Phillip Barresi (Deakin, Liberal Party) Share this | Hansard source

Member for Hunter, I am pleased to see that quite a few of the recommendations were in fact adopted by the government. It was very pleasing to see that that inquiry report received very serious consideration. On top of that, we had the recent Senate inquiry, which was chaired by the Victorian senator Judith Troeth. So there has been considerable discussion on this issue.

Why has this been the case? We are finding that in this country over the last 20 years there has been a substantial growth in the number and proportion of people in the Australian workplace who consider themselves to be independent contractors. Certainly the committee that I chaired found that in excess of 10 per cent of the Australian workforce can be classified this way. The Australian workforce is changing. We know that there is one group that does not like that change. We know that the labour movement, made up of both the unions and the Australian Labor Party, does not like the changes that we are seeing taking place out there in the Australian workplace.

There are now more independent contractors than there are trade union members in the Australian workforce. Australians are voting with their feet and choosing to work entirely outside the traditional employment structures. Why is this happening? Because all too often it meets people’s own family-work balance requirements and they have greater independence. It can often also be seen as a foothold in starting up your own small business. That is the case, and the result is that more and more people are turning to becoming independent contractors.

Unions are struggling for workplace relevance. They are faced with declining membership. They have failed to see the advantages that many workers have accepted—flexible working arrangements, which are offered through independent contracting and also through on-hire labour arrangements. There are now 1.9 million Australians who have made that decision, that choice, to manage their own affairs as independent contractors.

An efficient, modern economy should have a dynamic mix of working arrangements, with the flexibility to respond to the changing demands of clients, consumers and competitors. Independent contractors are an important part of that mix. Removing the barriers imposed by state legislation, reducing inconsistencies between states and reducing compliance costs for all businesses will encourage these businesses to grow and, of course, in growing their businesses they are, importantly, growing their workforces and further reducing Australia’s current record unemployment level. This bill seeks to protect the freedom to operate as a genuine independent contractor and to work through on-hire arrangements.

In launching this policy initiative the Prime Minister stated back in September 2004:

A new Independent Contractors Act would ensure that freedom of contract for independent contractors is enshrined and preserved, that they have a firewall built around them to protect them from the deprivation of unions and unfriendly Labor governments who would seek to impose limits and constraints on their freedom to contract.

That is at the heart of why those on the other side are opposed to this legislation and why the union movement is telling members on the other side to oppose this legislation at all costs. In moving in this direction to protect the rights of workers to make their own choices, we are opposed at every turn by those on the other side and by state Labor governments, which are, no doubt, controlled by their trade union members. They are opposed to this. I say to them: see the writing on the wall; recognise that people are looking for flexibility, alternative arrangements and choice, and this is exactly what this legislation is doing. Do not continue to take this paternalistic approach to independent contracting or labour hire arrangements, and recognise that we are seeing a major shift in workplace arrangements, which people out there are demanding. The sooner the unions and the Labor Party are able to understand that independent contractors require these protections, the better it will be for them.

Independent contractors have moved beyond the ‘us’ and ‘them’, boss and worker, class distinction of the 18th and 19th century, and so too has this government. The member for Brand, the Leader of the Opposition, is the only one wanting to take us back to the days of the accord, union strong-arm tactics and little individual freedom. In fact, in his own contribution he spoke about the woes of introducing these laws and the effect it would have on owner-drivers in his electorate. I am not sure whether he has read the legislation because this legislation does not in fact cover owner-drivers in New South Wales and Victoria. I will have a bit more to say on that a little later on. The reality is that the federal Labor Party is opposed to independent contractors because the union movement is opposed to them. The unions have been alarmed at how quickly independent contracting has flourished in this country, thereby reducing their role in the workforce.

I turn to some aspects of the legislation. The existing regulation of independent contracting across many of the states is a regulation of entrepreneurship. The sooner we remove this regulation, the sooner we are taking the shackles off entrepreneurship and the ability of people to move into their own employment arrangements. Independent contractors have taken the initiative to establish themselves as businesspeople. They are not employees, and they should not be considered by industrial relations laws to be employees. The current competing and complex state and federal systems allow too much interference by third parties in situations where people are essentially running their own business, and this is not appropriate. The government’s Work Choices reforms, which came into operation on 27 March this year, already prevent federal awards and agreements from containing clauses which restrict the use of independent contractors or labour hire workers or which seek to put conditions on their engagement, for example, by prescribing that they have the same conditions as employees.

This bill aims to do a number of things. Firstly, it protects independent contracting arrangements as commercial arrangements, not employment arrangements, under the law. Secondly, it addresses inappropriate state and territory legislation which deems independent contractors to be employees for the purpose of industrial relations regulation, including by overriding that legislation where appropriate. Thirdly, and I thought this would have been supported by those on the other side, it ensures that sham arrangements are not legitimised and prevents state and territory legislation from impacting negatively on labour hire and contracting arrangements.

There are a number of problems surrounding independent contractors which this bill aims to address. Some states have in place industrial relations laws which deem certain independent contractors to be employees. They are trying to drag genuine contracting relationships into the sphere of industrial relations law. Over the last couple of years various states have either enacted or considered such deeming provisions and deeming legislation. Contracting arrangements are commercial arrangements and it is inappropriate that they be regulated by workplace relations laws. Deeming provisions have the effect of invalidating the flexibility and choice of an individual in choosing work arrangements, and interfere with the original intention of the parties to the contract. Deeming provisions can result in completely arbitrary distinctions. For example, the New South Wales legislation deems 13 different categories of worker to be employees, including milk deliverers, bread deliverers, carpenters and plasterers, to mention a few. In other states, these workers could exercise their valid choice to be genuine independent contractors under the law. In one state they are deemed to be employees; in another state they can be seen as independent contractors. By overriding state deeming provisions, certain groups of workers will no longer be covered by state employment law but will be free to contract in a manner that best suits them with the business they are working for.

This approach is consistent with the approach taken in the overall Work Choices legislation. Under the independent contracting legislation a transitional period of three years will be established in relation to those workers previously deemed to be employees under state law. These workers will continue to be deemed employees unless they elect to become independent contractors during that time by agreement with the employer. Once again, it is a choice by that individual as to whether they want to be an employee or an independent contractor. It is all about choice.

One of the issues that has received some attention by members on the other side—obviously they have not read the legislation—and I know it has also received some attention in the Senate inquiry, is to do with protection for TCF workers. This group of workers is protected by this legislation, and it is pretty clear in the legislation that they do receive protection. The Australian Fair Pay and Conditions Standard will apply to contracted TCF outworkers in states and territories where they are not covered by laws providing for some form of remuneration guarantee. Most of the states currently deem contract outworkers to be employees. These special arrangements are in place because TCF outworkers are considered to be a particularly vulnerable category of worker. They often have low levels of English language proficiency and limited formal education. They tend to have limited negotiating power over their pay and work conditions.

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