Chris Bowen (Prospect, Australian Labor Party) Share this | Hansard source

The Independent Contractors Bill 2006 is very important legislation with very serious ramifications, and it is legislation that we will be opposing. There are various estimates regarding the number of independent contractors in Australia. Estimates vary from 800,000 to 1.9 million, the first being the estimate of the Australian Bureau of Statistics and the second being the estimate of the Independent Contractors of Australia. Regardless of which figure is correct—and I suspect that it is the estimate made by the Australian Bureau of Statistics—it is a very significant number. These estimates range from between eight per cent and 20 per cent of the Australian workforce. You only need to look around, as I do in my electorate, to see that there are a large number of independent contractors.

The minister, in his second reading speech, talked a lot about choice—it is the government’s mantra. We heard it again in question time today. The minister said:

These Australians have already chosen to work for themselves to gain the benefits of the choice and flexibility that self-employment provides. Their choice must be respected.

The member for Corangamite talked about that in his contribution. He even referred to independent contractors as being the instigators of the Eureka Stockade, which I thought was an extraordinary contribution for him to make. On the face of it, I cannot disagree. If somebody chooses to work for themselves and have that flexibility, they should be supported in that choice. But the House needs to examine the employment relationship of many independent contractors in some detail to test the minister’s claim.

The University of Melbourne estimates that 40 per cent of contractors work for one principal only and are in fact dependent—not independent—contractors. How independent are contractors who must in terms of their contract work exclusively for one company; who are instructed by one company; who wear that company’s uniform; who, if they have a truck, must paint the company’s logo on that truck; and who are forbidden under the terms of their contract to work for another company? Is it really the case that all people choose this arrangement to give themselves more flexibility?

I was attracted to the dissenting Senate committee report by Senator Murray, somebody who is not from my party but who has a wide degree of respect across the political spectrum and in the community. He said this:

For an increasing number of contractors the notion of independence is a myth, and any choice and flexibility in their arrangements have been constructed for the benefit of those who hire them, not their own.

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The current bill, Senator Murray says:

... does not prevent business from exploiting loopholes in the common law that allow workers to be classified as contractors, when for all practical purposes they are employees.

I agree with Senator Murray.

The minister says that the choice of independent contractors must be respected, but this government is removing the option for independent contractors to have unions represent them or have a union negotiate on their behalf. It is okay for independent contractors to have a lawyer, it is fine for them to have a guild or some other sort of association to represent them, but it will be illegal for them to have a trade union represent them. This is ideological zeal. This is the government’s extremist approach to industrial relations, and it is being driven by anti-union fervour; it is not being driven by a rational and calm assessment of the facts. I agree that people who choose to be independent contractors should have their choice protected and respected, and if they do not want a union representing them they should not be forced. But if they do want a union to represent them, they should not be forced not to have a union.

In the Age on 23 June this year I read comments by Steve Graham, who is a Foxtel contractor. He described this legislation as ‘draconian’. He said:

I haven’t had a (pay) rate increase in over six years.

He went on to say:

This legislation is going to make it so that I will walk into the office of the company that I work for and they’re going to put down a piece of paper that says ‘this is your rate, these are your hours of work, this is what you have to do. If you don’t like it go somewhere else’.

He is right. In 2003 Foxtel actually tried to reduce the rate of pay for independent contractors. The contractors asked their union to negotiate for them. It was only the intervention of the union which stopped their rate from being reduced. They had not had an increase for six years and Foxtel tried to cut their hourly rate. Why did it not get cut? Because the union intervened and represented them—something that will not be allowed once this legislation passes this parliament. Why should the choice of Foxtel contractors to have their union represent them not be respected? Why should their choice not be respected? The government should come in here and justify why they are removing choice for those people.

I read in the Australian on 27 June this year comments from Tony Healy, an IT contractor. He said:

This bill is anti-contractor ... It supports the contracting industry and, like recruitment companies ... seeks to screw independent contractors ...

Why should Tony Healy’s choice not be respected? Just the week before last I had an independent contractor from the IT industry come into my electorate office to see me about his contract. His contract had been terminated by a large multinational corporation, to whom he was contracted, only a few weeks into the contract, with no reasons given. There was only a short period of notice given—two weeks instead of the four nominated in the contract—and when he went to the company to ask why he was given no reasons.

It was made very clear to him that he could pursue his legal options if he wished but that the company had many more legal resources than this individual and they were happy to tough it out in a court of law. I will not name the individual, out of respect for his privacy, but he has been to see me. I had a long meeting with him and referred him to solicitors. I wonder whether he feels that his choice should be respected. I know he does feel that way, that he should have the choice to have somebody negotiate for him.

We have had government members coming in to speak on this bill—not many, I must say; it has been a very short speaking list, which perhaps indicates that government members are not too proud of this legislation—who have talked about independent contractors and thanked the independent contractors association for their help in drafting the bill. I thought that was an extraordinary thing for the member for Corangamite to say. He actually thanked the independent contractors association for their help in drafting the bill. I am really not sure the minister would be too happy with the member for Corangamite’s contribution, coming in here and thanking the independent contractors association for their help in writing this legislation.

But there are some independent contractors who will have their rights protected—their right to appoint a trade union to negotiate on their behalf is protected under this legislation—and they are the owner-drivers in New South Wales and Victoria. The member for Corangamite was at pains to stress that this was only a temporary protection, that the government was only putting this to one side for a short period of time and it would be reviewed in 2007. The government has not indicated when in 2007, but I suspect it will be very late in 2007, for obvious reasons. Owner-drivers like those at Tooheys, together with the Transport Workers Union, have resisted new contracts which involve reductions in pay rates of up to 43 per cent. That is because owner-drivers in New South Wales and Victoria have had their protections under state law carved out.

In New South Wales the Industrial Relations Act 1996 provides for the regulation of engagement in certain sectors. In Victoria the Owner Drivers and Forestry Contractors Act 2005 provides similar protection. I congratulate the Transport Workers Union for negotiating this concession. I attended a briefing which they put on in this place last year, I think. Members from both sides came to the briefing. It was a very moving presentation in which owner-drivers begged to be allowed to have their union continue to represent them because they were on such thin profit margins. The government has wilted under the pressure from the Transport Workers Union and the independent owner-drivers, and that is a good thing. But why has the government singled out these people for protection?

The minister says that they are on very tight margins and some have gone into considerable debt to pay for their trucks and so should not be subject to the same provisions as other independent contractors. There are two points to make here. The first one is that that is an admission by the minister that this will drive down the conditions of contractors. He said, ‘These people are on tight margins and have high debts. They should be protected.’ That is an admission that there is something to protect them from. That is an admission that their conditions would be driven down if they were not carved out of this legislation. I think that is a very interesting admission from the minister.

The second point is: does he not think that there are other independent contractors who are doing it tough? Does he not think that the Foxtel contractors who have had no increase in their rate for six years are doing it tough? Does he not think they are on tight margins? Does he not think that some of them are highly geared? Why would owner-drivers in New South Wales and Victoria be exempt and others not? Does he not think that contractors in the electrical and plumbing industry are doing it tough? Does he not think they are heavily in debt? Does he not think that, with petrol prices at record highs and interest rates going up, there are other highly geared contractors who are feeling the squeeze? By making this welcome concession, the minister has underlined the essential illogicality of his argument, and the arguments in favour of his bill have collapsed.

This bill creates a new national unfair contracts regime. However, the new regime is inferior to the state based regime it replaces. For example, the New South Wales Industrial Relations Commission can review a contract which has become unfair subsequent to the contract being entered into. This unfair contracts regime treats all contractors the same, whether they be purely independent, dependent, deemed employees or outworkers.

This new regime will encourage employers to make the shift towards independent contracting arrangements, away from employment arrangements. The government claims that this will be prevented by the anti-sham contracting arrangements in the bill. At first blush, the anti-sham contracting arrangements look reasonable enough, but on further investigation they are revealed to be a sham in and of themselves. I note the comments of Professor Andrew Stewart in relation to the definition of an independent contractor applied in the bill. He said:

The fact is that any competent employment lawyer can take almost any form of employment relationship and reconstruct it as something that the common law would treat as a relationship between principal and contractor ... thereby avoiding the effect of a wide range of regulation which is typically applicable only to employees, such as industrial awards, registered agreements, leave and superannuation legislation and unfair dismissal laws.

I was drawn to the comments of Senator Murray, who, again I say, is a respected person in this building. He is not from my party but he is one whose views are widely respected and who always brings an independent approach to these matters, and a very detailed and thorough approach. He said:

... we share widely-held views that the common law is manifestly inadequate for resolving a definition of employment, and jurisprudence in this area is badly in need of buttressing through statute. This too is the position adopted by state governments.

He went on to say:

... relying on the common law definition of employment is fraught with problems.

He continued:

... there are differences between common law definitions of ‘independent’ contractor and for tax purposes which could potentially disadvantage workers forced on to contracts.

Again, I find myself in agreement with Senator Murray.

The consequential bill amends the Workplace Relations Act by prohibiting sham arrangements. This makes it an offence to misrepresent or attempt to misrepresent an employment relationship and make false statements to an employee to influence them to become an independent contractor. It is also an offence to dismiss or to threaten the dismissal of a employee with the sole or dominant purpose of re-engaging them as an employee. However, it is firstly necessary to look at the potential defences under this bill. It is a defence if an employer reasonably believes the employee to be an independent contractor. So in order to mount a successful application, a worker would have to (a) convince the court that the contract was, or was intended to be, an employment arrangement rather than an independent contracting arrangement; and (b) rebut any claim by the employer that they could not have been reasonably aware that the contract was actually a contract of employment.

So it is a very hard defence to overcome for a worker attempting to take an action under these anti-sham provisions. I would be very surprised if any successful actions were brought as a result of these anti-sham provisions. If a case were successful in an enterprise with under 100 employees, of course the individual would have no right to reinstatement, because the government has abolished the right to action for unfair dismissal in businesses with under 100 employees.

In the time left remaining to me, I would like to turn to a very important issue, particularly in my electorate and the electorates of my colleagues the member for Fowler and the member for Blaxland, and that is the impact of this bill on outworkers. I do recognise that textile, clothing and footwear outworkers are treated differently in this legislation and there is some extra protection for them. However, I believe there is a strong case for treating outworkers completely separately from independent contractors. I do not believe it is appropriate to include outworkers in the independent contractors legislation.

I do believe there is a case for a completely different set of employment relations for clothing outworkers. I believed that before I read the report of the Senate committee on this matter. I note that the Senate committee has unanimously recommended completely excluding schedule 4 from this bill, which is the schedule which relates to clothing outworkers. I call on the government to listen to their own senators. Their own senators say that that schedule of the bill serves no purpose. We would go further and say that not only does it serve no purpose but it disadvantages clothing outworkers.

I invite the minister or any interested member opposite to come out to my electorate, or indeed the electorate of the member for Watson, who has joined us in the chamber. I know he has many clothing outworkers in his electorate as well. I invite them to come out to the garages in the backstreets of Cabramatta or Fairfield or Lakemba and see the outworkers in action and see if they are really independent contractors; see whether it is appropriate to take their working conditions away from them, as this bill does; see whether somebody who is working in a garage in Cabramatta and producing hundreds of pieces of clothing every day is exercising their choice and flexibility in this employment relationship nirvana that the minister talks about and that the member for Corangamite talked about before; and see if it is appropriate to treat these people the same way as other independent contractors.

I challenge the minister or any member opposite to keep holding that view after they have been out to the outworkers in the garages in Fairfield and Yennora and Cabramatta and have seen those operations in action and seen the clothing that is being produced by migrants, often with very poor English, or by Vietnamese refugees to this country who are working very hard in an outworker relationship. I invite them to see if this is the employment nirvana that the minister is so proud of. Minister Andrews talks about choice and flexibility. Come and walk through the garages and see how much choice and flexibility there is for outworkers in Cabramatta.

I think this bill increases the level of confusion in relation to outworkers, and the level of protection in place is substantially less than under existing state based arrangements. You can have a policy debate about how others should be treated, but clothing outworkers are an open and shut case. This government clearly just does not understand what these people are dealing with. It is being driven by ideology and by a desire to reduce working conditions in a race to the bottom. They should be opposed, and they will be continued to be opposed on this side of the House.

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