Justine Elliot (Richmond, Australian Labor Party) Share this | Hansard source

I rise to speak on the Independent Contractors Bill 2006. This bill follows on from the Howard government’s extreme industrial relations changes that we also saw in the Work Choices legislation, which was and is a massive attack on the living standards and living conditions of so many Australian employees by removing their rights, entitlements and conditions. Certainly, the impact of the Work Choices legislation is seen firsthand in my electorate of Richmond, where so many locals have been severely impacted by these changes, particularly in their job security and working conditions. No doubt, there will be an increase in those situations we are hearing about, particularly in regional areas where it is causing massive impacts. Indeed, it really is a case of ‘no choices’ for workers. The Independent Contractors Bill we are discussing tonight follows from that Work Choices legislation and further severely impacts so many workers throughout the country, particularly people in regional areas such as my electorate of Richmond.

I support the amendment moved by the member for Perth in relation to this bill, and I will touch on that amendment. That amendment relates to how the Howard government has attacked living standards by removing the rights, entitlements and conditions of workers; how the further degradation of workers’ rights, entitlements and protections occurs; the allowance of employees to be treated as independent contractors; and the removal of protections for dependent contractors. This bill effects this by continuing to use the common-law definition of independent contractor; by allowing employees to be treated as independent contractors in a sham way by very ineffective anti-sham provisions; by overriding state laws with employee deeming provisions; by overriding state unfair contract provisions; and by overriding any future state and territory owner-driver transport laws and putting existing state owner-driver transport laws at risk. It also fails to provide any genuine protections for outworkers. As I said, I support the amendment moved by the member for Perth in relation to this bill.

This proposed legislation complicates an area of law unnecessarily and provides a costly system of redress for small businesses and workers. The proposed legislation also leaves open the opportunity to significantly expand its scope by a very heavy reliance on regulation making. The government’s proposed Independent Contractors Bill will further undermine the job security of working Australians by making it so much easier for businesses to replace existing workers with independent contractors.

We have heard many people speak tonight about drawing the distinction between independent contractors and employees. This bill relies on the common-law distinction. In that, the bill has really failed to utilise an opportunity to streamline and codify the definition of an independent contractor, because the common-law test for whether a person is an employee or an independent contractor is difficult and complex, as we have heard many speakers say tonight. But, whilst these legalities might be very complex, the reality is indeed very simple. Independent contractors do not have access to the same rights and entitlements as employees—it is as simple and straightforward as that. In particular, independent contractors remain responsible for a large variety of aspects of the relationship that would usually be the responsibility of an employer. There are many things; superannuation payments and remitting income tax to the Australian Taxation Office to name two.

The Senate Standing Committee on Employment, Workplace Relations and Education reported on its Inquiry into the provisions of the Independent Contractors Bill 2006 and Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 in August. I want to note some of the comments, firstly by the Democrat senator Andrew Murray. He commented on the common-law definition in his dissenting report by saying:

... 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 ...

And:

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

There is no doubt about that; it certainly does continue that very complex and difficult definition.

In short, this bill will result in a loss of entitlements and protections, and will encourage employers to hire workers as independent contractors rather than as employees. That indeed will be the result of this legislation. Also, in relation to the Senate inquiry that I referred to before, the Labor Party dissenting report observed that the bill:

... is intended to turn natural employees into unnatural contractors ...

And:

The exercise smacks of a readiness to misuse and misdirect labour skills across the workforce, at a time of skills shortage.

The report made a unanimous recommendation to omit part 4 of the bill, which relates to clothing outworkers. Outworkers have previously been afforded employee-like protections and status due to their very particular vulnerabilities. Part 4 would allow unscrupulous employers the opportunity to reclassify their workers as contract outworkers in order to come within the terms of the bill and to avoid other outworker entitlements. The government’s own senators found that these changes serve no useful purpose.

This bill removes the current protections provided by state legislation. Again, quoting from the Democrat senator’s dissenting report:

The Bill does little to meet its stated objectives and is more about preventing the states from protecting what they view as vulnerable groups of workers and also dealing with the issue of disguised employment.

This is a very accurate and correct portrayal. The direct result of overriding relevant state deeming provisions will be to leave many vulnerable workers in an incredibly unfair bargaining situation and without access to basic entitlements to pay and to leave. In New South Wales, for example, certain categories of workers are declared to be employees and brought within the scope of industrial regulation even though they may be independent contractors at common law. But now those particular workers will be deemed independent contractors under federal law and will lose their rights and entitlements such as superannuation and leave. They will also lose their right to resolve disputes in the Industrial Relations Commission.

A principle underpinning this bill is that independent contracting relationships should be governed by commercial law and not industrial law. This means that independent contractors in New South Wales will lose their right to an independent, cost-effective industrial relations system. This is a system that sets minimum standards through contract determinations which protect owners’ goodwill and allow for effective dispute resolution. Instead, now they will have to go to the Federal Court or Federal Magistrates Court in respect of unfair contracts. It will be much more complex and take so much more time, and be a lot more expensive for workers and, indeed, for small business. This is really denying justice to those who cannot afford it and making it so much more difficult for them.

Under the federal system there is no ability for employer organisations or unions to apply for unfair contract review on behalf of a party, which is the case under state laws. Further, the existing New South Wales test for an unfair contract is broader than the proposed federal test. The discrepancies mean that the new legislation will be hardest felt in states like New South Wales, where our current legislation affords much better protection to workers than that being put forward by this very mean and arrogant federal government. The parties to independent contract arrangements in New South Wales will indeed see a sharp decline in the level of regulation of their relationships.

When we look at this legislation and who it is that is going to most affected by it, there certainly will be a diverse range of work relationships under threat. Some of the most vulnerable include delivery drivers, cleaners and some tradespeople as well. When we talk about the figures of how many independent contractors there are, and therefore how many potential victims there are of this legislation, those figures vary very wildly. We see some estimates from the Productivity Commission at 800,000 and we also see some estimates of as much as 1.9 million from the Independent Contractors of Australia. There is a diverse range of figures, but we certainly know that there will be a vast amount of people who will be very severely affected by this legislation and, indeed, vast numbers—hundreds of thousands if not millions—who will be worse off through the passing of legislation such as this.

Because of the removal of New South Wales deeming provisions, workers such as cleaners, carpenters, bricklayers, painters, timber cutters, plumbers, drainers and plasterers—just to name a few—will no longer be considered employees. They will now be independent contractors at common law. The reality is that they will lose their rights and entitlements. As I said, we do not know exactly what the figure will be, but estimates in the millions would be correct. Certainly millions of people and their families will be severely affected by this legislation.

The legislation just pays lip-service to protecting workers from sham arrangements—it purports to protect employees who have been improperly disguised as independent contractors. The Labor senators’ dissenting report stated:

Evidence was given that the protection of contractors through penalties against sham contracts would be largely ineffective.

The barriers to effective use of the protection from sham arrangements provisions appear to be considerable, and the provisions are likely to be of very limited, if any, use to workers seeking some form of redress from unscrupulous employers. The sham provisions are further reduced by the defences contained within the legislation. What we end up with here is really just sham protections for sham arrangements. Workers who have been improperly labelled have very little recourse in such situations. If a worker gets fired and put on as an independent contractor, there is no immediate right of reinstatement as an employee. The prohibitions contained in this proposed amendment will be difficult to enforce because they require an intention or knowledge. The onus is on the employer to disprove it, but the complexity of issues means that this will not be difficult. As I said, this really is a case of sham protection for sham arrangements and nothing more.

I would also like to comment on the exclusion of owner-drivers in New South Wales and Victoria. Due in large part to the very effective campaign by the Transport Workers Union, who fought so vigorously on behalf of their members—and I certainly congratulate them on how effectively they fought—against this legislation, owner-drivers in New South Wales and Victoria have been exempted from this legislation. However, that exemption is due to be revised by the Howard government in 2007. If this legislation is passed then there is every chance that owner-drivers, who form an integral part of the economy in my electorate of Richmond, will be subject to these extreme laws.

Owner-drivers are often highly dependent upon those with whom they contract. This dependence leads to an inequality of bargaining power and the associated potential for exploitation. These laws are going to deregulate the transport industry, which means that, whilst petrol prices soar, rates for truck drivers will plummet. This means that truck drivers, such as those in Richmond that I spoke about, as well as those everywhere else, will be dealt a blow. Some will be forced to leave the industry. With rates down, it will be very hard for many of them to even sell their vehicles.

This legislation will undermine the current support small truck owner-operators are able to access through the union movement. It will wipe out small operators, who are already struggling to remain viable in a fiercely competitive and increasingly deregulated industry. The protections for owner-drivers should be extended to all dependent contractors. As I said, it was certainly that very effective campaign by the Transport Workers Union fighting this legislation that led to that exclusion. I do have concerns about the implications of the revision in 2007.

This legislation does nothing to address the increase in the use of independent contractors by employers—nor does it address the occupational health and safety issues for independent contractors which were the subject of recommendations in the 2005 House committee inquiry into independent contracting. The legislation also does not address the genuine structural disadvantage of contractors in Australia. It does not give certainty to the common-law definition of independent contractors. There is nothing in the legislation that promotes or assists flexibility above current arrangements, despite claims made by the government.

I cannot support this legislation—nor can anyone who genuinely cares about preserving traditional Australian values in the workforce. I think that the government with this legislation is sending a clear message to workers and their families. This legislation is saying to Australian workers: ‘You’re on your own now. You’re all on your own with no protections at all.’ That is the harsh reality of the legislation. It shows yet again that the Prime Minister has lost touch with many hardworking Australians. I certainly have a lot of locals telling me their real concerns about the Americanisation of our workforce. They also ask me what the future holds for their children and grandchildren when we are seeing constant extreme attacks upon the working conditions of so many Australians right across the board.

The effect of this independent contractors legislation will be to reduce the wages, conditions and entitlements of workers. As a result of these laws, genuine employees will now be pushed out of the employer-employee relationship and pushed into sham independent contracting arrangements. The result of that will no doubt be to reduce their entitlements, conditions and protections and place on them many additional burdens.

This is coming about at a time when working Australians are dealing with petrol prices and interest rates going up. At the same time, we are seeing this government keep knocking down wages, conditions and entitlements through their extreme industrial relations legislation. What these laws are really going to do is hurt ordinary working Australians like cleaners, electricians and the locals I spoke about before who have approached me with their concerns about this onslaught of extreme industrial relations changes.

These laws tear away the protections and entitlements for Australians who are essentially in a very inferior bargaining position. It is the most vulnerable people in our society who are going to be most severely affected by the extreme changes that we have seen put forward by this government. I certainly cannot stand by whilst traditional Australian workplace values are stripped away by these extreme industrial relations laws. I am completely opposed to this legislation.

Firstly with the Work Choices legislation and now with the independent contractors legislation, we have seen further attacks on Australian workers and Australian workers’ rights to access job security and decent working conditions. Australian workers have a right to be fearful about their working future and about that of their children and grandchildren. Right across Australia, they have very heartfelt concerns. They also have very grave concerns in my electorate, which is a regional area. In my area, we have over 32 per cent teenage unemployment, so with extreme workplace changes like this people are very concerned.

When we see extreme workplace laws come forward, like the Independent Contractors Bill and the Work Choices legislation, what completely amazes me is we see National Party members voting for legislation that completely undermines those of us in regional Australia. I have said before that many National Party members do not have the guts to get up in this House and stand up for regional Australia. It is in those areas where this sort of legislation really hits hardest. It is yet another example of how the National Party has sold out regional Australia. We have seen it on many occasions; they sold out with the sale of Telstra and with the Work Choices legislation, and no doubt we will see them selling out again with the independent contractors legislation. I think it really is shameful that they do not stand up for regional Australia. (Time expired)

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