Simon Crean (Hotham, Australian Labor Party, Shadow Minister for Regional Development) Share this | Hansard source

It may well have been a worthy contribution, but there are not worthy contributors joining you. Yesterday, of course, we saw that outrageous abuse in question time, particularly by the Leader of the House. We felt that the government should be held to account. We could not call quorums yesterday because there were no people speaking on the government’s side in any debate that we conducted! And that is why we have had the quorum called today.

This is an important focus for legislation. Labor opposes the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 before us because, under the guise of protecting contractors—which I happen to believe is a worthy objective—the legislation in fact does the opposite. The bills strip away the rights and protections of Australian workers and the nature of the workplace. The Australian workplace is changing and we do have to acknowledge that. There has been a huge increase in the number of contractors and independent workers. We recognise this as an essential development in terms of our evolving economy and the calls for greater flexibility and diversity in the way in which people perform their jobs.

It is ironic that this government purports to be the champion of small business, of the contractor, of the entrepreneur, but, oddly, this legislation does nothing to protect them or to benefit them. In fact it strips away those protections which are indeed now afforded by state legislation. The truth of it is that only Labor will protect the rights of individual workers, whether they are regarded as traditional employees or as independent workers. We believe that contractual arrangements and non-traditional or non-standard work practices should meet a fairness test and should recognise the central role of work in most Australians’ quality of life. These contractual arrangements should not be supported where they undermine the employment relationship and such basic entitlements as the right to bargain collectively, the right to fair and decent wages and conditions, the right to be free of harassment or discrimination, the right to proper training to perform the work required as well as, of course, the right to appropriate occupational health and safety standards.

These bills are another step down the road to stripping Australian workers of their rights and of their protections. It makes it easier under this legislation to regard an employee as a contractor and so take away those basic entitlements. The bills purport to protect independent contractors but in fact do no such thing. It is another example of the government’s doublespeak. Just as it argues its industrial relations legislation is about work choices, it in fact offers no choice. If the employer is not prepared or willing to bargain collectively, that is the end of the matter. That is the end of collective bargaining in this country—at the whim of the employer. It re-weights the system in favour of the employer. This legislation does likewise in relation to contractors: it re-weights it in favour of the person they are contracted to.

This legislation is driven by ideology—not by good management practices, not by fairness, not by the standards for a civilised society. It is driven by the blind belief of this government in working solely to a free market as distinct from recognising collective responsibilities. We understand better than anyone in this place the importance of getting that balance right. It is what the labour movement has striven for in terms of opening up its relationship with employers to try to find the appropriate balance to drive productivity and to drive profit but to distribute fairly and to not have people exploited. There is a place for both approaches, but this government is driven by its hatred for unions. I was surprised to hear the previous member’s denigration of unions, given the great contribution that they have made to this country over many periods of our history. It is about pushing industrial relations to the extreme to re-weight the system. The government has done it in the Work Choices legislation; it is now doing it in the Independent Contractors Bill 2006 and the amendment to the Workplace Relations Act.

To understand how this issue regarding contractors has emerged within the workforce, I remind the House of a dispute that occurred last year. It involved my old union, as a matter of interest, and a company called Kemalex. Just when the workers were negotiating a new enterprise agreement, back in April last year, the company told the union that any new workers would be treated as independent contractors. The fact is these new employees were, in every way, workers—factory production line workers on minimal wages, with hours and duties all dictated by the company. They had a workforce that previously were treated as employees, but new employees, doing exactly the same thing, following the same commands and the same orders, were going to be called independent contractors. As independent contractors they would have to get an ABN and they would lose their rights to sick leave, annual leave, long service leave et cetera. They were mostly migrant women. The point here is that the company tried to categorise employees as contractors, when clearly they were not.

There was a lengthy dispute associated with that company. I think the company has simply pulled up stumps and moved to another state to avoid the circumstances. But the fact of the matter is that this legislation before us today will make it even easier for the employer to redefine his employment relationship. What is fair about that? Why should an employee who has given long and loyal service to the company wake up one day and be told, ‘You’re no longer an employee; you are an independent contractor, but we want you to do exactly the same functions as you were doing before.’ We have to get certainty into the system.

Interestingly, this issue of the burgeoning growth of independent contractors and of labour hire companies has been the subject of important parliamentary inquiry and scrutiny. The House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation—of which the member for Hasluck, who preceded me in this debate, is a member—reported on 17 August in an important document called Making it work. It was an inquiry into independent contractors and labour hire arrangements. The Senate Employment, Workplace Relations and Education Legislation Committee is also inquiring into this bill. It begs the question: why are we debating this bill now before that inquiry reports?

Unlike the member for Hasluck’s assertion, it is not correct to assert that the recommendations of his House of Representatives committee have all been adopted. They have not. There was a dissenting report of that committee—and I will come to aspects of that in a moment—but there were aspects of the report, some 16 recommendations, which received unanimous endorsement. One of those went to an attempt to further define ‘independent contractor’ beyond the common law to pick up elements of the taxation definition that the member for Hasluck referred to. Why do we not have in this legislation some attempt to define or codify what constitutes an independent contractor? If we accept that it is important to have legislation covering independent contractors in recognition of the emerging workforce development, why shouldn’t we as a parliament seek to define what we are talking about? That is what legislation is. It is not a question of hamstringing people; it is about giving clarity to the circumstance, giving certainty so that these sham arrangements—an example of which I have referred to already—cannot happen.

Interestingly, recommendations 2 and 3 of that House of Representatives committee have not been adopted in this legislation. I go further, because I think it makes common sense that we seek to define the distinction between running one’s own business and working for someone else. I think it is a terribly important distinction and differentiation to make in our workplace arrangements not only for the purposes of the commercial activity but for the purposes of people’s entitlements and protections. Different laws do apply in different circumstances. Whether a person works as an independent contractor or as an employee, particularly an independent contractor for one employer, why shouldn’t that person be entitled to the same rights and conditions as though that person were an employee? It is about attempting to get clarity in definitional terms so that those protections can be afforded so that we know the employment circumstance or otherwise that we are talking about.

This legislation has two important flaws: first, its reliance on the common-law definition of independent contractor to define the services contract and, second, its overriding of the deeming provisions contained within state and territory industrial relations legislation. This uncertain definition comes about because of the circumstances in which we seek to ascertain whether a person is working as an employee—in other words, working to a contract of service or working as a contractor, whereby they provide a contract for services to produce an agreed result. That is the conceptual differentiation in this; it has been recognised in the common law.

The trouble is that this is a definition that increasingly has become blurred. I might say that this legislation will blur it even more. The result of that is that we often get seemingly arbitrary and unpredictable outcomes. The view has been advanced that the real problem with the judicial approach—that is, just leaving it to the courts rather than to the parliament; and why should the parliament not have a view on these things—is that it enables one or both of the parties in a work relationship, and usually it is the employer, to evade obligations that would otherwise be imposed by awards and statutes. As Breen Creighton and Andrew Stewart put it, and I quote them because this is relevant:

There is nothing wrong in principle with allowing the parties to categorise their contractual arrangements as they choose. But in many cases it is only the “employer” who both understands the nature and effect of the arrangement, and stands to gain from it.

In other words, in leaving it to the courts you put more power in the hands of the person who has access to resources and legal advice and a strategic view as to what they want to get from tipping the arrangement in their favour. It re-weights the system in their favour. This is another example of the inequality of the bargaining power between the employer and the employee. Creighton and Stewart go on to say:

The advantages accruing to a worker who “freely” agrees to a non-employment arrangement are often illusory. While it may in some circumstances be possible to earn more as a contractor than as an employee, and even to reap certain tax advantages, it is important not to underestimate the real value of the statutory and award benefits foregone.

The point I am making is that the employer is better placed to understand the legal and financial significance of the status of the employee, usually to the employer’s advantage. This bill makes no attempt to codify or define the relationship. It does not provide any certainty and it is part of a strategy to make it easier to strip away people’s basic entitlements. The House of Representatives Making it work report recommended that the government maintain the common-law approach but that it should adopt aspects of income tax law—a point conceded even by the member for Hasluck when he made his contribution; and it ought to have been, because he agreed with it in this unanimous recommendation—such as the alienation of personal services income tests to identify independent contractors. If it is appropriate to have it applied for taxation purposes, why not start to pick it up for the purposes of identifying tests that determine whether or not a person is an employee or a contractor? It should not be difficult to codify that which the common law has spelled out by way of tests. I think it is important for the parliament to try to do that.

The other flaw in this legislation is that, this legislation aside and the common-law uncertainties taken into account, there has been in state and territory legislation the realisation that some attempt has to be made to define. And so we have state and territory legislation that does what is called deeming—it deems certain people to be employees. These are the deeming provisions. That does give certainty in those jurisdictions. But what does this legislation do? It overrides it. So, where a state has taken steps to bring certainty and clarity, this legislation will override it. This legislation has the effect of overriding state law deeming such contractors to be employees, with the consequent denial of access for them to the protections provided by state industrial relations laws. So, where the states have attempted to define and codify, this bill overrides them. The government wants to provide clarity but it ignores the common-law tests and an attempt to codify it. It ignores the taxation test, despite the unanimous recommendations of the House of Representatives committee, and it overrides state legislation.

This bill should be withdrawn. It is an inadequate response to a very important issue. We believe that the consideration by the House of Representatives committee, as well as by the Senate, should be allowed to proceed before we go further with this bill. I suggest to this government that it withdraw the legislation and that it talk with the opposition about how we can get clarity; that is important for all those in the equation. It is important not just for employers but also for people—and for their entitlements and for clarity and certainty within the system.

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