regarding small businesses becoming insolvent. According to ASIC data, under this government insolvencies as a proportion of all companies have been the lowest on record, averaging 0.29 per cent. That's half the rate recorded under the Howard government, which was 0.5 per cent, and lower than the Abbot-Turnbull-Morrison government's, which was 0.32 per cent. Average monthly new company registrations are higher under this government than under any government on record, at 25,000 per month. So, for all the predictions that our workplace relations laws would mean the end of the world for small businesses, that has not been the case. I predict it will not be the case when this bill is passed either.

Maria Kovacic (NSW, Liberal Party, Shadow Assistant Minister to the Leader of the Opposition) Share this | Link to this | Hansard source

I will be interested in looking at the granular data. I think we asked some questions at the last estimates in relation to that. Some of those businesses that are noted as being the new businesses might actually be microbusinesses that actually don't have any staff. So there is a variance between businesses that are employers and businesses that are not employers. However, I will move on.

My next question relates to business automation. If business automation reduces the need for casuals to work unsociable hours, will those workers take home less pay under their awards as a result of the implementation of this bill?

Murray Watt (Queensland, Australian Labor Party, Minister for the Environment and Water) Share this | Link to this | Hansard source

I'm not sure that it's got anything to do with business automation. What will happen as a result of this bill is that employees in Australia, whether they be employees of large or small businesses, will not face having their penalty rates cut from the awards, and that includes the 443,500 employees who are currently subject to a cut.

The TEMPORARY CHAIR: It being 7.30pm, I shall now report to the Senate.

Progress reported.