Trevor Evans (Brisbane, Liberal Party) Share this | Hansard source

I rise to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017. It is an area of law and of practice where I have had some experiences, given my previous work with the business sector and my former role in the retail sector. I will start by putting on the record my strong and unequivocal support for cracking down on the deliberate underpayment of workers, and vulnerable workers especially. This bill before the parliament follows some headline cases of systemic and deliberate underpayment of mostly young, mostly foreign and mostly vulnerable workers. It is always a reasonable observation to make, of course, that there are good and bad employers and there are good and bad employees. My personal experience is that the vast majority of employees and the vast majority of employers are overwhelmingly good and trying to be so. The member for Gorton made the same point.

Yet, when it comes to that small number of bad apples, we cannot throw the book hard enough at those who would seek to deliberately flout the law. Any business which deliberately and systemically underpays its employees is not just committing a terrible act that directly hurts its own team members; it is also hurting every other small business with whom it competes by gaining an unfair cost advantage over them, and it is potentially attracting the patronage of customers who would be appalled to know that they are supporting a business that would break the rules.

I want to also put on record a comparison of how this government is taking action compared to the former Labor government taking no action in this space. I note that the member for Gorton in his initial comments and other Labor speakers including the member for Hindmarsh just then were using weasel words along the lines of this bill not going far enough. But, for the record, Labor had absolutely no policy to protect vulnerable workers during their six years in government recently. They actually slashed the funding of the responsible agency, the Fair Work Ombudsman, by 17 per cent, from $150 million down to $124 million, over those six years. That is when the now Leader of the Opposition, Bill Shorten, was the minister for employment, incidentally, and directly responsible for this. As a consequence of Labor's funding cuts and approach, that regulator cut its staff numbers over those six years of their government by 20 per cent, down by about 173 workers. That was effectively a reduction in the number of cops on the beat that Labor oversaw when they were in government and, as I said, when the now Leader of the Opposition was the minister responsible for this important area.

I will give some credit to Labor here. They did finally come up with a worker exploitation policy at the very end of the campaign last year. The member for Gorton confirmed that when he referred to their policy as being initially announced 12 months ago. But you always have to remember to judge Labor on what they do, not what they say. Their policy came three years after they were in government and responsible for the portfolio. Sadly, as always with Labor policies, it was full of good intentions but massively flawed. Labor's policy proposal applied higher penalties but exempted businesses like most 7-Eleven franchisees on the basis of their size, which is pretty shocking when you consider that the 7-Eleven case has really been the headline case when we think about this bill.

In stark contrast to the record of those previous Labor governments, this government has already taken a number of significant actions in the area of protecting vulnerable workers. Two years ago, before any Labor policy had ever existed in this area, this government established Taskforce Cadena, a joint task force between the Australian Border Force and the Fair Work Ombudsman, to target and disrupt criminals organising visa fraud, illegal work and the exploitation of vulnerable and foreign workers.

This government made changes to require a valid payslip as proof of paid work before a second working holiday visa could be granted to a temporary migrant worker. This government outlawed payments to the sponsors of foreign workers by making it a criminal offence for employers and visa applicants to solicit or receive a payment in return for visa sponsorship. This government has better funded our enforcement bodies to ensure that employers comply with their obligations as sponsors of 457 visa holders. That is the record of this government to date, and anyone who really cares about protecting vulnerable workers would compare those very real achievements, together with the proposals in this bill right now, to the lack of any policies or actions under any Labor government to date, and they would draw certain conclusions from that.

This bill before the House now proposes to build on everything this government has already achieved and makes essentially six further changes to the Fair Work Act, but these amendments to the law are not being proposed in a vacuum. On top of the amendments to the law, this government is boosting funding to the regulator, the Fair Work Ombudsman, by $20 million. This is about ensuring that the regulator, the cop on the beat, has the resources to better investigate and prosecute those who do deliberately exploit workers. Of course, we established the Migrant Workers' Taskforce, chaired by the former ACCC chair Professor Allan Fels to target employers who exploit migrant workers and continue to monitor the progress of 7-Eleven in rectifying its terrible cases of worker underpayment.

In terms of the six main changes this bill proposes to make to the law, firstly, this bill will amend the Fair Work Act to increase penalties for serious contraventions of payment related protections in the Fair Work Act. These higher penalties—10 times the current penalties—will apply where contraventions are systematic and deliberate. Secondly, the bill will amend the Fair Work Act to increase penalties for breaches of recordkeeping and payslip requirements to make them consistent with the existing higher penalties that apply for the underpayment of workers. That will be a doubling or a tripling of existing penalties. On the topic of increased penalties, I want to make it clear how strongly I support higher penalties for those found to be involved in deliberate and systemic underpayment of employees. All of my experience working with retailers and small businesses leads me repeatedly to the important and significant distinction between deliberate and systemic noncompliance and technical, inadvertent and minor breaches that, sadly, too many small businesses occasionally do commit due to the complexity and ever-changing nature of their regulatory environment.

I will return to this fact in a moment, but, when regulators such as the Fair Work Ombudsman audit small businesses in sectors like retail, fast food, hospitality, liquor, and hair and beauty, they often find noncompliance rates of about 40 per cent. A long list of regulators actually finds similar rates of noncompliance in small business—around that 40 per cent number—in a whole heap of areas, not just in industrial relations. We are talking, say, health and safety or consumer law, by way of example. This noncompliance the regulators frequently find is substantially minor, technical and inadvertent in nature rather than serious or deliberate, but the point needs to be made that we have so many areas of regulation now with the rules changing so frequently in so many of those areas that small businesses in Australia are often already overwhelmed. So it is vitally important that we do draw this important distinction that these amendments seek to make between conduct that is clearly deliberate and systemic versus conduct that is inadvertent, minor or technical in nature.

I said in my maiden speech last year that many small businesses survive right now in a fraught purgatory of noncompliance and nonenforcement and that they do need a strong voice. I do not want to see well-intentioned but ill-considered or poorly administered new rules further strangling or unnecessarily killing our struggling small businesses. So I support amendments which would seek to tie harsher penalties to conduct which is systemic and deliberate in nature. I suggest it is a good approach for policymakers to consider on future occasions.

Further amendments the government is proposing to make to the Fair Work Act include outlawing cashback, another coercive behaviour by employers, where employees may be paid correctly but are then forced by their employer to repay part of their wages. That was a very specific type of conduct we saw emerge in that 7-Eleven case, and it is clearly inexcusable.

On top of the increased funding provided to the regulator to be a better resourced cop on the beat, this government is also proposing amendments to the Fair Work Act to increase its capabilities and powers. These amendments seek to expressly prohibit hindering, obstructing or providing false or misleading information to Fair Work inspectors who carry out investigations into compliance. These amendments also seek to strengthen the evidence-gathering powers of the Fair Work Ombudsman to ensure the regulator can gather evidence where proper records to do not exist and to overcome that culture of fear that often prevents vulnerable workers from coming forward. These are similar to the powers held by ASIC and the ACCC.

I support these amendments and I want to add a comment in passing that it will be incumbent on the Fair Work Ombudsman, as it is on all of our regulators to use their powers wisely and proportionately on the cases of potential noncompliance they are investigating. I am all too aware of the temptation for regulators, and the individual investigators within them, to sometimes shy away from larger or more complex cases and to target smaller, easier cases, such as small businesses with a lower capacity to respond to investigations and achieve natural justice.

I have spoken before in this place about the need to ensure the culture within Australian regulators is one that avoids any preference for seeking scalps, through media releases or high profile court rulings, if that comes at the expense of pursuing more serious or systemic noncompliance or if it comes at the expense of achieving better overall rates of compliance in particular industries of concern. It comes back to my comments earlier about throwing the book at those involved in the most serious, deliberate and systemic cases of noncompliance, whilst understanding that small businesses are sometimes found to be noncompliant in minor technical and inadvertent ways.

The final amendments the government proposes to the Fair Work Act are to clarify the accessorial liability provisions to ensure franchisors who are complicit or turn a blind eye to underpayments are responsible for rectifying them. That involves the introduction of a three-step test. If a franchisee or a subsidiary contravenes a payment related provision of the Fair Work Act and the franchisor or holding company (1) has a significant degree of control over the franchisee or subsidiary and (2) reasonably should have known of some noncompliance, then the franchisor or holding company will be found to be liable for the noncompliance, unless (3) they took reasonable steps to prevent it.

On the specifics of that drafting, I note comments by the member for Gorton earlier and indeed some other members here about the drafting and about the Senate Education and Employment Committee inquiry into this bill. The inquiry conducted hearings and I was very interested to observe the contributions of many of the stakeholders with experience in these matters. That Senate inquiry reported back last night, and I have had the opportunity to read its recommendations this morning.

The Labor opposition and the Greens in dissenting comments in that report have proposed additional amendments that would be just crazy. They have proposed reversing the onus of proof. They have proposed imposing strict liability and they continue to show that they have no sense of proportion or context or understanding of how businesses actually operate. It is not a question of being pro business or anti business it is about having enough of an understanding of how things work to make a meaningful and practical contribution to solving problems like this. It is all shallow posturing and undergraduate solutions with modern Labor. Of course we should not be surprised; very few of them have ever been involved in small business or the private sector. They do not have the context to understand how franchising works or how small business works.

The majority report of the Senate committee, however, did hear and understand the evidence given to them by many of the experts and those with experience in these sectors. They made a number of recommendations, and I would like to note and commend one of them in particular: the first recommendation of the committee, which is that the control exerted by a franchisor or holding company be linked to workplace relations matters. Anyone who has been involved in franchising will understand the common sense behind that recommendation, and witnesses to the Senate inquiry made that point very strongly. Franchising by its very nature involves control; it involves quite detailed contracts full of obligations, responsibility, liability and certain rights. Even in cases where a franchise system is fairly limited—to, say, bulk buying or joint marketing—there is going to be some evidence there of significant control. Finding a link between the arrangements that shows the franchisor or parent company having some oversight or influence in the payroll functions or rostering functions is a necessary precondition towards allocating blame and responsibility in cases of systemic underpayment. Of course in the 7-Eleven case that test would have been easily met. The 7-Eleven head office had direct oversight of rostering and was involved in processing payroll after all.

Lastly, I believe it would be helpful to provide clarification around what reasonable steps might be in relation to the third limb of the proposed test. Whether that clarification is proposed in the legislation or by the regulator, the point is that the certainty it would provide would be helpful, which was also a point made very strongly by witnesses to the Senate inquiry. We are, after all, aiming for compliance here, not the creation of further cases of inadvertent and technical noncompliance. I strongly and unequivocally support cracking down on the deliberate underpayment of workers, and vulnerable workers especially. Labor did nothing in office, and are now proposing crazy and extreme responses. This government is acting.

See this speech in context