Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

I was very pleased that my contribution to this debate coincided with my obligation to be on House duty for an hour or so. That provided me with the opportunity—I hope the member for Deakin is not leaving the chamber, because I am not finished with him yet—to listen to some of the contributions of those on the other side, including the member for Deakin, whose tone was very interesting. He proudly reminded the House that he chaired the House of Representatives committee on workplace relations and other things in its inquiry into the matters before the House tonight. But I could not help but notice the low tone he was using throughout his contribution. That reflects, of course, the inconsistency between the recommendations of the member for Deakin’s committee and the Independent Contractors Bill 2006, which we have before the House tonight.

What is clear to me is that the member for Deakin has been told: ‘Forget about the recommendations of your committee; just toe the line. Get in there, tone it down and follow the government line on this issue.’ That is exactly what he did this evening. He should have come in here and defended all of his committee’s recommendations. If he really believed in them he should have come in here and defended them, and of course he was not prepared to do so, because he has been told to toe the line.

This is a fascinating bill for me. I have an intense interest in matters of small business, being the opposition spokesman on small business matters in this place. Any bill that goes in any way to small business matters of course always attracts my attention. This is a very strange bill in that it in a sense pits small business person against small business person. It pits some independent contractors against other independent contractors. It will have some benefits for some independent contractors and disadvantages for others.

It is interesting to listen to the debate and hear the various numbers that are attributed to the independent contractor pool in this country. We heard the minister in his second reading debate talk about there being 700,000. I think the member for Deakin talked about there being in excess of a million just a moment ago in his contribution. We see various figures thrown up. We are supposed to have, according to the ABS, 1.2 million small businesses in this country, and yet we get claims in this place that we have more than a million independent contractors.

This demonstrates the paucity of research and information we have in this country on small business. You cannot make good small business policy if you do not in the first instance know how many of them you have. It takes me back to the government’s decision in 1996 to cut funding on the small business longitudinal study and all the good work it was doing, which would have provided answers to many of the unanswered questions we have when delving into small business policy in this country.

We know there are three types of independent contractor. There are the genuine independent contractors—people who go into independent contracting for all the right reasons. Many of those reasons are entrepreneurial, and this is a good thing. We are in the post-Fortis era. We have a much different, more open and competitive economy than we used to have. We have many former schoolteachers, Telstra workers et cetera buying themselves jobs—going out there and working for themselves as genuine independent contractors. This is good thing for the Australian economy.

Then we have the shams. The shams are split into two. There are the shams forced by the employer who wants to avoid his or her obligations to an employee—whether they be award wages, sick pay, holiday pay, superannuation and even OH&S in some circumstances. They do not want the burden of all that. They just want to put them on a commercial basis and rid themselves of all those obligations as an employer. In many instances that might be legitimate thing to do and it might be done in a way which provides additional reward for the former or prospective employee. But in many cases they are sham arrangements.

The other class of sham arrangement is when the employee seeks to become an independent contractor rather than employee, for tax advantage in the first instance. That is probably the prime reason they seek to do so. The government many years ago, when we were doing the Ralph business tax reform, acknowledged these arrangements existed and addressed them by introducing the rules on the alienation of personal services income. So the government has recognised these arrangements exist. The drive towards independent contracting and part of the reason for the proliferation of independent contracting arrangements comes from all sorts of forces.

I did not hear the minister do this when he made his introductory contribution—and I invite him to do so when he summarises on this debate—but, talking about numbers again, I have seen no attempt by anyone on the other side to determine how many winners and how many losers are involved in this. I have listened intently to members opposite and I have not heard them nominate one loser in all of this. Surely they do not believe that! I am prepared to say there could be some winners in this; why aren’t they prepared to say there could be some losers in all of this? Of course there are independent contractors out there somewhere who do not want state deeming provisions and do not want legislatures interfering in their commercial arrangements. I am sure they are out there, but I can assure you that there are even more independent contractors out there who look to the protections of both the state based deeming provisions and the state based unfair contracts provisions.

You need only to go to the very good submission of the Transport Workers Union. I will not go into detail, but suffice to say it reminds us that they represent literally thousands of owner-drivers in this country who want those deeming provisions to remain in place. What does the government do? It backflips and acknowledges the need to continue, at least for the time being, the application of the deeming provisions or their equivalent to transport workers and TCF outworkers. If that is the principle, why not apply it to everyone who is in need of protection? The member for Deakin said that amongst TCF outworkers you would have people with language difficulties, for example. The member for Deakin is telling me that there is a TCF outworker out there with limited English, if any English at all, who is exposed to exploitation, but isn’t there a cleaner out there in the same circumstances? I think it is absolutely feasible that there could be a newly arrived Australian with poor English skills working in a cleaning arrangement on an independent contract basis, so where is the differentiation? Why is the government applying the principle to some people but not to others? Could it be that they have more political weight and greater opportunity to cause pain for the government, given that there are many TCF outworkers and owner-drivers but not enough cleaners to have the same sort of political impact? That is the only explanation. Anyone who really wants to understand this bill and the potential impacts on independent contractors in this country who are currently protected by the deeming provisions should go to the very good TWU submission to the inquiry and they will get a very good understanding.

I go back to the member for Deakin and the point I was making about the failure of this legislation to pick up his own recommendations. The big standout is the failure of the government to go all the way to adopting a statutory definition of ‘independent contractor’ by invoking the rules set down under the alienation of personal services income rules under the tax act. The big outstanding question is the lack of definition of ‘independent contractor’. We have heard throughout the debate how difficult it is to determine and how difficult the courts have found it over various years to determine such a definition. We know that they have laid down some not so vague rules about control of the employer over the employee and whether the employee uses his own tools, and they have all been stated before. But the lack of definition is what forces state governments to move in with deeming provisions and unfair contract provisions so that people who do not really fit under the common law definition are protected. The big standout of this bill is the government’s failure to accept that recommendation.

I think the government had an opportunity to deal with what is no doubt an issue in the community on both sides—for people who are being deemed but do not want to be deemed and vice versa—but there are very strong cases for protecting the welfare of people who have been forced into independent contractor arrangements. Again, the government has acknowledged that by taking some specific clauses on TCF outworkers and owner-drivers. You will not find a more competitive sector than the transport sector. Both sides of the transport sector are happy. The owner-drivers are happy. Because they are carrying high risk, working long hours and carrying debts, they want some certainty in the arrangements. And the employer organisations are happy, so where is the push? Where was the great need to undermine so many protections for so many people?

Unfair contracts are another example where small business people are going to be disadvantaged by this bill. If you have a commercial arrangement with another player who has greater market power then you and the thing goes pear-shaped for you, you do have recourse under various state based unfair contracts legislation. But that has just been taken away by this bill. People from the other side should not come in here and tell us that this is all about small business. Again I challenge the minister to come into the House and give us the numbers. Tell us how many people are going to be disadvantaged by this bill compared to how many people are going to find some benefit in this bill.

There has been lots of talk throughout the course of the debate about the state of the economy. The economy is in pretty good shape. There are some pressures emerging on the horizon, and there are some pressures that the Reserve Bank governor has been talking about for some years now. I was delighted to hear on ABC radio last night the Reserve Bank governor, before his departure, defending the legacy of the Keating government and making the point that the real thing that sustained 15 years of economic growth was the work of Paul Keating back in the early 1990s.

I know the phrase ‘the recession we had to have’ was not seen to be all that clever at the time; it might have sent the wrong message. But the point was well made, and that is that it was that slowdown that broke the back of inflation in this country. It did not have the hallmarks of the earlier recessions; it was a recession that broke the back of inflation in this country. That is a legacy we are all still benefiting from today, and that all these people who are in the right entrepreneurial spirit are looking towards when they go out there, back themselves, take the risks and put themselves in self-employment situations. They have the choice; many do not have the choice.

There is also another inconsistency here. For some time the government has been laying aside in the Senate a bill that is generally known as the Dawson bill. Amongst other things, the Dawson bill seeks to streamline the opportunity for small businesses to band together and bargain collectively with larger businesses. They might be agriculturally based, selling apples to Coles and Woolies; they might be a group of truck drivers trying to bargain with one of the big transport or construction companies. They might be chicken growers, who might be bargaining with one of the big chicken processors. So in the Senate we have a bill in which the government says we have got to strive harder to make sure small business can collectively bargain, recognising that the parties to the bargain are not equal; in other words, recognising that there is big opportunity for the Coles and Woolies of the world, one of the big transport companies or one of the big chicken processors to misuse their power to the disadvantage of the person they are in negotiation with.

Unfortunately that bill is stuck in the Senate, and here is the other irony. It is stuck in the Senate for a couple of reasons. One is that there is also a mergers provision in there that the opposition and the minor parties are not totally satisfied with. We have put forward some very responsible amendments that would allow the ACCC back into the game as a gatekeeper on authorisations on merger applications—authorisations based on the public interest test. That is holding the bill up. But the other interesting thing about this bill is the government’s belated decision to put in that bill a provision that bars trade unions or their representatives from acting as bargaining agents in a collective bargaining arrangement. To make this even more nonsensical, we already have collective bargaining for small businesses in this country, but at the moment they go under what they call an authorisation process. The authorisation process can be slow, costly and cumbersome, and the government has sought, after the Dawson recommendations, to streamline that and go from an authorisation process to a notification process so that when small firms enter into a collective bargaining arrangement they simply notify the ACCC and the ACCC has 30 or 40 days to raise objection. If it does not object, the arrangement—which on the face of it would be contrary to the Trade Practices Act—is allowed to continue, and immunity is granted. So there is immunity to continue if the ACCC does not object. That is a much better system than the authorisation system.

Under the authorisation system, trade unions or their representatives can be the bargaining agents, and it is worth pointing out that those authorisation provisions will remain in place. But, while it was not in the original bill—there were two bills here; one lapsed because the parliament was prorogued—the government decided that they would ban trade union representatives or their agents from the notification process. There is no consistency here at all. I would be less critical if they retrospectively took the rights of unionists to act under the authorisation provisions; at least it would be consistent. But there is no consistency, and the fact is that under the authorisation scheme trade unions have been acting as bargaining agents for years. I deliberately used transport and chicken because they are very good examples. The AWU represents chicken growers when entering into collective bargaining arrangements with the processors, and it has been commonplace in the transport industry as well.

So this is just full of inconsistencies. Up there in the Senate Ivan Milat could negotiate a collective bargaining arrangement for some transport workers, but Tony Sheldon of the TWU cannot. That is the law they are seeking to put in place in the Senate. But the key point is that it is inconsistent to say that there cannot be some collective protection for independent contractors in the broader community but at the same time, up in the Senate and in this place, they are trying to put in place more streamlined collective bargaining arrangements for small business. In its approach this bill is full of inconsistencies, and that is why I am rising to support the amendment put forward by the member for Perth. If the government really want to do something about growing independent contracting in this country for all the right reasons, I suggest they go back, redraft it and have another go, and we will have a look at their new attempt.

See this speech in context