Julie Owens (Parramatta, Australian Labor Party) Share this | Hansard source

I stand to speak on the Independent Contractors Bill 2006 and Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. When I saw this title on the Notice Paper some time ago I thought this would be an interesting debate. I was looking forward to seeing the draft of this bill because it provided such extraordinary opportunity for this government to do something real for an extremely important section of our society and our economy: independent contractors.

What we needed was a bill that provided incredible flexibility for equal partners but also very strong protection for the weak—those in weak bargaining positions and those who are really employees but are being forced into work situations under the name of contractors. We needed to recognise that there is an increasing range of workplace agreements in place that have developed over several decades, and increasingly in the last 10 years, and that there are systems already in place at the state level that have been developed to provide protections for the many people in this area.

I have to say I do not know where to start with this legislation. On the one hand, it is late. The government has been in office for 10 years—10 years of massive change in the workplace, an increase in contracting out and quite a lot of shades of grey in employment relationships. Only now, after 10 years, do we see a bill from a government that claims to be a government for business, and it is the wrong bill. It is a bill that belongs way back, the last time John Howard was in government. It assumes that we still live in a world where there are employees and contractors, everybody agrees on what they are and there is nothing in between.

This bill ignores the reality of life in the workplace in 2006, a reality that has developed over many years. There has been a gradual mixing up in the workplace of notions of employee and contractor, and there are now many more shades of grey. Patterns have emerged in some areas, particularly construction and transport, of workers who were once employees becoming dependent contractors. These are not small business operators in the real sense. They are employees in a slightly different kind of relationship with their employer, but they are still essentially employees. This group call themselves dependent contractors. This is the real world.

We have also seen a growing number of sham contracts, where people are stripped of their entitlements and conditions, pushed onto contracts that are really employment contracts by another name—but without the entitlements and protections—and left to be responsible for their own super, sick leave and holidays.

Estimates vary as to the total number of independent contractors operating in Australian workplaces, but the Independent Contractors of Australia claim that independent contractors as a percentage of total employment have grown from 16.4 per cent in 1978 to nearly 20 per cent in 2004, or 1.9 million employees. Whether that figure is right or whether the ABS has it right at around 800,000 in that year, it is still a hell of a lot of people—somewhere between 800,000 and two million. And then you can include their families. Those people and their families have come to rely on strong state legislation and systems of working and negotiation that have developed over time.

During that time, the unions have also done an extraordinary job in representing a group of workers that have gradually moved from employment contracts to dependent contract arrangements. State governments have also acted, building a network of protections and freedoms for genuine independent contractors, for workers caught by industry practice called dependent contractors and for workers caught by employer ignorance or greed in sham contracts. All the regulation and systems put in place acknowledge the clear definitions of the sixties and seventies, and it seems the government is more comfortable there—those decades where what you actually were was what you were called. You were a contractor or an employee. Those definitions have broken down with time.

Contrary to the view that I have heard expressed here by several members of the government speaking on this bill, people forced into sham contracts and, quite often, dependent contractors are not necessarily entrepreneurs. They are not people waiting to be released from the shackles of unemployment, which you would believe if you listened to the member for Greenway. They are not entrepreneurs waiting to explode into the small business world. They are actually employees. They see themselves as employees. They have the skills of employees, not small businesses. They are not entrepreneurs by any objective test; they are employees.

We also find dependent contractors called independent contractors in this bill. These are people who might provide their own tools or vehicle but who work regular hours at the direction of their employer. They cannot subcontract to another worker or send an employee of their own to replace them. They work a full-time week and cannot contract to another employer. They are dependent contractors at best and, at the most basic level, employees by another name. The workplace in this decade is a very messy place. There are employees and genuine independent contractors, but between those two there is a range of people who live in a shade of grey.

The employee has already been dudded by the Howard government’s extreme industrial relations legislation, and with this bill quite a few more will be dudded. I will say, though, that at least in this bill there is a transition period, which is not something that was given to Australian workers when Work Choices, or ‘Work Lack of Choices’, was introduced last year. It is much more than the Australian worker got under that piece of legislation. Howard’s love for business and his contempt for workers will work in the favour of workers who have been inappropriately called contractors. At least in this legislation you can see the trouble coming through that transition phase. At least these workers, which again John Howard thinks of as contractors and therefore deserving of more respect than employees, will get to rearrange their finances and look for other work as they see that transition period move them towards a much harsher environment than they currently enjoy.

Transition period or not, it is the middle ground that has been most dudded by this bill. Actually, they have not been left out of consideration; they have been misunderstood and left with considerably less than they have now, because the middle ground does have protection now. Over time, as the workplace changed so too did state legislation. A raft of protections, representation by unions, including collective bargaining, and state law provide safety mechanisms, and unfair contract law at state level provides considerable relief for those who are unfairly treated and have unequal bargaining positions.

One of the key protections that have been built up over time and dismantled in these bills is the state laws with employee-deeming provisions. Deeming provisions in state IR law deem certain categories of independent contractors to be employees and grants related entitlements to those independent contractors. 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. These deeming provisions cover a fixed range of occupations and include milk vendors, cleaners, carpenters, joiners, bricklayers, painters, bread vendors, outworkers in clothing trades, timber cutters and suppliers, plumbers, drainers, plasterers, blinds fitters, council swimming centre managers, ready mixed concrete drivers, Roads and Traffic Authority lorry drivers and others as prescribed by the regulation. These state provisions recognise the unequal bargaining power of these categories of workers compromises their ability to negotiate fair and reasonable working conditions. In many cases, working arrangements for workers in the deemed categories are not different in any real way from those of employees. Often they have little understanding of how the work relationship will operate before they enter into it. State deeming provisions offer protection to workers from disguised employment relationships.

The government has allowed a transitional period, though it does vary across industries. Generally, deeming provisions will continue to apply to existing contracts for three years after the commencement of the act and parties may leave early, if they wish to, under section 33. Three years down the track, though, the result of overriding the state deeming provisions will be to leave many vulnerable workers in unfair bargaining situations and without access to basic entitlements.

A second concern relates to state transport owner-driver laws, particularly for me those of New South Wales. The bill does provide for an exemption for New South Wales and Victoria owner-driver legislation but will review that exemption in 2007, which means that it is possible and perhaps likely, given the track record of this government of delaying anything nasty until after the election, that we will see an end to the state transport owner-driver laws sometime after the next state election.

Those state laws have served New South Wales well. When it comes to owner-drivers—those men and women who drive tip trucks through our suburban streets, for example—the state laws provide a base level of conditions and income for owner-drivers so that we do not have a situation where in order to pay the costs of their vehicles drivers will drive uninsured, overloaded or overtired. The base level of contract which has been collectively negotiated ensures that a driver can drive safely through our streets and still make a living. It is in no-one’s interest to see those conditions downgraded. It is in no-one’s interest—in fact it is a safety issue in the community—to see drivers forced into situations where they cannot afford appropriate insurance or the repair of their vehicles and where they are forced to work longer hours than are safe. Those laws have worked very well in the state of New South Wales and have created a basic living for a range of people who choose to take a slightly different path in their working lives from a regular employee or, for that matter, a small business owner.

Those laws apply only to single-vehicle owner-drivers who are dependent contractors with one company. Those drivers are often required to brand their vehicles with the name of the company for whom they work. They cannot work for other companies; they cannot send in a replacement driver. They are effectively totally dependent on the one company for which they work. As such their bargaining positions are negligible without that collective bargaining power which up until now they have had through some very effective unions that have worked tirelessly and found new ways of representing a group of people who have moved over time from the employee to the dependent contractor relationship. This exemption for both New South Wales and Victoria is due to be reviewed in 2007. The review opens up the prospect that some exemptions will cease either before or, most likely, after the next federal election if the government is re-elected.

A third area of very real concern is the exclusion of the state unfair contracts jurisdiction. Independent contractors under this bill will no longer be able to access state unfair contract laws. The bill creates a federal unfair contracts jurisdiction, but it is less than those that contractors currently enjoy under the states. The tests of the states are much broader and much more easily accessed. Quite frankly, the government’s sham contracting arrangements are an absolute sham.

The explanatory memorandum describes a sham contract arrangement as an arrangement through which an employer seeks to disguise an employment relationship as an independent contract in order to avoid responsibility for the legal entitlements of an employee. This type of arrangement is an absolute blight on our labour market; it is an absolute abuse of the system, and all members in this place know it is far too common. But this bill seems to be written as if the assumption is that people who get caught in unfair contracts are all actually functioning small business operators. That is not the reality. The majority of people who get caught in these sham arrangements are actually employees, quite often at the lowest skill levels in our community. They are people who are being forced off regular employment agreements, with all the entitlements, and forced into sham independent contract arrangements. This bill, again assuming that these people are actually powerful entrepreneurs in their own rights, reverses the onus of proof and requires the contractee to demonstrate that they could not reasonably have known that the contract was an employment contract rather than a contract for services. It requires the worker who has been forced onto a sham contract to prove that the employer did not know that this was actually a genuine employment contract.

Because such cases are fought out in the Federal Magistrates Court and not by the Industrial Relations Commission they are across jurisdictions, so any affected worker who manages to get through the complexities of the system also faces the prospect of having costs awarded against them should they be unsuccessful in challenging a sham arrangement. This bill assumes a very black-and-white world. Again, it assumes that you are either a small business person or an employee. It totally ignores the extraordinary conditions that some people find themselves in: unskilled in the ways of business, employees for most of their lives—usually in an unskilled occupation—and suddenly forced into the commercial world. They are taken out of an industrial relations system where up until now there has been an umpire prepared to independently consider their circumstances, and forced into a situation of lawyers, legal costs, the court system and the extreme complexity of commercial law.

This is an extremely complex bill. It provides an additional layer of complexity. The provisions are highly prescriptive and introduce a whole new range of concepts—for example, pre-reform commencement contracts, continuation contracts, related continuation contracts, remedy contracts, test contracts and the contractor law test designed to clarify the continued application of the state contract deeming provisions to relevant services contracts. Most small business operators I know are too busy getting on with their lives and running their businesses to try and get their heads around what all that means. And an employee who is being squashed into a contract relationship that is unwanted and inappropriate does not have time or, perhaps, the expertise to get their head around all of that. I had fun writing it myself.

Some types of contracts that are entered into after the commencement of the bill will be subject to relevant state laws and others will not, depending on whether they satisfy a range of technical requirements. This bill does not deal with the complexities that are already in the real world, but it does add a whole stack of new ones. It is absolutely ideology gone mad, this absolute belief that the market will sort it out and that there is a group of people in the workplace desperate to blossom into entrepreneurs as soon as this nasty industrial relations system is ripped out of the way and the way is made clear.

I find that anybody in Australia who wishes to be an entrepreneur probably already is one. There are no barriers to entrepreneurial activity in this country, and there are many people who are doing it quite well, even with an industrial relations system which the government clearly believes has been an appalling burden over last 10 years. I find it difficult to understand how it has been such an incredible burden on the one hand and yet the government brags about the growth that has been achieved over the same time.

This might be the first bill to include the role and classification of independent contractors under legislation, and it probably is time, as I said initially, that that was done, because this is a growing area—not only in numbers but also in importance. But this bill does not bother to define this. The principle underpinning this bill is that the contracting relationship should be governed entirely by commercial law, not by industrial law. That has been the case for quite a while, and reaffirming it does not add anything for those who are genuine independent contractors. In fact, by removing independent contractors from the flexible state unfair contracts law, it removes protections and flexibility.

There has also been concern expressed that, while a worker may be hired on a commercial contract basis, they may meet the definition of an employee for tax purposes. The tax office does have its own definition, and we now have two ways of looking at ‘employee’ and ‘independent contractor’ definitions. Alienation of personal services income, the PSI tax rules which came into effect on 1 July 2000, removed most tax advantages for personal services contractors, while independent contractors must cover expenses for salary continuance, superannuation— (Time expired)

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