Peter Andren (Calare, Independent) Share this | Hansard source

A dynamic and flexible mix of working arrangements is an essential part of a modern society and its economy. Independent contractors are a very important part of that mix, and within that framework, genuine commercial contracting relationships are obviously part of the economic mix—but voluntary, not involuntary, contracts. After all, those who choose to set up as a self-employed business and to contract out their skills and expertise work very hard. They often forgo the certainty of regular income, holidays or sick pay and choose to bear the burden of their own risks and costs: their superannuation, tax, workers compensation and legal liabilities. However, such contractors also enjoy the flexibility to determine the direction of their business and the freedom to negotiate their own terms and enter into the contracts of their own choice so they may enjoy the profits of their effort.

It is a sad indictment that when this government uses the terms ‘choice’ and ‘flexibility’ my suspicions are immediately raised about whom exactly will benefit from the proposed changes. The Independent Contractors Bill 2006 and its accompanying Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 purport to protect contractors by firmly placing all contracting arrangements within the realm of commercial regulation. A commercial contractual arrangement between contractor and client is fundamentally different to an employment contract and should remain unfettered by industrial regulations of neither party’s choosing.

But these bills blur important distinctions such as the removal of state and territory protective legislation and industrial relations tribunals. In this legislation, those so-called dependent contractors—who for all intents and purposes are employees but without the bargaining power to negotiate or insist on basic entitlements under contract—are explicitly removed well away from the reach of protection offered by state and territory employment regulations and placed firmly within the commercial sphere, on par with those who truly choose to be contractors. This means that some of our most vulnerable workers—those who have no choice but to take work under exploitative service contracts—may no longer refer to state and territory laws that recognise their employee relationship and thus protect their entitlements through deeming or unfair contract provisions.

According to the Minister for Employment and Workplace Relations, these current protections are in fact arbitrary restrictions on how independent contractors are to be treated under the law. But state deeming laws in relation to superannuation, workers comp, OH&S or taxation are not considered arbitrary restrictions. The so-called arbitrary restrictions in state or territory laws include workplace relation matters such as minimum pay, basic leave entitlements, hours of work and other conditions of employment. These are all overridden by this legislation. Yet these arbitrary restrictions are actually acknowledged in these same bills as important protections for two classes of contractors widely recognised as being particularly vulnerable groups of workers—that is, outworkers and sweatshop workers.

Outworkers in the textile, clothing and footwear industries retain access to existing state and territory protective legislation, but only where there is specific reference to service contracts in that legislation. Access to these protections is further qualified. In the absence of other legislated minimum pay rates, the default minimum rate is determined by the federal Australian Fair Pay and Conditions Standard, which may refer to similar going rates, which of course may be similarly unfairly low. Further, the head contractor or originating employer is only obliged to pay the statutory minimum standard to the worker with whom they have the immediate service contract. There is no requirement that they pay sufficient amounts to cover necessary costs by some subcontracted workers further down the contract chain, which is the framework on which the fashion industry operates. I will mention the telecommunications industry and its impact on so-called contractors in a moment.

Owner-drivers in the road transport industry also retain existing protections, but only in Victoria and New South Wales, where protective laws are well established. I would not be too confident about the protections remaining in place, given that future regulations could easily remove them. It has been made clear that a review in 2007 of this provision intends to rationalise and nationalise it. Those owner-drivers in other states suffering the same vulnerabilities are ignored, and they will be in the same position as other workers on commercial contracts: no longer able to access their states’ unfair contracts legislation, relying instead on the new federal unfair contracts regime established under this legislation.

The provisions relating to unfair contract provisions and sham arrangements mean that those employees who are already powerless enough to have been forced to take all the costs and downsides of a commercial business enterprise through a service contract with none of the choice or benefits of being their own boss would only have recourse to the Federal Court or the Federal Magistrates Court to determine whether a contract is unfair or is a sham arrangement engineered by the employer for their own financial convenience.

Consider contracted workers like those engaged in labour hire arrangements, cleaners, factory workers and people like the young person I spoke to recently who applied for a job at a call centre only to have to ask what an ABN was. She was required to provide one for that job that she needed so dearly. When she queried the terms of the contract, which included looking after her own insurance, super and other on costs for a paltry hourly rate of pay, she was offered a better deal. She had qualities, it seems, that the company wanted. An award rate with super set aside was offered, providing she did not tell the other employees. She told them it was totally unethical and rejected the offer and the job.

Good on her, but who can afford to stand on their dignity in this labour market, where an hour a week is regarded as employed and where kids are cobbling together a portfolio of part-time and casual work? It is not only kids but also people with mortgages and families. What deceit, and what a fraud that statistic is. And what political flexibility is now built into our employment statistics—talking of shams—to enable this sham full employment message to be put about. Both sides of politics hide behind those figures when it suits them.

While a court has the important ability to examine the true nature of the working relationship in its totality to determine sham and unfair arrangements, how on earth can these already disadvantaged and disempowered people even consider taking their employer/contractee before the Federal Magistrates Court or the Federal Court in the first place? Where on earth could they possibly get the capacity and finances to see through a formal, slow and costly court process—the only option available under this legislation? After all, it is the recognised reality of the vulnerable position of such employees that created the need for the state deeming laws in the first place.

Where once their interests may have been safeguarded and mediated by accessible and specialised industrial relations tribunals, they will be on their own with few resources in an alien and intimidating legal system. Remember that only a party to the contract may make such application. Thus, where once a group of workers could collectively make representation or request a union to act on their behalf, common-law tests can only be applied to individuals on a case-by-case basis. Where once collective agreements and awards provided safety net and deeming provisions that defined groups of dependent contractors as the employees they really are, such employees are now fully exposed to the free-fall of the market.

By removing those state safety nets and the ability to seek advocacy, the legislation draws yet another group of vulnerable employees into the government’s brave new world of industrial relations. It provides yet another opportunity for unscrupulous employers. Of course, employers are not all unscrupulous. That is the reason why I consistently supported the unfair dismissal provisions for businesses with up to 20 employees. I recognised that a workplace that was coherent and cooperative was in the best interests of all parties. But this provides an opportunity for unscrupulous employers to avoid the responsibility and employee entitlements that once went hand in hand with the employer-employee relationship, including investment in skills training. It transfers all the risk to the employee. It puts fairness and a fair go just out of reach for most of those whom this legislation purports to protect.

The legislation does nothing to clarify who is truly an independent contractor. It does nothing to synchronise with other laws, such as tax law, that would determine the rights and responsibilities of contracted workers. And it does nothing to encourage investment in a skilled and prosperous future for all Australians. I support the tenor of the second reading amendment moved by the opposition. I will support it, symbolic as it is. No amount of detailed amendments will rescue this package from unfairness.

The Prime Minister spoke in question time today about a fair workplace—the new, fair workplace. Tell that to the workers at Cowra abattoir, faced as they are with the prospect of only getting some help from taxpayers as an employer allegedly shifts assets around. The GEERS—that is, the General Employee Entitlements and Redundancy Scheme—is welcome. But at the end of the day it seems like it could well be an incentive for a company to go belly up by whatever means and expect the Australian people to take responsibility for workers’ entitlements—or only part thereof—that should be the responsibility of the employing company. What chance is there of a GEERS for contractors? There is nil, especially now, with the removal of the deeming provisions.

Let me tell the House of a very pertinent story, so relevant to this debate. The biggest telcos, Telstra and Optus, rely on contractors who deliver a service through a middle company. It is usually one of Downer, Transfield or BSA. These dependent contractors rely on the price struck by their related contracting company. In Telstra’s case it is Downer. Telstra winds back the contract price to Downer. Downer picks up the loss by winding back the individual contractor rates. By how much? I heard today that the rate has been wound back to a flat $80 for rural contractors.

The contractors have been told to accept the same rate as their city counterparts to cover all their costs, including vehicle, fuel for use in the bush, insurance, superannuation and all on costs of running a small business from their van. What is more, there is no longer a second code rate—that is the amount for the necessary fault-finding follow-up after a repair has been made to the line. So these rural contractors are now facing a cut of up to $25,000 in their annual income. In one case, that amount is exactly that of the mortgage repayments of the young couple relying on the contracted rate.

What can these men—and in this case they are all men—do? They cannot take on their immediate contractor, Telstra. Downer shrugs its shoulders and says that it is Telstra’s fault. These people are employees—they get their jobs from Downer, Downer decides where they work and they rely on Downer exclusively for their income—and yet they are deemed to be contractors. Now they receive the same payment for the quite different and more expensive work of maintaining the rural telephone network. This is a company that is squeezing massive monopoly profits while it can—profits for the benefits of private shareholders—from what is, in many circumstances, a parlous network, when it should be servicing the needs of all Australians. Those repairing the lines should be rewarded according to the level of their skill and the absolutely vital role they are playing in providing telecommunications to all Australians, but especially rural Australians. By dint of legislation such as this, the government is complicit in the winding back of conditions for these contractors and ultimately in the winding back of protection for the most vulnerable of people: those caught between employee and contractor status.

I received an email from a non-award employee this week who said:

I completely support your outrage at the blatant grab for money when the government and opposition agreed to increase the parliamentary superannuation to just over 15%.

However, he points out that increasing the employer contribution for all workers to 15 per cent would mean that he and other workers on TECs, total employment cost packages, would find any increase in the super guarantee simply trimmed from the package. In other words, the pre-tax salary of the employee is reduced to cover the additional superannuation. As my correspondent points out:

My family barely survives as it is on my single income and I certainly couldn’t absorb a cut of $3,000.

Nor should he. Nor should this prevent this parliament working out a means of ensuring the superannuation guarantee is increased to that enjoyed by its MPs—with existing members of the old scheme, by the way, required to join the new one.

A tax relief mechanism must be determined to account for an honest, guaranteed super payout for all workers whether they are award employees, non-award employees or those contractors who are forced to accept a fixed—and in the case of those telecommunications workers, a reduced—rate for their vital services. The dilemma facing young workers who are seeking to provide for their retirement is highlighted by the inflexibility—not the flexibility—of the whole new workplace relations and independent contractors legislation. It is flexible only for the hirer of labour, not the provider, unless they are in that small fraction of the workforce that can name their own price.

Rather than workers and contractors being relaxed and comfortable as Australians were encouraged to be at one stage over the past decade—as this government chipped away at workplace and human rights—this legislation erodes individual financial security, increases insecurity and anxiety and further swings the pendulum away from fairness and towards exploitation. I hope there are sufficient senators who stand for family and small business values who will reject this legislation when it reaches the other place. It deserves to be trashed.

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