Ross Hart (Bass, Australian Labor Party) Share this | Hansard source

I am pleased to be able to speak on the Fair Work Amendment (Protecting Vulnerable Workers) Bill 2017 which is currently before the House. The bill goes some way to addressing the ever-increasing community concerns around the exploitation of vulnerable workers by unscrupulous employers.

The Fair Work Act is amended in several key ways by this legislation. Firstly, it introduces a higher scale of penalties for serious contraventions of proscribed workplace laws, as well as increasing the penalties for record keeping failures. The bill makes franchisors and holding companies responsible for underpayments by their franchisees or subsidiaries where they knew or ought to have reasonably known of the contraventions and failed to take reasonable steps to prevent them. I note that this responsibility only applies where franchisors and holding companies have a significant degree of influence or control over their business networks. The bill also expressly prohibits employers from unreasonably requiring their employees to make payments—for example, demanding a proportion of their wages paid back in cash, a sickening situation that was recently revealed by the Fair Work Ombudsman's recent inquiry into 7-Eleven. Lastly, it strengthens the evidence-gathering powers of the Fair Work Ombudsman to ensure that exploitation of vulnerable workers can be effectively investigated. The new examination powers will provide the Fair Work Ombudsman with a greater suite of options to investigate potential noncompliance with workplace laws. The ombudsman is also given new avenues to pursue those who hinder or obstruct investigations or provide false or misleading information to the regulator.

What this bill does not do, however, is go far enough in protecting our most vulnerable and low-paid workers. Labor will support the passage of this bill through the House because the current extent of worker exploitation within Australia's economy is such that anything is better than nothing. I would make the point, however, that this bill falls well short of the policies and legislative reforms Labor took to the last election directed towards combating sham contracting, licensing labour hire companies, shutting down the practices of companies phoenixing to avoid wage liabilities, reforming the Fair Work Act to strengthen protections for workers and criminalising employer conduct that involves the use of coercion or threats during the commission of serious contraventions of the Fair Work Act in relation to temporary overseas workers or making it easier for workers to recover unpaid wages from employers and directors of responsible companies.

Significantly, there is one particular group of vulnerable workers which it is clear the Turnbull Liberal government has no interest in protecting. We just heard the member for Brisbane giving us a lecture on how Labor could or should have acted earlier. Strangely, he was silent when addressing the issue of protection of the lowest-paid workers in Australia. This government has wilfully refused to support the wages of low-paid workers. The evidence is there for all to see. Not only has the government refused to take any action in support of preserving the pay of those affected by the Fair Work decision with respect to penalty rates, the government also does not support any move to ensure that low-paid workers receive reasonable increases in their remuneration so as to keep pace with increasing costs of living. Paradoxically, this wilful refusal to support the incomes of low-paid workers also hurts the substantial constituency that is small business which must suffer if their customers have reduced spending power, in that discretionary spending is eroded by low wage growth not meeting the costs of living pressures. This underscores a fundamental difference between a government which claims a focus on jobs and growth but through its actions can be seen to be favouring large corporations, at least with respect to the government's failed proposal to deliver $50 billion worth of tax cuts over 10 years, which was recently reaffirmed in the budget last night. This tax cut will be delivered to the largest corporations in Australia. In contrast to that, Labor puts people first.

Labor accepts that small business is the engine room of the economy an drives employment. However, there is a consensus, particularly amongst economists, that low wage growth is a real risk to the present economy. Ideological insistence by those opposite on driving down the costs of doing business, which ignores that labour costs also represent the discretionary income of consumers within an economy, can ultimately destroy the living standards of our community. This is why Labor is particularly concerned to ensure that low-paid and, in the present case, vulnerable workers receive appropriate protections. This is another example of what Labor stands for: the rights of ordinary people so that all within our communities can benefit. Putting people first benefits all, including businesses.

The list of areas which are not addressed by this bill has already been outlined. The fact that these issues remain to be addressed is of concern. It is perfectly obvious from the conduct identified in multiple inquiries and reports that a culture of avoidance of employer obligations with respect to employees has infected a range of workplaces. Exploitation of temporary work visa holders, the appalling revelations with respect to the 7-Eleven franchise abuses, the misuse of labour procurement arrangements of the Baiada Group and, indeed, other reports of workplace abuses indicate that this may be fertile ground for further legislation should a government take further interest in the issues identified in these reports.

In its Fair Work Amendment (Protecting Australian Workers) Bill 2016, introduced into the Senate on 15 March 2016 and restored to the Notice Paper on 31 August 2016, Labor acted to address serious allegations of disgraceful treatment of workers by well-known companies. This government was silent until now despite the appalling nature of the revelations.

The present revelations include subcontractors engaged by Myer employing cleaners on sham contracts where workers were paid below award wages, workers were denied penalty rates and superannuation and workers were employed without appropriate OH&S protections. The 7-Eleven stores operated a business model based upon a methodical, systematic exploitation of vulnerable foreign workers, including underpayment of wages, fraudulent manipulation of pay records and workers threatened with deportation and physical intimidation in order to extract payments of cash to cover up award noncompliance. Pizza Hut delivery drivers were paid as little as $6 an hour under sham contracting arrangements. Poultry processing involved exploitation of temporary overseas workers forced to work dangerously long hours for less than the minimum wage housed in overcrowded and substandard accommodation.

Just this year we have heard further allegations with respect to other high-profile businesses. Caltex staff were working night shifts for $13 an hour, half the legal entitlement, and there was widespread underpayment of staff across the outlets. At Domino's claims have been made of franchisees selling visas to prospective overseas workers together with claims of systematic underpayment of workers.

Reform is a priority. I say that this is a real priority because a failure to address these issues has the potential to strike at the heart of our workplace relations system. Labor takes the view that a comprehensive approach should be taken to workplace relations so as to protect all workers. Employers who do not do the right thing and regard compliance with their obligations of minimum payments and workplace entitlements generally do not just exploit the workers they steal from; they also undercut employers who do the right thing. This undermines the integrity of our workplace relations system and arguably is a cost to the whole community in that the labour market is distorted, fair competition is impossible and, ultimately, our economy loses, whether by way of taxation which may be avoided through undocumented transactions or simply by way of exploitation of a worker who might otherwise participate in the economy in a more meaningful way with all the associated consumption that that implies.

The problem that I see with this bill and, indeed, with this government despite this bill is that the government sends an implicit message that avoidance of award obligations towards employees is in some way accepted or desirable, because they have a consistent message that the Australian employment framework is inflexible. We often hear from those opposite about the necessity for flexibility with respect to employment arrangements and that high wages mean that additional employment is more difficult. There is, of course, no suggestion that other business inputs such as rentals should be reduced so as to facilitate the employment of further employees or the opening of a business on a Sunday or a public holiday. Rather, each time, there is a call for low-paid workers to give up an entitlement so that the employer can choose whether to redirect that saving towards other purposes.

It is usually suggested that an employer will choose to employ additional employees on the basis that the current cost of overall cost of employment will be less. There is nevertheless scant evidence to suggest this will in fact follow. Employers are of course free to apply any such saving in any way that they rationally wish. No assumption should be made that a savings measure should result in any particular pattern of behaviour, including adding additional employment. I would like to see this government take real steps to protect low-paid workers in addition to those who were subject to the worst form of exploitation covered by this bill. In my view, the support of low-paid workers is just as important as ensuring the most vulnerable workers are not exploited and, for this reason, Labor will continue to press the government to support our private member's bill.

Returning to this bill, the opposition is broadly supportive of the measures within the bill but has some concerns with respect to the drafting of the legislation. The legislation has been the subject of an inquiry before the Senate Standing Committees on Education and Employment. There are some provisions which do not go far enough such as the prohibition of the practice of employers demanding unreasonable payments from their workers—for example, employers demanding a proportion of their employees' wages be paid back in cash so as to cover up an underpayment under an award, in the case of 7-Eleven, which does not apply to prospective employees. The effect of this does not capture the situation where employers in Australia might effectively sell sponsorship of working visas to people before they enter Australia—that is what is alleged to have occurred at one of the Domino's franchises.

The Fair Work Ombudsman has attracted the power to compel people to answer questions for certain purposes. However, there are not procedural protections within the bill which might have been expected to be included in such legislation. The bill falls short of the procedural protections that apply to the ABCC compulsory questioning power. As the shadow minister, Brendan O'Connor, has stated in the second reading speech, the power to give a government agency to compel citizens to answer questions is not a trivial power; it removes a right to silence. We must be vigilant to ensure that such powers are proportionate and that there are appropriate safeguards with respect to the exercise of that power.

Stakeholders have argued that the same procedural protections which apply to the ABCC should apply to the FWO; I agree. There are other provisions which appear to fall short of an optimal response to the identified misbehaviour. Multiple inquiries have suggested that franchisors and holding companies have effectively exploited underpayments by franchisees or subsidiaries. In a case where the franchisor or holding company knew or reasonably ought to have known of the contraventions and failed to take reasonable steps to prevent them, that franchisor or holding company should be responsible for those underpayments. The position as expressed in the bill does not include a reversal of the onus of proof, a position which Labor supported at the last election which would make the establishment of liability much easier without imposing a legal burden on the franchisor. In other words, this would be an evidentiary provision.

Labor favours the proposition that accessories to contraventions of workplace laws such as franchisors are required to establish that they did not know or could not reasonably have known about the contraventions. Labor supports the bill. However, it can and should be improved if this government is committed to the task of combatting exploitation of vulnerable workers.

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