Sharon Grierson (Newcastle, Australian Labor Party) Share this | Link to this | Hansard source

I rise today in continuation on the Independent Contractors Bill 2006. Prior to the interruption of debate, I was discussing how much money the government had been wasting on advertising its industrial relations changes, and I will come back to that. Since the debate was interrupted, the Senate committee looking at the Independent Contractors Bill has tabled its report. It does not make comfortable reading for government MPs, I would imagine.

The committee unanimously recommended that the whole of part 4 of the bill be removed. This is the part which you will recall sought to remove protections such as annual leave, public holidays, overtime, superannuation, workers compensation and redundancy pay from outworkers in the clothing industry. The government’s own senators have rejected these unfair provisions, which the committee found ‘serve no useful purpose’. I think they could have gone further and rejected the bill in its entirety, because the rest of the bill also serves no useful purpose. This bill, just like Work Choices, is about as far as you could get from the fairer, simpler, national system that the government spent over 50 million taxpayer dollars advertising.

The Australian people know that the Howard government’s extreme industrial relations laws are not fairer. I have had massive amounts of feedback into my office from people who are concerned for themselves, their children and their grandchildren. The changes are certainly not national. Work Choices gutted the state systems but still left them with some jurisdiction. This bill overrides some state laws for some independent contractors and leaves others alone. And the laws are not simple. The common-law criteria that will be used by courts to decide who is and who is not an independent contractor under this bill are more difficult and complex than the state deeming rules. This bill overrides the deeming provisions of state industrial laws but leaves other state legislation—such as occupational health and safety and workers compensation—alone.

So it is not a simpler system. The only simplistic thing about it is the Howard government’s simplistic argument that individuals are in a better position when they are stripped of their rights and they are negotiating on their own against their employer. This is more of the same ‘every man for himself’ stuff that we are now used to from this government. It is estimated that around 40 per cent of independent contractors only deal with one employer. In effect, they are wholly and solely ‘dependent contractors’. These people are employees in all but name, yet this bill is going to let their employer avoid their obligations to their workers.

This bill is going to encourage sham arrangements, where genuine employees are shifted into contracting arrangements so that employers can avoid paying workers’ entitlements. The protections for workers against such actions are simply not strong enough, and the encouragement to employers to engage in sham arrangements are simply too great. It is always worth reminding people that many employers will do those sorts of things just because they can. Just as Work Choices encourages the spread of AWAs to undercut wages and conditions, starting a race to the bottom, this legislation encourages the shifting of workers into contracting arrangements with lower wages and fewer conditions.

So the incentives for bad employers are strong, just as the protections for workers are weak. Under this bill, the onus of proof is reversed so that the worker has to convince the Magistrates Court that the contracting arrangement was or would be an employment arrangement. After that, the worker would have to rebut any claims by the boss that they acted in good faith, genuinely believing that contract was for services, and could not have been expected to know that it was a contract of employment. These claims of good faith will in all probability be very difficult to refute.

So, once again, the Howard government is stacking the odds against the ordinary worker. It is a move to further centralise power in the hands of the government and its Minister for Employment and Workplace Relations, who, by the way, has his own ‘independent contractor’ now—his new assistant, Mr Hockey, the Minister Assisting the Minister for Workplace Relations. On the surface, it looks like this appointment is a bit of a ‘good cop, bad cop’ routine—Minister Andrews, the hard, cold, uncaring face of Work Choices, is now joined by the jovial Mr Hockey, the Minister for Human Services, who presides over a supposedly kinder, gentler Centrelink, which he said last year would ‘put the “service” back in service delivery’. It looks like a good match, but I am not sure. Let us not forget that Minister Hockey retains the responsibility, through Centrelink, of implementing Welfare to Work—not so jolly and jovial there—the policy that sees 16-year-old kids with leukaemia forced to get a job. And now he is the assistant for Work Choices—the policy that forces down wages and conditions so that people are forced to accept anything they are offered, otherwise they will have their benefits cut.

I have always said that these two policies—Work Choices and Welfare to Work—when taken together would wreak havoc on young people, the unskilled and people with sickness and disabilities. And now, by giving Minister Hockey responsibility in both, the Howard government has confirmed just how closely these two policies are linked. Under the new welfare system, a person on Newstart must accept an offer of a job or run the risk of being breached and losing their benefit. Under the new industrial relations system, that person can be made a ‘take it or leave it’ offer of an individual contract containing the minimum wage and four other minimum basic conditions. Remember that under the new Fair Pay Commission—another great product of the Howard government spin factory—there is every chance that the real value of the minimum wage will be eroded over time.

So let us look at the choice this person faces: take the job on the boss’s terms or risk not only not having a job but also losing the Newstart allowance. It is not much of a choice. But these two pieces of legislation—Work Choices and Welfare to Work—were always intended to go hand in hand to slash wages. Now we have the ministerial crossover—the two ministers going hand in hand to enforce this crackdown on the low paid and the disadvantaged.

At the same time, the government has also launched a backbench industrial relations task force which is designed to, and I quote the Prime Minister’s announcement:

… better inform the Australian public how these changes—

Work Choices—

will strengthen the Australian economy.

As far as we can tell from the Prime Minister’s announcement, that is the task force’s only role—just more spin.

Families all around Australia are feeling the pinch as these extreme industrial relations laws hit home, and all this out-of-touch government can do is keep trying to convince them they are actually better off as their incomes and their conditions slide ever lower. The government will not actually listen to the Australian people about how these laws are affecting them. This task force will not be out there listening. It will not actually try to quantify the impact of these laws on our economy or the wages and conditions of Australian workers. By contrast, the Australian Labor Party have been listening to the Australian people. The Labor Party established their own industrial relations task force in December last year. Since then we have been listening to communities all around this nation. We have been out there hearing what is actually happening in places like Launceston, Townsville, Blacktown, Tumbi Umbi, Darwin and Lismore.

The Labor Party has an acute understanding of the impact of Work Choices, and that is why it is opposing the further extreme changes contained in this Independent Contractors Bill. I must say that recent attacks by the minister in the House on people who presented to Labor’s IR task force are just so typical of the bullying attempts to muzzle people in our communities. Apparently, according to the minister’s comments, if you are a member of a union you do not count as a real Australian. What rubbish! Like Work Choices, this bill removes rights, entitlements, conditions and protections that should be afforded to all Australians in the workplace, whether they be employees or independent contractors.

I noted an earlier government member speaking of ‘setting the workers free’. Well, the only things this legislation is setting the workers free from are their protections, their rights, their conditions and their dignity. The government is not setting the workers free; it is actually cutting them loose. This is another bill that is all about the Howard government’s utter contempt for the working people of this nation. It is the government saying to independent contractors, as it is saying to all Australian workers: ‘You’re on your own. Look after yourself.’ It is survival of the fittest, but those who are less fit and less powerful in the workplace will certainly miss out. We are sick of the government saying ‘Good luck’ and leaving these people desperately hanging out. They do need support, as everyone does. This country is strengthened by a strong labour movement based on equity and fairness. The Independent Contractors Bill 2006 is not about a labour movement that is committed to delivering economic prosperity to this nation. In fact, it undermines its citizens’ commitment and willingness to do so.

Michael Johnson (Ryan, Liberal Party) Share this | Link to this | Hansard source

As always, it is a great pleasure to speak in the House of Representatives chamber of the Australian parliament, where I represent the wonderful people of the western suburbs of Brisbane in the electorate of Ryan. I am delighted to speak in the parliament today on a very important bill, the Independent Contractors Bill 2006, and a related bill. While I am in the chamber, I would like to bid a very good afternoon to any of my Ryan constituents who might be listening. I think there are a couple; they emailed and phoned earlier to say that they would be listening to my speech because they have a very great interest in this legislation, which is all about jobs, economic prosperity and economic opportunity. So I want to say ‘good afternoon’ to all my constituents who might be listening—in particular a friend of mine, Mr Novak Petrovic. He has, with great regret, been taken out of the Ryan electorate because of the recent redistribution. In any event, a very strong Liberal supporter is Novak Petrovic.

This legislation is about jobs and about maximising economic opportunities for Australians right across the country, particularly those who are practitioners of small business. I am delighted that the Minister for Small Business and Tourism is in the chamber, because she not only is doing an outstanding job in her portfolio; she also has a very strong interest in meeting Ryan businesspeople. I had the great pleasure of hosting her in Brisbane recently and she met many of my constituents. They were very impressed by her stewardship of her portfolio.

Small business is often described as the engine room of the Australian economy. It accounts for some 95 per cent of all business and employs 3.3 million Australians. Since 1996, some 110,000 new businesses and 1.9 million new jobs have been created. This has fostered an increase in the culture of enterprise and innovation, which is one of the hallmarks of our country and which we must continue to promote here in the parliament. Why is this relevant to the Independent Contractors Bill 2006? It is relevant because many independent contractors are small businesspeople. They are the innovators, the entrepreneurs and the builders of business in this country. They are running their own small businesses and they want to be treated as businesspeople. They do not want to be treated as employees. That is why this legislation is important, and that is why I referred to small business at the outset of my speech.

Before I come to some of the details of this legislation, I want to paint the picture of the Australian economic landscape as it really stands, not as the desperate Labor opposition seeks to paint it. The Labor member who spoke before me talked about minimum wages being a problem in this country. I ought to remind her and others opposite that, in fact, Australia has the second highest minimum wage of any developed country. That is something that this government is very keen to ensure is secured. We are in the business of looking after the workers of Australia. I know that this really does irk the opposition, but I am afraid that the people of Australia have spoken at successive elections and they have voted with absolute confidence in the Howard government and its representation of their interests as workers of Australia. The government is reaching out not only to the traditional supporters of the Liberal Party and the Prime Minister but also to Australians right across the democratic spectrum of this country.

We all know that oppositions try to paint a picture of doom and gloom and claim that the landscape is very poor. They claim that people are facing mass sackings and that employers are all out to get the workers, but of course we all know that the reality is very different. The Australian economy is worth almost one trillion dollars. In every year of the Howard government, we have had positive economic growth and record levels of employment and participation. In August, the Australian Bureau of Statistics released its latest labour force figures, which gave an indication of the latest unemployment figures; and they are 4.8 per cent—the lowest in 30 years. I think that is something that we should all be very proud of. I know that it is very difficult for those in the opposition to fly this flag, but I do encourage them to do so, because it means that people in their electorates are also getting jobs. They are getting into the workforce and are able to provide for their families and their local communities. It is community-minded constituents who are doing a good deal to add to the economic prosperity of this country.

Work Choices was introduced in late March. Now, almost six months later, do we have the doom and gloom scenario that the Labor Party portrays? Of course we do not. Since 27 March, some 175,800 new jobs have been created. That is more than 1,000 new jobs a day since the Work Choices legislation was introduced into the parliament. In August alone, 23,400 jobs were created, of which 22,600 are full time. There are more jobs in the community, and they need to be filled. So I would say to anyone who is seeking to reconnect with the workforce: the jobs are out there, and I would encourage you to get a job, because the employers of Australia are desperate for your services.

Jobs are being created all over the country. Since the Prime Minister took office in 1996, 1.9 million new jobs have been created and wages have risen by some 16.4 per cent. It should be noted that the only time wages have gone down was when Labor was in government. Between 1983 and 1996, wages actually fell by 0.2 per cent. So let us have none of this doom and gloom from the Labor Party. Let us have none of this portrayal of the economic landscape as being desert-like. This is an employees’ market.

The challenges that the Australian economy faces now are the challenges of prosperity. The challenges we face are happy challenges. Rather than the million unemployed under Keating and Hawke, we now have a situation in which companies, businesses and employers are desperate for people with skills and qualifications to enhance their businesses. The Howard haters are going to continue to preach doom and gloom; they will be negative; they will be pessimistic. But the Australian people are very much aware of what is really happening in the Australian community. They are not influenced by those who run the Labor Party—which of course is the unions. The Labor Party is dominated by the unions. The Australian people should keep in mind that reference from a very senior union figure about union control of the country. I know that in the Ryan electorate they will very much keep that in mind.

I am delighted to speak on the bill. This is all about economic choice and freedom. It is all about economic justice. We quite often hear the Labor Party talking about social justice. What about economic justice? What about jobs? What about the economic injustice of a million people out of work when Labor was last in government? What about the economic injustice of 11 per cent of the nation unable to get work under the stewardship of the current Leader of the Opposition? What about the economic injustice of high interest rates under Labor? What about the economic injustice of mortgage repossessions? It is very disappointing that those opposite do not talk about this. The Australian people know what the right thing to do is and which government has the policies and the ideas to ensure that the Australian economy continues its prosperity.

Independent contractors have traditionally been the forgotten people of the industrial relations sector, and yet they are very much the rising stars of our workforce. They consist of some 800,000 to two million Australians, and they are a growing force of entrepreneurs and innovators which is revolutionising the nature of business in this country, and particularly small business. They permeate virtually every sector of the workforce. They are the Australians who install your hot water system, fix your computer, do your landscaping and lay the foundations of your new home. The benefit that these independent contractors provide to business in Australia is immeasurable in dollar terms. In sectors such as the building industry, in which almost 25 per cent of the nation’s independent contractors are employed, they provide the flexibility needed to sustain such a highly fluctuating industry. For small businesses, they provide an avenue to outsource non core or temporary services, allowing the small business operators to better concentrate on the business’s essential operations.

The benefits that independent contractors provide are not just for business. Operating as an independent contractor also gives workers tremendous flexibility—the flexibility to choose how they work, when they work and what they work on, enhancing family life and work satisfaction. In particular, it gives workers the chance to operate as microbusinesses, to be their own boss and to gain the expertise needed to become the employers and small businesses of tomorrow.

I want to take the House to a very interesting speech that a former hero of the Labor Party, the former federal Labor leader Mr Mark Latham, gave to the Tasmanian state conference following the defeat of the Labor Party at the last election, in 2004. Deputy Speaker Adams, it is quite timely that a Tasmanian is in the chair, because I am sure that you will be very interested in the words that I am about to deliver to the House. On 30 October 2004, following the defeat of the Labor Party under Mark Latham’s leadership, Mr Latham made these remarks to the Tasmanian Labor conference, and they bear quite interesting reading:

We urgently need to establish a new basis for the economic purpose and legitimacy of the Labor movement. We need to be realistic about the changes happening around us right around the country.

…            …            …

The conventional working class—in steady, semi-skilled and low-paid jobs—has declined. Just look at the affluence of the traditional trades in the mining, construction and service industries. In many cases, they make enough money to be investors, not just workers—this is the nature of the new economy.

The new middle class is here to stay, with its army of contractors, consultants, franchises and small businesspeople. This reflects the decentralised nature of the modern economy, where flexible niche production has replaced the organising principles of mass production.

The implications for the Labor movement are quite obvious. Workers are more independent and self-reliant. Large, centralised institutions and policies are less relevant. Our economic policies need to be based on the principles of flexibility, enterprise and upward mobility.

They are very interesting words, and they could easily have been delivered by someone from the coalition ranks. The Labor leader—who has our good wishes for his post-political life—delivered a very important message to the Labor Party.

It is a shame that here we are in 2006 and the Labor Party still cannot accept those words: ‘the principles of flexibility, enterprise and upward mobility’. I refer again to Mr Latham’s words: he talked about the ‘army of contractors, consultants, franchises and small businesspeople’. These are here to stay. These are people in the modern Australian economy who are doing their bit to make this country prosperous, to give opportunities to their fellow Australians and to create a greater and more flexible economy so that others in their circumstances might be able to join the modern Australian economy. That is what this bill is all about. This independent contractors bill is all about trying to give flexibility, opportunity and scope to people who are not employees but businesspeople; they want to be treated as businesspeople. They want the flexibility to choose how they work, when they work and what they work on so as to enhance their own family lives and their work satisfaction.

Despite the benefits that independent contractors bring to the economy and to themselves, this sector of the workforce has been stifled by Labor state governments—Labor governments which, in order to appease unions with declining membership rates, have dragged independent contractors back into the realm of employees. I want to remind the Australian community, and those who live in the western suburbs of Brisbane in the Ryan electorate, of something that they might find interesting if they do not already know: 17 per cent of the Australian workforce is unionised, and I suspect that this is quite an inflated and unauthentic figure. I am sure that many of those ranked or classified as part of the union workforce would not really want to have that tag on them. They are probably small business people in their own right and want to be employees without the heavy hand of the union movement on them. Anyway, 17 per cent of the workforce—less than one-fifth—is officially part of the union movement.

Rather than embracing and nurturing these entrepreneurs, the state governments have stifled the individual and flexible contracts of these workers and have arbitrarily drawn them back under the guise of industrial law. In Queensland, for example, the Industrial Relations Act 1999 deemed outworkers, apprentices and trainees, and workers in the security industry, to name a few, as employees, despite the presence of contracts which specifically state they are independent contractors. In addition, the Queensland Industrial Relations Commission has the power to declare a class of contractors to be employees based on such criteria as the relative bargaining power and economic dependency of a class of persons and whether the contract is designed to, or does, avoid the provisions of the industrial instrument.

We have the ludicrous situation in Queensland where two parties can enter into a commercial contract for service with one party operating as an independent contractor and taking advantage of the freedom to negotiate the contract according to their terms and conditions. However, under current state legislation, that contract is assessed by the Industrial Relations Commission according to standards required for an employment contract, including minimum award conditions, rather than as a commercial contract. So, despite a clear intention on behalf of the two parties to the contrary, the contract falls back within the scope of the state industrial relations legislation. This is absolutely absurd. It is high time it was changed, and this legislation will address that.

The absurd situation was succinctly highlighted in another example, the case of Mr Simon David, who made some interesting comments in the Australian on 27 July 2006. Mr David, who is a computer programmer in Melbourne and an independent contractor, says he pays WorkCover and limited insurance liability, like any other small business, but was disadvantaged by being treated as an employee under industrial law. He said:

I treat myself as a small business, and I expect that everybody that deals with me also treat me as a small business ...

But, in reality, he is not because of the way the Victorian legislation embraces him. Well, Simon, the good news is that the Howard government has heard your pleas, along with the hundreds of thousands of other independent contractors in the workforce throughout Australia, and we will legislate here in the parliament of Australia to correct this injustice.

The independent contractors bill will remove the uncertainty and confusion of state regulations to bring all independent contractors under the certainty and security of a federal system. It will ensure that agreements entered into by independent contractors are correctly classified as commercial contracts and not contracts of employment, thereby allowing independent contractors more flexibility in negotiating the terms of such contracts rather than being forced to have them satisfy stiff award conditions. Deeming provisions in state legislation will be overridden. A three-year transitional period will apply, during which workers previously deemed by state legislation will have the opportunity to clarify their position within contracts as either an independent contractor or an employee.

In the time I have left, I want to read a couple of comments from key stakeholders. I think it is important that those who are right at the heart of this area have their words reflected in the parliament. Mr Norman Lacey, who is the director of the Information Technology Contract and Recruitment Association, said:

The bill is a great step forward for us as an industry and for independent contractors ... It’s not going to change their lives tomorrow, but it creates an environment in which independent contractors will flourish and enjoy a measure of protection and recognition that they would not otherwise have had ... It legitimises their place in the workforce.

To that I say: hear, hear! Thank you, Mr Norman Lacey, for your remarks supporting this important legislation. With one in four in the building and construction industry operating as independent contractors, Chief Executive of the Master Builders Association of Australia, Wilhelm Harnisch, said of the bill:

The Government’s legislation means that contractors will be able to operate without the workplace relations system dampening their entrepreneurial spirit ...

This is a very good bill. It is a very important bill. I am delighted to be part of the Howard government and, of course, to support this bill very strongly. Today’s reforms the Howard government is putting in place in the parliament will set up tomorrow’s prosperity. I know that people find change difficult, but strong and confident government is in the business of important reform that will set this nation up for prosperity in the times ahead. Independent contractors deserve our thanks and congratulations for being very committed Australians in terms of their contribution to our national economy, prosperity and record low levels of unemployment that we are enjoying in this country today. I thank all the independent contractors who live in the Ryan electorate. I know that they will be working very hard. I salute them and the prosperity that they bring to the western suburbs of Brisbane. I hope that they will be delighted to continue to support me. I will ensure I continue to work hard for them. (Time expired)

Sharon Bird (Cunningham, Australian Labor Party) Share this | Link to this | Hansard source

I rise to oppose the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 and to support the amendments moved by the shadow minister for industry, infrastructure and industrial relations. I will take a minute or two to make comment on the member for Ryan’s contribution. It will only take me a minute or two because most of it was about what this side of the House thinks rather than addressing the bill, so there is not a great deal to deal with in terms of the content. However, the member did make the point that there is a new breed of contractors and franchisees out there and that, somehow, on this side of the House we have a problem with that. Indeed we do not. What we have a problem with is the abuse of that system and the potential for there to be massive abuse of that system under these bills and amendments.

I say to the member for Ryan that there is a hell of a big difference between, for example, an IT person who sets themselves up as a small business and works as an independent contractor and a group of 18-year-old kids I know who deliver pizzas. They have been put onto individual contracts and made to pay their own workers compensation and provide their own uniforms. From what they tell me, they have to do a minimum of 20 deliveries in a night before they even have covered the cost of their petrol and start to make any money—despite the fact that they are on regular shifts and, in any other way, would be considered employees. What the member for Ryan fails to acknowledge is that there are too many instances where this mechanism is used to abuse particularly young people in the workforce in a way that makes it very discouraging for most of them to continue seeking work.

Most of them are at university, and they are doing this to support themselves through the massive costs of university that they now undertake. The member for Ryan well knows that there are examples where young people are forced onto this individual contract form, providing their own uniforms, paying their own workers comp and, indeed, having to do a significant amount of work before they even make a bit of profit for themselves. I accept the member for Ryan’s argument that there are people who legitimately work as independent contractors. That is not our problem with this legislation. Our problem with the legislation is that its structure enables an abuse of that system.

In particular, the shadow minister outlined in the first point of his amendment that our concern goes to the fact that, as the example of the young pizza delivery people indicates, this government has an obsession with mechanisms that allow the cutting of wages and the slashing of the conditions and entitlements of workers. This is particularly sad when it applies to young workers in our communities. The bills and the amendment are another instalment in the government campaign. It was interesting in question time today that the Prime Minister for once was pretty clear that the reason they have pursued this agenda is that it is about giving power and flexibility to the bosses. In answer to several questions, he made it quite clear that this was about providing strength to the arm of the boss in the workplace, not the worker.

The government has in its collective head the idea that times are so good. Indeed, the member for Ryan outlined how wonderful they have been over 10 years. Their logic goes that, having achieved such—according to them—wonderful wages growth and unemployment decline, that makes it crucial to put in place mechanisms that allow you to attack wages, remove conditions of work and remove entitlements. They want to make it more difficult for workers to sustain their families and communities and to participate in a way that gives not only economic fairness—which the member for Ryan spoke about—in terms of fair pay for a fair day’s work but also some social fairness in their capacity to meet their family and community obligations.

Australians are generally disposed to giving new ideas the benefit of the doubt. If they consider there is a national interest in it, most are prepared to give something a try. But most hardworking Australians struggling to keep the family budget in order at the moment, weighed down by an increase in commitments, are now realising that the government’s agenda is indeed not for the national interest. It is, in fact, reflecting an ideological obsession, which means that, in reality, for hardworking Australians, unless you are at the high end of high-demand wages in areas like the mining industry, you will actually end up working for less, getting cut wages for increased hours and having reduced protections in the workplace.

The Prime Minister likes to quote average income and wage increases but he ignores the fact that that average is achieved by an explosion in wages at the top end, in high-demand areas—in fact, to the extent that it is actually endangering the viability of major projects in the energy and construction industries, in particular in mining—whereas, on the other side of it, that average is achieved by a whole lot of people in communities like mine, working in hospitality and in retail, who actually see themselves going backwards. So averages are all very good, but if the reality is that you have vast numbers of people suffering a cut in order to provide that increase to the smaller number at the other end of the scale there is not a lot of community joy in that.

This bill and the amendment to the workplace relations legislation before us plan to implement a two-tier system of independent contractors, on which I have made some comment and which the previous member failed to address. The bill contains minor protections for outworkers and owner-drivers in New South Wales and Victoria, but these protections are only short term. Indeed, they are quite political in nature in that they were intended to get this issue over the line before the election, and they will certainly be revisited. If the government is re-elected next year, those carve-out clauses for outworkers and New South Wales and Victorian owner-drivers will clearly disappear.

Last week’s report by the Senate Employment, Workplace Relations and Education Legislation Committee highlighted the systemic flaws in this bill by recommending that part 4 be scrapped. The government’s majority sends a clear message that this bill is flawed, by including a guarantee that outworkers would be protected, but that inserting part 4 in effect does the opposite. So the government’s own majority recommends its abolition from the bill. To add insult to injury, the committee, in perhaps a quite unprecedented intervention, actually sets up negotiations for outworkers and their representatives with the minister’s department to ensure that outworkers have the promised protection.

I want to spend a little bit of time drawing to the attention of this place the views of owner-drivers in New South Wales, especially those hardworking owner-drivers who live in my electorate who have regularly met with me to outline their concerns. This bill offers these workers some slight protections until there is a review next year. Owner-drivers in New South Wales, and I suspect in Victoria, are not one bit fooled by the minister’s assurance in the second reading speech. Kennith Simpson, 52, married with children, with four years service in general transport and a $145,000 investment, lives in my electorate. He tells how this bill would affect him:

These changes just mean my rates are going to go backwards ... politicians keeping getting pay rises and we go backwards. I will be working harder and longer for the same or even less.

Ian Jack, 56, with 23 years service in transport and a $200,000 investment in his business, lives in my electorate. He says:

Howard likes to say he’s for small business. But he’s turned around and kicked us in the gut. I’m only worried about my family.

Mukesh Ram, 38, has five years in transport and lives in my electorate. He says:

It’s already so hard to make ends meet. If I lose my rates, I can’t see how I’m going to meet rising fuels costs and insurance payments. At the moment I can’t afford to take a single day off. We need someone to stick beside us.

Genady Bendersky, a courier in my electorate, says:

I’ll find it impossible to hire a lawyer to help me. The expense will be too much.

It is clear that owner-drivers of New South Wales and Victoria did wage a successful campaign to convince the government to place a clause in this bill. Indeed, I am sure that if the many other people affected by the bill had the capacity to drive large rigs around Parliament House and draw such visual attention to their concerns they might have got fairer treatment too. It was not done for any other reason than to placate a group of hardworking Australians living in coalition electorates who lobbied very successfully, to their credit. The owner-drivers in New South Wales and Victoria could have taken the clauses in this bill and let the matter rest in order to look after themselves for a short time. But they are aware that what is protecting them in the short term is denied to owner-drivers in other Australian states and territories. Therefore, this bill will only unnecessarily add greater complexity to the legal regime regulating contracting employment.

One of the reasons for implementing the Work Choices legislation, we were all told, was the perceived complexity of the Commonwealth, state and territory legislative framework. Work Choices has not made the industrial relations system any easier to navigate. You only have to look at the surveys of businesses conducted by their own business representative organisations to see that they are still confused about and unfamiliar with what this new regime actually is. This bill does nothing to simplify the legislative framework for determining contracting employment. Indeed, it actually adds unnecessary complexity.

In late May, the Productivity Commission released a major report entitled The role of non-traditional work in the Australian labour market. The Sydney Morning Herald gave the commission’s report some coverage on 30 May. The Sydney Morning Herald article indicated that, based on the commission’s findings, the proportion of contractors as a proportion of the workforce fell from 10.1 per cent to 8.1 per cent. From 2001 to 2004—the article says—contractors grew in number but not as a proportion of the workforce. The Sydney Morning Herald article went on to state:

Bureau of Statistics figures show the proportion of employers has also shrunk under the Howard Government. The proportion of employees has therefore risen and business owners shrunk since Mr Howard was elected.

I believe we all have a right to know precisely why the Howard government has allowed this to take place. The Productivity Commission should be instructed by the Treasurer to inquire into this. After all, the government parades around in this place as the friend of small business. The facts, however, tell a very different story.

Everyone recognises that Australia’s labour market has changed in significant ways over the last quarter of a century. Literature on the labour market confirms that Australia’s 10 million strong workforce is now split between up to eight different methods of earnings. We still—for the moment—have awards, collective agreements and individual agreements covering workers in the contract of service. Within these groupings there are further sub-splits on earnings, which include over-award wages, safety net adjustments, certified agreements, executive-professional contracts and minimalist individual contracts. In contract for service, we generally find a two-way split between independent contractors and dependent contractors.

Employment in Australia is clearly increasingly fragmented and diverse. Within individual workplaces there is even further fragmentation, as the industrial literature points out. Direct employees are either permanent, fixed term trainees or casuals. Indirect sources of employment are also fragmented into permanent or fixed term and casual or dependent contractors. Some are sourced through a temporary employment agency or labour hire. The government and big business lobby groups like to suggest that the labour market should be treated no differently from the general product market. They argue the labour market should be subject to the economic principles of supply and demand only. Workers, labour market economists and even the Productivity Commission know it to be very different.

The Productivity Commission report highlighted that employment demand and supply factors are:

... seldom separate from institutional factors, which include the regulatory and workplace relations environment of firms.

The report went on to state:

The institutional framework shapes the minimum conditions and entitlements that firms provide to workers under different forms of employment, which then leads to demand and supply—

factors—

being affected.

The commission’s report dismisses the rhetoric of the government and the self-serving big business lobby that the employment relationship is simply that of a worker and an employer. This deregulation mindset is a play on words and language—no more so than in the case of employment and industrial relations.

The institutional framework equally applies to employment agreements—what will be in them, how they will be reached and implemented and from them what types of work will emerge and will not be allowed to emerge. Work Choices, for example, is highly prescriptive, giving minute detail on how the employment relationship will work between workers, their employer and third party involvement. Work Choices is about destroying the award system which has historically set the concrete foundation of minimum earnings and conditions.

The government’s other intention is clearly to root out collective bargaining from the labour market. Also involved in this bill is the concept of shifting private costs to the taxpayer, which has been compellingly argued in the Senate Employment, Workplace Relations and Education Legislation Committee report by retiring Australian Democrat Senator Andrew Murray. The Productivity Commission also highlighted this fact, suggesting that non-traditional methods of work had crucial impacts on a range of public policy areas, including taxation and revenue, health and occupational health and safety, superannuation and retirement savings and skills and training. The government’s own report, Rethinking regulation, recommended:

The Australian Government should align the definitions of ‘employee’ and ‘contractor’ used for superannuation guarantee and PAYG withholding purposes.

However, the government, in its response to the report recommendation, indicated it would not agree with its adoption.

I should also note that the Dawson report, which recommended changes to the Trade Practices Act, has encouraged the use of collective bargaining for small businesses. The National Farmers Federation has been granted the right to collectively bargain—at the same time, interestingly, that it opposes the same right for workers. Those are all very interesting developments in the commercial law jurisdiction which, I can assure the other side, have not been lost on us. This bill does nothing to solve the central question of what is an independent contractor. The bill does not attempt a definition. It leaves the resolution of the question to the common law.

The next development in the industrial relations debate will focus on the bargaining power of all parties that increasingly make up the global supply chain. The most important aspect in both commercial and employment law will be the strengths and weaknesses of each of the parties involved in these chains. As the government and the big business lobby, which has never had any time for small business, remain wedded to the ideological obsession with smashing unions, wiping away awards and undermining and sterilising industrial tribunals, other statutory authorities are fleshing out a response to the weakest soft spot in commercial relations—the relative strength of bargaining by each of the parties involved in commercial relationships.

Although this bill overrides state and territory legislation on dependent contractors, the government has conceded that state and territory legislation is actually addressing a problem and recognising the limits of bargaining power. That is why it has given short-term protection to outworkers and owner-drivers in New South Wales and Victoria.

I notice that the ACCI and the Independent Contractors of Australia recently issued media releases on the importance of an ILO recommendation, clause 8. The clause says:

National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships, while at the same time ensuring individuals in an employment relationship have the protection they are due.

The ILO recommendations in subsequent clauses are framing the ongoing debate on what are ‘true civil and commercial relationships’ while at the same time ensuring that workers have the ‘protection they are due’. The ICA has condemned this bill for ‘political deal making’ and ‘corrupted policy’.

In preparing for this debate I had a chance to read the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation report Making it work. The Labor dissenting report offers a way forward in its key substantive alternative recommendation No. 2. The government should have adopted the recommendation, as it offers more certainty and removes the complexities of ambiguity that are causing major concern.

We all accept that the method of employment is wide ranging, fragmented and constantly changing in Australia. There is no valid reason for the government to continue its obsession with cutting wages, conditions and entitlements of workers. There is no valid reason why the government intends to push through this bill, which establishes in effect a two-tier system of contractors: those with minor protection in the short-term and those left on their own. This bill further complicates the legislative framework. The minister has conceded, in comments— (Time expired)

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

I am very pleased to make a contribution to this long anticipated bill, the Independent Contractors Bill 2006. One of the government’s 2004 election commitments was to introduce separate legislation governing independent contractors and on-hire arrangements. It is a commitment which has been highly anticipated by the sector. I am pleased that we are coming close to the time when legislation will go through this House and then be presented in the Senate.

This legislation and the issues that it covers have been widely canvassed throughout this country. Any member of the opposition who claims that this bill has for one reason or another been thrust through the parliament with little consideration does not know what they are talking about. This was an election commitment back in 2004; we have had a departmental discussion paper on the issue; we have had an inquiry by the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation, which I am pleased to say I chaired, which brought down a great report, if I may say so, called Making it work. It was an inquiry into independent contractors.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

But the government didn’t adopt it all.

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

Member for Hunter, I am pleased to see that quite a few of the recommendations were in fact adopted by the government. It was very pleasing to see that that inquiry report received very serious consideration. On top of that, we had the recent Senate inquiry, which was chaired by the Victorian senator Judith Troeth. So there has been considerable discussion on this issue.

Why has this been the case? We are finding that in this country over the last 20 years there has been a substantial growth in the number and proportion of people in the Australian workplace who consider themselves to be independent contractors. Certainly the committee that I chaired found that in excess of 10 per cent of the Australian workforce can be classified this way. The Australian workforce is changing. We know that there is one group that does not like that change. We know that the labour movement, made up of both the unions and the Australian Labor Party, does not like the changes that we are seeing taking place out there in the Australian workplace.

There are now more independent contractors than there are trade union members in the Australian workforce. Australians are voting with their feet and choosing to work entirely outside the traditional employment structures. Why is this happening? Because all too often it meets people’s own family-work balance requirements and they have greater independence. It can often also be seen as a foothold in starting up your own small business. That is the case, and the result is that more and more people are turning to becoming independent contractors.

Unions are struggling for workplace relevance. They are faced with declining membership. They have failed to see the advantages that many workers have accepted—flexible working arrangements, which are offered through independent contracting and also through on-hire labour arrangements. There are now 1.9 million Australians who have made that decision, that choice, to manage their own affairs as independent contractors.

An efficient, modern economy should have a dynamic mix of working arrangements, with the flexibility to respond to the changing demands of clients, consumers and competitors. Independent contractors are an important part of that mix. Removing the barriers imposed by state legislation, reducing inconsistencies between states and reducing compliance costs for all businesses will encourage these businesses to grow and, of course, in growing their businesses they are, importantly, growing their workforces and further reducing Australia’s current record unemployment level. This bill seeks to protect the freedom to operate as a genuine independent contractor and to work through on-hire arrangements.

In launching this policy initiative the Prime Minister stated back in September 2004:

A new Independent Contractors Act would ensure that freedom of contract for independent contractors is enshrined and preserved, that they have a firewall built around them to protect them from the deprivation of unions and unfriendly Labor governments who would seek to impose limits and constraints on their freedom to contract.

That is at the heart of why those on the other side are opposed to this legislation and why the union movement is telling members on the other side to oppose this legislation at all costs. In moving in this direction to protect the rights of workers to make their own choices, we are opposed at every turn by those on the other side and by state Labor governments, which are, no doubt, controlled by their trade union members. They are opposed to this. I say to them: see the writing on the wall; recognise that people are looking for flexibility, alternative arrangements and choice, and this is exactly what this legislation is doing. Do not continue to take this paternalistic approach to independent contracting or labour hire arrangements, and recognise that we are seeing a major shift in workplace arrangements, which people out there are demanding. The sooner the unions and the Labor Party are able to understand that independent contractors require these protections, the better it will be for them.

Independent contractors have moved beyond the ‘us’ and ‘them’, boss and worker, class distinction of the 18th and 19th century, and so too has this government. The member for Brand, the Leader of the Opposition, is the only one wanting to take us back to the days of the accord, union strong-arm tactics and little individual freedom. In fact, in his own contribution he spoke about the woes of introducing these laws and the effect it would have on owner-drivers in his electorate. I am not sure whether he has read the legislation because this legislation does not in fact cover owner-drivers in New South Wales and Victoria. I will have a bit more to say on that a little later on. The reality is that the federal Labor Party is opposed to independent contractors because the union movement is opposed to them. The unions have been alarmed at how quickly independent contracting has flourished in this country, thereby reducing their role in the workforce.

I turn to some aspects of the legislation. The existing regulation of independent contracting across many of the states is a regulation of entrepreneurship. The sooner we remove this regulation, the sooner we are taking the shackles off entrepreneurship and the ability of people to move into their own employment arrangements. Independent contractors have taken the initiative to establish themselves as businesspeople. They are not employees, and they should not be considered by industrial relations laws to be employees. The current competing and complex state and federal systems allow too much interference by third parties in situations where people are essentially running their own business, and this is not appropriate. The government’s Work Choices reforms, which came into operation on 27 March this year, already prevent federal awards and agreements from containing clauses which restrict the use of independent contractors or labour hire workers or which seek to put conditions on their engagement, for example, by prescribing that they have the same conditions as employees.

This bill aims to do a number of things. Firstly, it protects independent contracting arrangements as commercial arrangements, not employment arrangements, under the law. Secondly, it addresses inappropriate state and territory legislation which deems independent contractors to be employees for the purpose of industrial relations regulation, including by overriding that legislation where appropriate. Thirdly, and I thought this would have been supported by those on the other side, it ensures that sham arrangements are not legitimised and prevents state and territory legislation from impacting negatively on labour hire and contracting arrangements.

There are a number of problems surrounding independent contractors which this bill aims to address. Some states have in place industrial relations laws which deem certain independent contractors to be employees. They are trying to drag genuine contracting relationships into the sphere of industrial relations law. Over the last couple of years various states have either enacted or considered such deeming provisions and deeming legislation. Contracting arrangements are commercial arrangements and it is inappropriate that they be regulated by workplace relations laws. Deeming provisions have the effect of invalidating the flexibility and choice of an individual in choosing work arrangements, and interfere with the original intention of the parties to the contract. Deeming provisions can result in completely arbitrary distinctions. For example, the New South Wales legislation deems 13 different categories of worker to be employees, including milk deliverers, bread deliverers, carpenters and plasterers, to mention a few. In other states, these workers could exercise their valid choice to be genuine independent contractors under the law. In one state they are deemed to be employees; in another state they can be seen as independent contractors. By overriding state deeming provisions, certain groups of workers will no longer be covered by state employment law but will be free to contract in a manner that best suits them with the business they are working for.

This approach is consistent with the approach taken in the overall Work Choices legislation. Under the independent contracting legislation a transitional period of three years will be established in relation to those workers previously deemed to be employees under state law. These workers will continue to be deemed employees unless they elect to become independent contractors during that time by agreement with the employer. Once again, it is a choice by that individual as to whether they want to be an employee or an independent contractor. It is all about choice.

One of the issues that has received some attention by members on the other side—obviously they have not read the legislation—and I know it has also received some attention in the Senate inquiry, is to do with protection for TCF workers. This group of workers is protected by this legislation, and it is pretty clear in the legislation that they do receive protection. The Australian Fair Pay and Conditions Standard will apply to contracted TCF outworkers in states and territories where they are not covered by laws providing for some form of remuneration guarantee. Most of the states currently deem contract outworkers to be employees. These special arrangements are in place because TCF outworkers are considered to be a particularly vulnerable category of worker. They often have low levels of English language proficiency and limited formal education. They tend to have limited negotiating power over their pay and work conditions.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

They are the only example, are they?

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

Order! The member for Hunter will listen to the debate in silence.

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

The member for Hunter has his chance to speak later on.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

What about a cleaner with bad skills?

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

The member for Hunter will control himself.

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

In recognition of the particular difficulties faced by contract outworkers, Member for Hunter, this bill will not override state laws that deem outworkers to be employees.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

What about the cleaners?

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

I warn the member for Hunter!

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

It will also leave untouched specific state laws that provide additional protections for TCF outworkers. There it is, Mr Deputy Speaker. There is protection in this legislation, and of course we recognise that TCF workers are particularly vulnerable. Just as Work Choices did not override protections for employee outworkers, so too the independent contractors legislation will not override protections for contract outworkers. Any changes that are made to protections under this act will be to reinforce protections already in place, so what we are doing is providing a double guarantee.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

What about the cleaner?

Phillip Barresi (Deakin, Liberal Party) Share this | Link to this | Hansard source

The member for Hunter, I do not know how many times you need it written, but there is a guarantee that TCF outworkers are protected. Further to this, this bill does not seek to override protections for owner-drivers in New South Wales and Victoria, the only two states with such legislation. I know that this is a fairly contentious aspect of the legislation and I also know that when I held the House of Representatives parliamentary inquiry into independent contractors we did receive major representation from owner-drivers in New South Wales. They all turned up and they all gave their case. So what we have here is a bill which does not seek to override these protections.

From my own philosophical point of view, if we were starting off with a clean slate I would much prefer that every owner-driver is roped into this legislation. But we are not starting with a clean slate. There is significant legislation at both the New South Wales and the Victorian government levels which does provide a certain amount of protection and restrictions on what the federal government can do. It is simply a recognition of the facts of the situation. But I know that everybody, certainly on this side of the House, would acknowledge that if we were starting with a clean slate we would prefer a situation where all owner-drivers were treated the same way right across this country. The government does believe that special protections need to be put into place for these two states. However, we will also establish a review of the state owner-driver protections. This will be done as a way of trying to rationalise and achieve nationwide consistency in these types of laws. There will be a public consultation process involving a discussion paper from the department in 2007. Like contract outworkers, owner-drivers have a particular vulnerability, which this legislation has recognised. Many owner-drivers we know work for only one principal and they often operate within very tight business margins.

The Independent Contractors Bill will provide a more balanced approach to the regulation of unfair contracts. The bill retains access to a fair and reasonable federal remedy for genuine cases where unfair or harsh conditions have been imposed on a contract. This will be achieved by overriding state unfair contracts legislation using the corporations power. Provisions in the bill replace the existing federal unfair contracts legislation. More accessible remedies may be sought in the Federal Magistrates Court. State unfair contracts regimes will be overridden by a federal remedy for genuine cases where contracts are harsh or unfair. What we will be seeking through these specific provisions is to create one single, national, unfair contracts system which will eliminate existing duplication and confusion with the overlapping state systems that are currently in place in New South Wales and Queensland. The existing federal unfair contracts provisions will be removed from the Workplace Relations Act and instead be covered by this bill.

This further illustrates the government’s firm view that contracting relationships should be dealt with outside the scope of workplace relations legislation. The Federal Magistrates Court will have the power to determine unfair contracts cases and will provide a cheaper, more accessible remedy for independent contractors with unfair contracts claims. The federal system will also allow incorporated independent contractors to access the jurisdiction. Currently, the federal jurisdiction is limited to independent contractors who are natural persons. Furthermore, the law will provide for a financial cap for the jurisdiction to be set by regulation.

In the limited time I have left I want to turn my mind to the protections against sham arrangements, which also received quite considerable coverage through our inquiries. I know there are varying views out there on what is and what is not a sham arrangement. The bill will protect genuine employees from sham arrangements. This is where an employee is disguised as an independent contractor so that an employer can avoid payment of legitimate employee entitlements. Penalties will apply to employers who deliberately try to avoid their responsibilities through the use of sham arrangements. The Office of Workplace Services will investigate such cases and enforce the provisions as required.

The bill will also address the issue of sham labour hire arrangements by allowing a voluntary code of practice to be made, with an ability for mandatory application if necessary. I know that there are some industry groups out there, particularly in the on-hire labour sector, that have excellent codes of practice, which they put in place for their own industry representatives. Some of these models need to be looked at very carefully with a view to introducing them on a wider level. I will pay credit this time to the Recruitment and Consulting Services Association for the work that they have done in this area. The legislation will also introduce penalties for unscrupulous employers who seek to use sham contracting arrangements to avoid their obligations to their employees.

There are well over one million independent contractors in the Australian workforce. The government respects the right of genuine independent contractors to manage their own affairs and enter their own agreements with their clients if that is their preference, just as it respects the right of employees to be accorded the relevant legal protections. Independent contractors are a crucial component of the modern economy and a modern, flexible labour force. This legislation seeks to protect and encourage their activities. It is legislation that should be supported by this House as a recognition of what a growing number of Australians have clearly shown is an occupational preference. (Time expired)

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

Mr Deputy Speaker Haase, I should begin by apologising to you for being a little rowdy throughout the contribution of the member for Deakin. Of course, I was provoked by the member for Deakin’s language.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

Mr McArthur interjecting

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I will deal with the member for Corangamite in just a moment.

Barry Haase (Kalgoorlie, Liberal Party) Share this | Link to this | Hansard source

Order! Quid pro quo.

Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Link to this | Hansard source

I was very pleased that my contribution to this debate coincided with my obligation to be on House duty for an hour or so. That provided me with the opportunity—I hope the member for Deakin is not leaving the chamber, because I am not finished with him yet—to listen to some of the contributions of those on the other side, including the member for Deakin, whose tone was very interesting. He proudly reminded the House that he chaired the House of Representatives committee on workplace relations and other things in its inquiry into the matters before the House tonight. But I could not help but notice the low tone he was using throughout his contribution. That reflects, of course, the inconsistency between the recommendations of the member for Deakin’s committee and the Independent Contractors Bill 2006, which we have before the House tonight.

What is clear to me is that the member for Deakin has been told: ‘Forget about the recommendations of your committee; just toe the line. Get in there, tone it down and follow the government line on this issue.’ That is exactly what he did this evening. He should have come in here and defended all of his committee’s recommendations. If he really believed in them he should have come in here and defended them, and of course he was not prepared to do so, because he has been told to toe the line.

This is a fascinating bill for me. I have an intense interest in matters of small business, being the opposition spokesman on small business matters in this place. Any bill that goes in any way to small business matters of course always attracts my attention. This is a very strange bill in that it in a sense pits small business person against small business person. It pits some independent contractors against other independent contractors. It will have some benefits for some independent contractors and disadvantages for others.

It is interesting to listen to the debate and hear the various numbers that are attributed to the independent contractor pool in this country. We heard the minister in his second reading debate talk about there being 700,000. I think the member for Deakin talked about there being in excess of a million just a moment ago in his contribution. We see various figures thrown up. We are supposed to have, according to the ABS, 1.2 million small businesses in this country, and yet we get claims in this place that we have more than a million independent contractors.

This demonstrates the paucity of research and information we have in this country on small business. You cannot make good small business policy if you do not in the first instance know how many of them you have. It takes me back to the government’s decision in 1996 to cut funding on the small business longitudinal study and all the good work it was doing, which would have provided answers to many of the unanswered questions we have when delving into small business policy in this country.

We know there are three types of independent contractor. There are the genuine independent contractors—people who go into independent contracting for all the right reasons. Many of those reasons are entrepreneurial, and this is a good thing. We are in the post-Fortis era. We have a much different, more open and competitive economy than we used to have. We have many former schoolteachers, Telstra workers et cetera buying themselves jobs—going out there and working for themselves as genuine independent contractors. This is good thing for the Australian economy.

Then we have the shams. The shams are split into two. There are the shams forced by the employer who wants to avoid his or her obligations to an employee—whether they be award wages, sick pay, holiday pay, superannuation and even OH&S in some circumstances. They do not want the burden of all that. They just want to put them on a commercial basis and rid themselves of all those obligations as an employer. In many instances that might be legitimate thing to do and it might be done in a way which provides additional reward for the former or prospective employee. But in many cases they are sham arrangements.

The other class of sham arrangement is when the employee seeks to become an independent contractor rather than employee, for tax advantage in the first instance. That is probably the prime reason they seek to do so. The government many years ago, when we were doing the Ralph business tax reform, acknowledged these arrangements existed and addressed them by introducing the rules on the alienation of personal services income. So the government has recognised these arrangements exist. The drive towards independent contracting and part of the reason for the proliferation of independent contracting arrangements comes from all sorts of forces.

I did not hear the minister do this when he made his introductory contribution—and I invite him to do so when he summarises on this debate—but, talking about numbers again, I have seen no attempt by anyone on the other side to determine how many winners and how many losers are involved in this. I have listened intently to members opposite and I have not heard them nominate one loser in all of this. Surely they do not believe that! I am prepared to say there could be some winners in this; why aren’t they prepared to say there could be some losers in all of this? Of course there are independent contractors out there somewhere who do not want state deeming provisions and do not want legislatures interfering in their commercial arrangements. I am sure they are out there, but I can assure you that there are even more independent contractors out there who look to the protections of both the state based deeming provisions and the state based unfair contracts provisions.

You need only to go to the very good submission of the Transport Workers Union. I will not go into detail, but suffice to say it reminds us that they represent literally thousands of owner-drivers in this country who want those deeming provisions to remain in place. What does the government do? It backflips and acknowledges the need to continue, at least for the time being, the application of the deeming provisions or their equivalent to transport workers and TCF outworkers. If that is the principle, why not apply it to everyone who is in need of protection? The member for Deakin said that amongst TCF outworkers you would have people with language difficulties, for example. The member for Deakin is telling me that there is a TCF outworker out there with limited English, if any English at all, who is exposed to exploitation, but isn’t there a cleaner out there in the same circumstances? I think it is absolutely feasible that there could be a newly arrived Australian with poor English skills working in a cleaning arrangement on an independent contract basis, so where is the differentiation? Why is the government applying the principle to some people but not to others? Could it be that they have more political weight and greater opportunity to cause pain for the government, given that there are many TCF outworkers and owner-drivers but not enough cleaners to have the same sort of political impact? That is the only explanation. Anyone who really wants to understand this bill and the potential impacts on independent contractors in this country who are currently protected by the deeming provisions should go to the very good TWU submission to the inquiry and they will get a very good understanding.

I go back to the member for Deakin and the point I was making about the failure of this legislation to pick up his own recommendations. The big standout is the failure of the government to go all the way to adopting a statutory definition of ‘independent contractor’ by invoking the rules set down under the alienation of personal services income rules under the tax act. The big outstanding question is the lack of definition of ‘independent contractor’. We have heard throughout the debate how difficult it is to determine and how difficult the courts have found it over various years to determine such a definition. We know that they have laid down some not so vague rules about control of the employer over the employee and whether the employee uses his own tools, and they have all been stated before. But the lack of definition is what forces state governments to move in with deeming provisions and unfair contract provisions so that people who do not really fit under the common law definition are protected. The big standout of this bill is the government’s failure to accept that recommendation.

I think the government had an opportunity to deal with what is no doubt an issue in the community on both sides—for people who are being deemed but do not want to be deemed and vice versa—but there are very strong cases for protecting the welfare of people who have been forced into independent contractor arrangements. Again, the government has acknowledged that by taking some specific clauses on TCF outworkers and owner-drivers. You will not find a more competitive sector than the transport sector. Both sides of the transport sector are happy. The owner-drivers are happy. Because they are carrying high risk, working long hours and carrying debts, they want some certainty in the arrangements. And the employer organisations are happy, so where is the push? Where was the great need to undermine so many protections for so many people?

Unfair contracts are another example where small business people are going to be disadvantaged by this bill. If you have a commercial arrangement with another player who has greater market power then you and the thing goes pear-shaped for you, you do have recourse under various state based unfair contracts legislation. But that has just been taken away by this bill. People from the other side should not come in here and tell us that this is all about small business. Again I challenge the minister to come into the House and give us the numbers. Tell us how many people are going to be disadvantaged by this bill compared to how many people are going to find some benefit in this bill.

There has been lots of talk throughout the course of the debate about the state of the economy. The economy is in pretty good shape. There are some pressures emerging on the horizon, and there are some pressures that the Reserve Bank governor has been talking about for some years now. I was delighted to hear on ABC radio last night the Reserve Bank governor, before his departure, defending the legacy of the Keating government and making the point that the real thing that sustained 15 years of economic growth was the work of Paul Keating back in the early 1990s.

I know the phrase ‘the recession we had to have’ was not seen to be all that clever at the time; it might have sent the wrong message. But the point was well made, and that is that it was that slowdown that broke the back of inflation in this country. It did not have the hallmarks of the earlier recessions; it was a recession that broke the back of inflation in this country. That is a legacy we are all still benefiting from today, and that all these people who are in the right entrepreneurial spirit are looking towards when they go out there, back themselves, take the risks and put themselves in self-employment situations. They have the choice; many do not have the choice.

There is also another inconsistency here. For some time the government has been laying aside in the Senate a bill that is generally known as the Dawson bill. Amongst other things, the Dawson bill seeks to streamline the opportunity for small businesses to band together and bargain collectively with larger businesses. They might be agriculturally based, selling apples to Coles and Woolies; they might be a group of truck drivers trying to bargain with one of the big transport or construction companies. They might be chicken growers, who might be bargaining with one of the big chicken processors. So in the Senate we have a bill in which the government says we have got to strive harder to make sure small business can collectively bargain, recognising that the parties to the bargain are not equal; in other words, recognising that there is big opportunity for the Coles and Woolies of the world, one of the big transport companies or one of the big chicken processors to misuse their power to the disadvantage of the person they are in negotiation with.

Unfortunately that bill is stuck in the Senate, and here is the other irony. It is stuck in the Senate for a couple of reasons. One is that there is also a mergers provision in there that the opposition and the minor parties are not totally satisfied with. We have put forward some very responsible amendments that would allow the ACCC back into the game as a gatekeeper on authorisations on merger applications—authorisations based on the public interest test. That is holding the bill up. But the other interesting thing about this bill is the government’s belated decision to put in that bill a provision that bars trade unions or their representatives from acting as bargaining agents in a collective bargaining arrangement. To make this even more nonsensical, we already have collective bargaining for small businesses in this country, but at the moment they go under what they call an authorisation process. The authorisation process can be slow, costly and cumbersome, and the government has sought, after the Dawson recommendations, to streamline that and go from an authorisation process to a notification process so that when small firms enter into a collective bargaining arrangement they simply notify the ACCC and the ACCC has 30 or 40 days to raise objection. If it does not object, the arrangement—which on the face of it would be contrary to the Trade Practices Act—is allowed to continue, and immunity is granted. So there is immunity to continue if the ACCC does not object. That is a much better system than the authorisation system.

Under the authorisation system, trade unions or their representatives can be the bargaining agents, and it is worth pointing out that those authorisation provisions will remain in place. But, while it was not in the original bill—there were two bills here; one lapsed because the parliament was prorogued—the government decided that they would ban trade union representatives or their agents from the notification process. There is no consistency here at all. I would be less critical if they retrospectively took the rights of unionists to act under the authorisation provisions; at least it would be consistent. But there is no consistency, and the fact is that under the authorisation scheme trade unions have been acting as bargaining agents for years. I deliberately used transport and chicken because they are very good examples. The AWU represents chicken growers when entering into collective bargaining arrangements with the processors, and it has been commonplace in the transport industry as well.

So this is just full of inconsistencies. Up there in the Senate Ivan Milat could negotiate a collective bargaining arrangement for some transport workers, but Tony Sheldon of the TWU cannot. That is the law they are seeking to put in place in the Senate. But the key point is that it is inconsistent to say that there cannot be some collective protection for independent contractors in the broader community but at the same time, up in the Senate and in this place, they are trying to put in place more streamlined collective bargaining arrangements for small business. In its approach this bill is full of inconsistencies, and that is why I am rising to support the amendment put forward by the member for Perth. If the government really want to do something about growing independent contracting in this country for all the right reasons, I suggest they go back, redraft it and have another go, and we will have a look at their new attempt.

Stewart McArthur (Corangamite, Liberal Party) Share this | Link to this | Hansard source

I have listened very carefully to the member for Hunter. He is the shadow spokesman for small business, and he understands contracting. In fact I have been to his electorate, where I have seen him in action, and he has talked to those contractors in the coal industry. I am having a bit of difficulty understanding what he has been saying. I think he supports the legislation intrinsically. He talks about competition between contractors being unfair; that is a strange comment. He supports some contractors and not others. So I think the member for Hunter, surprisingly enough, after all the rhetoric, supports the government’s bill and I am very pleased that the member for Hunter showed such erudition.

I am delighted to support the Independent Contractors Bill 2006 and the workplace relations legislation on this occasion. The government is proud to encourage an entrepreneurial culture across Australia where people are encouraged and able to go about their work and to get a job done productively and efficiently. The entrepreneurial culture will put emphasis on people getting the job done, with the key focus being on payment on outcomes, as opposed to time spent on the job.

There has been a dramatic shift across society towards contracting out jobs and tasks to those who are in a better position to deliver, thereby generating increased efficiency and reducing cost. We see this in our industries, where large manufacturers have moved away from start-to-finish construction. In Geelong, in the electorate of Corangamite, the Ford Motor Company do not build a car and all its components; instead, Ford pay a number of small component firms on contract terms to produce parts and deliver them on a just-in-time basis to the factory, where they put them together to produce a fully assembled motor vehicle.

We see a shift in our own households, as the member for Hunter would understand. We call in Jim’s Mowing to mow our lawns quickly and cost-effectively. This saves hundreds of families in Grovedale, Belmont and Highton, in the electorate of Corangamite, from the need to service and start their own motor mowers, which often do not start when you want to mow the lawn. And we see this shift in the workforce, where increasingly workers are opting out of structured employment and choosing to work for themselves as contractors, to be their own boss and do a job for a client: walk in, get the job done and leave to do the next job.

This legislation recognises the massive change in the workforce towards what is called ‘latent entrepreneurship’ by University of Zurich economists who have studied self-employment. This bill will provide important protection for up to 1.9 million Australians who are independent contractors. There are many self-employed contractors working in my electorate of Corangamite and in the rural industries across country Australia. Farmers hire contractors to do fencing; cut, bale and cart hay; sow and harvest crops; and transport grain to the silos or livestock to the market. Agricultural contracting has developed at the same time as farming has evolved. Former farmers who have been forced out of farming have been able to use their skills to provide private contracting services to other farmers, in a win-win arrangement.

In my own experience, I have contracted a typical rugged rural Australian called ‘Nabby’ McNabb for fencing on my family property. As a contractor, Nabby was his own boss. He would turn up at 7 am, rain, hail or sunshine, put in a full day’s work—digging holes, putting up fence posts, stringing wires—and then Nabby would be at the head office, the local hotel, by 3.30 pm, having a few cold beers. It was here that he conducted and arranged the business with the local farmers. Nabby would not have wanted to be an employee and work for hours at the direction of a boss. He was fiercely independent; he wanted to get the job done. It is for hardworking, enterprising, free-willed Australians such as my old friend Nabby that the government is introducing this legislation.

The labour movement and the Labor Party want to drag self-employed workers into the regulated employment system to allow unions to exert more influence over people’s lives. The government is introducing this legislation to protect Australians from another example of union overreach. The Australian self-employed contractor workforce can take much credit for their contribution to the nation’s economic growth over recent years. The contractor workforce have helped to deliver increased productivity and efficiency that has not been delivered by the more heavily regulated awards based and union dominated sectors of the workforce.

By way of example, I can compare the highly unionised construction industry with the home-building industry, which operates with contractors and subcontractors. The construction industry has serious problems, as was demonstrated by the Cole Royal Commission into the Building and Construction Industry. In this industry, the union movement, represented by the Construction, Forestry, Mining and Energy Union, the CFMEU, is notorious for its strikes, bullying tactics and enforcing a ‘no ticket, no start’ regime. The construction workers have no incentive to get the job done quickly or even on time because they get paid for the time they are on the site. There are countless examples of construction sites in Victoria that have suffered delays and cost blow-outs so that workers can get more money.

The house-building industry is a completely different case. I have the opportunity to observe house construction across Corangamite, with rapid residential development in the Geelong suburbs and in Colac. A number of private contractors and subcontractors are employed in housing construction. These tradesmen are employed on fixed contracts to construct houses and they have a strong incentive to complete the job quickly, efficiently and for the least cost possible in accordance with all the laws. Our self-employed tradesmen and subcontractors are always aware of the need to move on to the next job and to maintain their personal reputation for quality and cost-effective service so that they will receive future jobs. Subcontractors cannot afford to make mistakes on the job, because errors and faulty work cost them extra time and higher costs for no extra pay.

The National Executive Director of the Housing Industry Association, Dr Ron Silberberg, reflected on these matters during a speech to the HR Nicholls Society conference in September 1991. Dr Silberberg is somebody who knows a thing or two about house construction and the views of the people who work in the industry. He said:

Subcontractors are highly self-motivated, which is reflected in their high productivity levels … It is not unusual to see subbies working on housing sites at weekends. They don’t receive penalty rates for working at weekends … Their future earnings depend on establishing a reputation for quality and reliability.

Dr Silberberg compared the housing and construction industries:

The housing industry is characterised by harmonious industrial relations. Subbies don’t get paid for delays so there is a strong incentive to get on with the job. According to the CSIRO, the level of unproductive time on housing sites is about 4 percent; for the unionised commercial building industry, the amount of unproductive time is 23 percent.

Those two figures reflect the thesis and background of this legislation. Every new homeowner, every young family of first home buyers and everyone else with an appreciation of the nation’s buoyant property market will understand that there are new houses going up across Australia’s suburbs. The houses seem to be constructed almost overnight, and this remarkable development has only occurred because of the use of self-employed building contractors and subcontractors who have an incentive to get on with the job.

In the free economy, people should have a choice to go into business for themselves if they want to. People should be able to have a choice to be their own boss and to contribute their skills, abilities, assets and hard work towards the growth of the nation—and to take the risk of bankruptcy if they are not successful. That is the key issue for a contractor: not only do they apply their skills but they run the risk of going broke—and the bank is very tough on these independent contractors if they do not pay the bills. The Labor Party and the trade union movement, on the other hand, want to crush the spirit of individual endeavour and free enterprise by clawing Australia’s independent contractors into the regulated employment system and deeming independent contractors as employees. The member for Hunter ably demonstrated that in his previous remarks.

The decision as to whether a person can go out on their own and establish their own business should be up to the individual. It should not be a decision for the government or for the trade union movement. It would be better if the government did not have to legislate for independent contractors; it would be better if these decisions could be left to individuals. But, because of the Labor Party’s position across the states, there is a need to protect—at both federal and state level—the rights of independent contractors. The Australian economy and workforce are changing, and that is why it is important for the government to take this action to protect the legal rights of independent contractors—and I emphasise ‘legal rights of independent contractors.’

Australia is no longer a highly unionised, nine to five, Monday to Friday economy. Australians are leaving the trade unions in droves because the unions no longer seem to be relevant to the majority of our nation’s workers. Rigid and inflexible award conditions do not suit the needs of individual employees and businesses. Union membership has been declining for the past 30 years. In 1976, 51 per cent of the workforce were union members—and we well remember those days. Union membership had fallen to 40.5 per cent by 1990 and, by August 2004, 22.7 per cent of workers were in a union. Despite a massive union campaign against the government’s proposed industrial relations reforms last year, the proportion of the workforce who choose to be members of a union fell again to 22.4 per cent in August 2005.

In the private sector, the rate at which Australian workers have abandoned the union movement has been even more severe, with only 16.8 per cent of private sector employees in unions by August 2005. In contrast to the steady decline in union membership, there has been an increase in the number of Australians who choose to work for themselves as independent contractors. It is estimated that there are up to 1.9 million independent contractors in Australia—equivalent to the number of union members.

This legislation delivers on an important commitment given to independent contractors at the 2004 federal election, when the Howard government said that it would legislate to not only protect but support the endeavours of independent contractors in the Australian economy. This commitment came as a direct result of the calls from independent contractors to be protected from the deeming laws of state Labor governments, which have sought to classify independent contractors as employees. The Labor Party’s national policy at the time of the last election included expanding the definition of ‘employee’ to include ‘those in employment type relationships’. The rights of individual contractors were under serious threat from the Labor Party’s proposals. So we can see that the Labor Party were very keen to make their own definition of ‘contractors’. The government, with this legislation, will make it quite clear.

On this basis, members of the Labor Party at both state and federal levels have demonstrated that they are out of touch with the aspirations of those Australians who genuinely want to operate as independent contractors and to enter into service contracts with companies, clients and private individuals. The important factor for the Labor Party and the unions to understand is that contractors are different from employees, and they do not want to be treated as employees. Bob Day, the former President of the Housing Industry Association, outlined the union mindset on contractors and employees in a speech to the HR Nicholls Society in 2000. He said:

Contractors are paid for performance—not for time. Any non-standard arrangement like this is a threat to the union mindset … Unions have always wanted to conscript subbies into their dwindling ranks and along with tax officialdom and the IR Club have, at every opportunity, tried to turn independent contractors into employees. Unions already have secured footholds in just about every area of the commercial construction industry and have significant influence in areas such as superannuation, health funds, training, occupational health and safety rehabilitation, insurance and even labour hire firms. Their campaign to control the supply of labour never ends.

…         …         …

But contractors are not employees—they are running businesses with all the associated risks and expenses.

Until the Labor Party unshackle themselves from the trade union movement and, instead, support the desires of Australia’s independent contractor workforce to be their own boss, the Labor Party will not be a credible choice to win government.

I can report that there has been a lot of interest in this legislation from small business men and women across my electorate. Many self-employed people are looking for the certainty that this new legislation will provide. Indicative of the feedback I have received from local business, Fred Runia, from a successful Geelong region transport company, Josie’s Transport Group, has written to my office regarding the government’s Independent Contractors Bill 2006. Fred is well known to me. He is a classic independent contractor who employs a lot of people. He is a very genuine small businessperson and runs a wonderful transport company. He wrote to say this:

We are aware of the Independent Contractor Act and fully support the introduction of this Act. Our company has always had responsible commercial dealings with our contractors without interference ... that have been beneficial to both parties. We are therefore looking forward to the clarity that the IC Act will give to owner drivers and principal contractors to negotiate and operate without third party interference.

This is a statement from Josie’s Transport, which has been a very successful business in Geelong for the past 32 years. The firm has a relationship with approximately 35 owner-driver contractors who are operating to enhance their fleet and their service. Like many others, this company is successful because it has managed an ongoing relationship with self-employed owner-drivers who have formed a contractual service agreement with Josie’s on a commercial basis. I can confirm that because I have talked to Fred Runia at some length about these arrangements, and I know from my personal observation that they are successful. As with many other private transactions, Josie’s Transport and the drivers who provide transport services to them under private contract do not want third party interference, whether it be from government or from the trade union movement. These owner-drivers are confident that they can negotiate their own arrangements without government intervention.

In drafting this legislation, there have been some concerns amongst owner-drivers regarding the provisions that will allow for the continued recognition of New South Wales and Victorian legislative protections for owner-drivers. The government is looking closely at this issue and the protections for owner-drivers that have been supported on a bipartisan basis in these states. The minister has advised that the government does not intend to disturb these arrangements at this stage. However, the government will establish a review of the state based owner-driver protections in 2007 with a view to achieving national consistency for these types of laws.

There are particular arrangements in place for owner-drivers under the existing New South Wales state laws, including goodwill on delivery contracts, and the government’s proposed review of these state provisions will ensure that there are no unintended consequences for these owner-drivers. I have taken a close interest in this debate and have met with representatives of the Independent Contractors of Australia and Owner Drivers Australia. I have discussed these issues with owner-drivers, represented by Mr Ken Phillips, who is a forceful advocate for independent contractors and more flexible labour arrangements. It is clear to me that this bill implements our election commitment to deliver certainty to independent contractors and that there is a clear commitment to review the specific protections provided to owner-drivers in New South Wales and Victoria.

This is very important legislation, both in philosophical terms and in terms of the government’s commitment to that section of the Australian workforce. Ken Phillips suggests that the Independent Contractors Bill is:

... arguably more significant and far reaching in its implications than the labour regulation reforms under WorkChoices. Whereas WorkChoices is a re jigging of the employer-employee relationship, the Independent Contractors Act cuts entirely away from that paradigm. It walks away from the idea contained within employment law that economic activity involving labour is one of systematic and inevitable conflict. The Independent Contractors Act will prove important because it contains the idea that every Australian has the right to be their own boss to set their own economic direction and to control their own destiny.

It would be a struggle to more clearly explain the importance and meaning of this bill. I am delighted with Mr Ken Phillips and his very strong support for the contractors bill and the background information that he has provided to the government, which has assisted in the drafting of this particular legislation.

I support the bill wholeheartedly. I support the philosophical thrust of it. When this bill is passed—with the opposition voting against it—it will become a key part of the government’s reforms of the industrial relations system. It will give, as I have said, a sense of independence. It will give legal protection to independent contractors. Contrary to the propositions put up by those opposite, this legislation is in the interests of those hardworking contractors who work day and night for their own good, their family’s good and the good of the client.

I note that the amendment put forward by the opposition put up the usual arguments that people will be exploited and that employees will not be looked after. Australia is an independent country. Those contractors have shown their spirit since the Eureka Stockade. They want to work hard; they want to get the job done. We totally reject the amendment put up by the opposition. That reflects a bygone era. This government is moving into 2006 and beyond. This will be a most important part of the legislative program that looks after hardworking Australians.

Chris Bowen (Prospect, Australian Labor Party) Share this | Link to this | Hansard source

The Independent Contractors Bill 2006 is very important legislation with very serious ramifications, and it is legislation that we will be opposing. There are various estimates regarding the number of independent contractors in Australia. Estimates vary from 800,000 to 1.9 million, the first being the estimate of the Australian Bureau of Statistics and the second being the estimate of the Independent Contractors of Australia. Regardless of which figure is correct—and I suspect that it is the estimate made by the Australian Bureau of Statistics—it is a very significant number. These estimates range from between eight per cent and 20 per cent of the Australian workforce. You only need to look around, as I do in my electorate, to see that there are a large number of independent contractors.

The minister, in his second reading speech, talked a lot about choice—it is the government’s mantra. We heard it again in question time today. The minister said:

These Australians have already chosen to work for themselves to gain the benefits of the choice and flexibility that self-employment provides. Their choice must be respected.

The member for Corangamite talked about that in his contribution. He even referred to independent contractors as being the instigators of the Eureka Stockade, which I thought was an extraordinary contribution for him to make. On the face of it, I cannot disagree. If somebody chooses to work for themselves and have that flexibility, they should be supported in that choice. But the House needs to examine the employment relationship of many independent contractors in some detail to test the minister’s claim.

The University of Melbourne estimates that 40 per cent of contractors work for one principal only and are in fact dependent—not independent—contractors. How independent are contractors who must in terms of their contract work exclusively for one company; who are instructed by one company; who wear that company’s uniform; who, if they have a truck, must paint the company’s logo on that truck; and who are forbidden under the terms of their contract to work for another company? Is it really the case that all people choose this arrangement to give themselves more flexibility?

I was attracted to the dissenting Senate committee report by Senator Murray, somebody who is not from my party but who has a wide degree of respect across the political spectrum and in the community. He said this:

For an increasing number of contractors the notion of independence is a myth, and any choice and flexibility in their arrangements have been constructed for the benefit of those who hire them, not their own.

…         …         …

The current bill, Senator Murray says:

... does not prevent business from exploiting loopholes in the common law that allow workers to be classified as contractors, when for all practical purposes they are employees.

I agree with Senator Murray.

The minister says that the choice of independent contractors must be respected, but this government is removing the option for independent contractors to have unions represent them or have a union negotiate on their behalf. It is okay for independent contractors to have a lawyer, it is fine for them to have a guild or some other sort of association to represent them, but it will be illegal for them to have a trade union represent them. This is ideological zeal. This is the government’s extremist approach to industrial relations, and it is being driven by anti-union fervour; it is not being driven by a rational and calm assessment of the facts. I agree that people who choose to be independent contractors should have their choice protected and respected, and if they do not want a union representing them they should not be forced. But if they do want a union to represent them, they should not be forced not to have a union.

In the Age on 23 June this year I read comments by Steve Graham, who is a Foxtel contractor. He described this legislation as ‘draconian’. He said:

I haven’t had a (pay) rate increase in over six years.

He went on to say:

This legislation is going to make it so that I will walk into the office of the company that I work for and they’re going to put down a piece of paper that says ‘this is your rate, these are your hours of work, this is what you have to do. If you don’t like it go somewhere else’.

He is right. In 2003 Foxtel actually tried to reduce the rate of pay for independent contractors. The contractors asked their union to negotiate for them. It was only the intervention of the union which stopped their rate from being reduced. They had not had an increase for six years and Foxtel tried to cut their hourly rate. Why did it not get cut? Because the union intervened and represented them—something that will not be allowed once this legislation passes this parliament. Why should the choice of Foxtel contractors to have their union represent them not be respected? Why should their choice not be respected? The government should come in here and justify why they are removing choice for those people.

I read in the Australian on 27 June this year comments from Tony Healy, an IT contractor. He said:

This bill is anti-contractor ... It supports the contracting industry and, like recruitment companies ... seeks to screw independent contractors ...

Why should Tony Healy’s choice not be respected? Just the week before last I had an independent contractor from the IT industry come into my electorate office to see me about his contract. His contract had been terminated by a large multinational corporation, to whom he was contracted, only a few weeks into the contract, with no reasons given. There was only a short period of notice given—two weeks instead of the four nominated in the contract—and when he went to the company to ask why he was given no reasons.

It was made very clear to him that he could pursue his legal options if he wished but that the company had many more legal resources than this individual and they were happy to tough it out in a court of law. I will not name the individual, out of respect for his privacy, but he has been to see me. I had a long meeting with him and referred him to solicitors. I wonder whether he feels that his choice should be respected. I know he does feel that way, that he should have the choice to have somebody negotiate for him.

We have had government members coming in to speak on this bill—not many, I must say; it has been a very short speaking list, which perhaps indicates that government members are not too proud of this legislation—who have talked about independent contractors and thanked the independent contractors association for their help in drafting the bill. I thought that was an extraordinary thing for the member for Corangamite to say. He actually thanked the independent contractors association for their help in drafting the bill. I am really not sure the minister would be too happy with the member for Corangamite’s contribution, coming in here and thanking the independent contractors association for their help in writing this legislation.

But there are some independent contractors who will have their rights protected—their right to appoint a trade union to negotiate on their behalf is protected under this legislation—and they are the owner-drivers in New South Wales and Victoria. The member for Corangamite was at pains to stress that this was only a temporary protection, that the government was only putting this to one side for a short period of time and it would be reviewed in 2007. The government has not indicated when in 2007, but I suspect it will be very late in 2007, for obvious reasons. Owner-drivers like those at Tooheys, together with the Transport Workers Union, have resisted new contracts which involve reductions in pay rates of up to 43 per cent. That is because owner-drivers in New South Wales and Victoria have had their protections under state law carved out.

In New South Wales the Industrial Relations Act 1996 provides for the regulation of engagement in certain sectors. In Victoria the Owner Drivers and Forestry Contractors Act 2005 provides similar protection. I congratulate the Transport Workers Union for negotiating this concession. I attended a briefing which they put on in this place last year, I think. Members from both sides came to the briefing. It was a very moving presentation in which owner-drivers begged to be allowed to have their union continue to represent them because they were on such thin profit margins. The government has wilted under the pressure from the Transport Workers Union and the independent owner-drivers, and that is a good thing. But why has the government singled out these people for protection?

The minister says that they are on very tight margins and some have gone into considerable debt to pay for their trucks and so should not be subject to the same provisions as other independent contractors. There are two points to make here. The first one is that that is an admission by the minister that this will drive down the conditions of contractors. He said, ‘These people are on tight margins and have high debts. They should be protected.’ That is an admission that there is something to protect them from. That is an admission that their conditions would be driven down if they were not carved out of this legislation. I think that is a very interesting admission from the minister.

The second point is: does he not think that there are other independent contractors who are doing it tough? Does he not think that the Foxtel contractors who have had no increase in their rate for six years are doing it tough? Does he not think they are on tight margins? Does he not think that some of them are highly geared? Why would owner-drivers in New South Wales and Victoria be exempt and others not? Does he not think that contractors in the electrical and plumbing industry are doing it tough? Does he not think they are heavily in debt? Does he not think that, with petrol prices at record highs and interest rates going up, there are other highly geared contractors who are feeling the squeeze? By making this welcome concession, the minister has underlined the essential illogicality of his argument, and the arguments in favour of his bill have collapsed.

This bill creates a new national unfair contracts regime. However, the new regime is inferior to the state based regime it replaces. For example, the New South Wales Industrial Relations Commission can review a contract which has become unfair subsequent to the contract being entered into. This unfair contracts regime treats all contractors the same, whether they be purely independent, dependent, deemed employees or outworkers.

This new regime will encourage employers to make the shift towards independent contracting arrangements, away from employment arrangements. The government claims that this will be prevented by the anti-sham contracting arrangements in the bill. At first blush, the anti-sham contracting arrangements look reasonable enough, but on further investigation they are revealed to be a sham in and of themselves. I note the comments of Professor Andrew Stewart in relation to the definition of an independent contractor applied in the bill. He said:

The fact is that any competent employment lawyer can take almost any form of employment relationship and reconstruct it as something that the common law would treat as a relationship between principal and contractor ... thereby avoiding the effect of a wide range of regulation which is typically applicable only to employees, such as industrial awards, registered agreements, leave and superannuation legislation and unfair dismissal laws.

I was drawn to the comments of Senator Murray, who, again I say, is a respected person in this building. He is not from my party but he is one whose views are widely respected and who always brings an independent approach to these matters, and a very detailed and thorough approach. He said:

... 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. This too is the position adopted by state governments.

He went on to say:

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

He continued:

... there are differences between common law definitions of ‘independent’ contractor and for tax purposes which could potentially disadvantage workers forced on to contracts.

Again, I find myself in agreement with Senator Murray.

The consequential bill amends the Workplace Relations Act by prohibiting sham arrangements. This makes it an offence to misrepresent or attempt to misrepresent an employment relationship and make false statements to an employee to influence them to become an independent contractor. It is also an offence to dismiss or to threaten the dismissal of a employee with the sole or dominant purpose of re-engaging them as an employee. However, it is firstly necessary to look at the potential defences under this bill. It is a defence if an employer reasonably believes the employee to be an independent contractor. So in order to mount a successful application, a worker would have to (a) convince the court that the contract was, or was intended to be, an employment arrangement rather than an independent contracting arrangement; and (b) rebut any claim by the employer that they could not have been reasonably aware that the contract was actually a contract of employment.

So it is a very hard defence to overcome for a worker attempting to take an action under these anti-sham provisions. I would be very surprised if any successful actions were brought as a result of these anti-sham provisions. If a case were successful in an enterprise with under 100 employees, of course the individual would have no right to reinstatement, because the government has abolished the right to action for unfair dismissal in businesses with under 100 employees.

In the time left remaining to me, I would like to turn to a very important issue, particularly in my electorate and the electorates of my colleagues the member for Fowler and the member for Blaxland, and that is the impact of this bill on outworkers. I do recognise that textile, clothing and footwear outworkers are treated differently in this legislation and there is some extra protection for them. However, I believe there is a strong case for treating outworkers completely separately from independent contractors. I do not believe it is appropriate to include outworkers in the independent contractors legislation.

I do believe there is a case for a completely different set of employment relations for clothing outworkers. I believed that before I read the report of the Senate committee on this matter. I note that the Senate committee has unanimously recommended completely excluding schedule 4 from this bill, which is the schedule which relates to clothing outworkers. I call on the government to listen to their own senators. Their own senators say that that schedule of the bill serves no purpose. We would go further and say that not only does it serve no purpose but it disadvantages clothing outworkers.

I invite the minister or any interested member opposite to come out to my electorate, or indeed the electorate of the member for Watson, who has joined us in the chamber. I know he has many clothing outworkers in his electorate as well. I invite them to come out to the garages in the backstreets of Cabramatta or Fairfield or Lakemba and see the outworkers in action and see if they are really independent contractors; see whether it is appropriate to take their working conditions away from them, as this bill does; see whether somebody who is working in a garage in Cabramatta and producing hundreds of pieces of clothing every day is exercising their choice and flexibility in this employment relationship nirvana that the minister talks about and that the member for Corangamite talked about before; and see if it is appropriate to treat these people the same way as other independent contractors.

I challenge the minister or any member opposite to keep holding that view after they have been out to the outworkers in the garages in Fairfield and Yennora and Cabramatta and have seen those operations in action and seen the clothing that is being produced by migrants, often with very poor English, or by Vietnamese refugees to this country who are working very hard in an outworker relationship. I invite them to see if this is the employment nirvana that the minister is so proud of. Minister Andrews talks about choice and flexibility. Come and walk through the garages and see how much choice and flexibility there is for outworkers in Cabramatta.

I think this bill increases the level of confusion in relation to outworkers, and the level of protection in place is substantially less than under existing state based arrangements. You can have a policy debate about how others should be treated, but clothing outworkers are an open and shut case. This government clearly just does not understand what these people are dealing with. It is being driven by ideology and by a desire to reduce working conditions in a race to the bottom. They should be opposed, and they will be continued to be opposed on this side of the House.

Brendan O'Connor (Gorton, Australian Labor Party) Share this | Link to this | Hansard source

I rise to support many of the comments made by the member for Prospect and others on this side of the House in relation to the Independent Contractors Bill 2006. Before I make some comment upon the substantive provisions of the bill, I would like to note that again we find ourselves in a situation where the government speakers have already stopped speaking on this bill. I look at the list of members to contribute to this debate today. There are three government members and 23 opposition members.

It is quite extraordinary to see the government fail to articulate their support for a piece of legislation that has far-reaching consequences. We say that most of those consequences will be adverse for those the legislation affects. However, the government, I understand, have a contrary view. But they are not in this place to convince the Australian people, via this chamber, why we should support this bill. This is not the first time. Indeed, the failure of the government to attend to a debate in the parliament seems to be happening on a daily basis when we engage in very important matters affecting the nation. So it is a disappointment that I have to rise immediately after the member for Prospect rather than after hearing a government member attempt to convince me and others why there are merits to this bill—and I have to say that I find very few merits indeed.

I indicate to the House that the member for Prospect was quite correct when he said that there should be no schedule 4 to the bill, going to outworkers. There is no doubt in my mind that outworkers are not independent contractors. It is fair to say that there have been some protections afforded to outworkers but, seriously, if anyone understood the situation which most outworkers find themselves in, they would rather this government afford them proper protection than lump them into the independent contractors bill. Let there be no mistake: Labor does not oppose independent contractors per se. There are genuine independent contractors in this country—those people who freely choose to enter into arrangements with their clients or with a principal contractor and go about their business seeking to gain work through the contractual laws of this land.

The problem is that there are too many people deemed to be contractors who are in fact clearly under sham arrangements which are not a relationship between a principal and a contractor but a relationship between an employer and an employee. One would have to go behind the provisions of the bill to seek answers to why a person would want to call themself an independent contractor if they were entirely dependent upon the other party to an employment relationship. My answer to that, in the main, is that many so-called independent contractors do not have a choice. They do not have a choice as to whether they will be deemed an independent contractor or not. Unfortunately, there are growing examples of employers forcing employees to take ABNs—that is, they will be employees on Friday but will be provided with an ABN so that they can be contractors on Monday. We have employees who have no control over their work other than that they are working for one employer and in this country they are deemed to be independent contractors.

This bill, if enacted, will remove the right of unions in the main to defend those employees who have been forced into sham arrangements. This bill proscribes the right of most unions in this country to defend or challenge the assertion that somebody is in a contractual relationship. As the member for Prospect said, as a lawyer you can represent many of these so-called contractors. You can as an association. You can as almost any person or organisation, provided you are not a union. Provided you are not a registered employee organisation, you are in a position to represent the interests of persons who argue that they are not independent contractors, that they are in a sham arrangement. That clearly shows the enmity that this government have towards unions. Rather than say that there would be one type of agent who would represent a person in a legal matter or an industrial matter, they are proscribing the right of most unions to do so.

I acknowledge that there are two exemptions that provide for some level of representation for workers who find themselves in a contractual relationship. For owner-drivers in New South Wales and Victoria, under two particular state acts, unions are still able to represent the interests of their members. Having spoken with the TWU about that particular matter, I understand that they worked very hard to seek to distinguish themselves, claiming, quite rightfully, that they have been representing these workers—these owner-drivers who drive large rigs, who quite often have very large debts and who have to work very hard to pay them off—for more than 80 years and it would be ludicrous that a Commonwealth law could proscribe their right to represent them in the future, subsequent to the enactment of this bill. Clearly the government has decided to concede that particular point.

The question then is: why are they so different from so many others who might be deemed to be or are called contractors? Why is it the case that only owner-drivers are provided the right to be represented by a union when others who are in almost identical situations to those drivers are not afforded that same right? How can the government explain away the fact that they will discriminate against every other employee or contractor in their right to be represented by a union and not cogently argue why that will take place? I have to say that clearly one of the reasons for that is that the government were fearful of the successful campaign of the Transport Workers Union. They were fearful of this parliament having thousands of Transport Workers Union members attending a rally that would have occurred in the event that the government chose to exclude them also.

I do not think that this was necessarily undertaken graciously. I do not think it was an act of generosity on the part of the government. Clearly the government has chosen not to get into a fight with what is a very effective union in relation to this type of occupation. It has chosen instead to pick on the weakest, most vulnerable contractors in the land, who, once this legislation is enacted, will no longer have a right to be represented by a union in particular tribunals. We would argue that that is clearly and utterly discriminatory. We do not in any way support the motives of the government in relation to that exclusion.

This matter has been under consideration for some time. The matter was referred to the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation in late 2004 or early 2005. A report of the committee was tabled in this place on 15 September last year. That report, amongst other things, dealt with the independent contracting arrangements. In the report there were a number of unanimous recommendations which the government failed to incorporate into the provisions of this bill.

The government has chosen to resist accepting the reasoning of opposition and government members of the committee that inquired into independent contractors. I was not for a moment surprised that it failed to take up any of the recommendations in the dissenting report, but I would have thought some of the recommendations that were unanimously made would have been acceptable to the executive government. That was not the case.

There is still a blur between what would make up an independent contractor and what would make up an employee. There was some effort by the committee to delineate the differences between those two creatures, those two legal personalities. Whilst we did not agree on all matters, there was some effort made by all 10 members to consider the matter properly and faithfully, to seek some solutions and to propose them to the executive government. They were met with a lack of generosity on the part of the government and a lack of concern that the matters we raised had some bearing on independent contractors—so much so that the minister put out his own paper during the course of our inquiry. He put out his own survey, with loaded questions, and then started to form his own views concurrently with our inquiry.

We had a situation where the minister had referred a particular matter to the committee and then, whilst that matter was being considered, started to undertake his own process behind closed doors. No witnesses were called. The minister was engaging in what I think was contemptible behaviour—failing to allow the committee to properly report, failing to allow for those matters to be considered by executive government and pre-empting all of that by starting to draw his own conclusions on this matter as we met and held public hearings throughout the country.

I should not be too surprised that that would be the case with this government. The government has shown little regard for parliamentary committees in this place. Therefore I was again not surprised about some of the unanimous recommendations of the Senate inquiry, which was held only last month—for only two days, but that is two days more than not having an inquiry. Even in respect of that Senate inquiry, the unanimous recommendation to remove part 4 from the bill was completely and utterly ignored by this government.

We now have a government that is contemptible with respect to the way in which it fails to debate bills in this chamber and that shows utter contempt for inquiries that it has itself referred to committees. And then it shows complete contempt not only of opposition members but also of government members who are seeking to find solutions to some of the complexities in relation to independent contractors and their relationship with the definition of employee.

If the government was interested in seeking some answers—if it was seeking to delineate these two definitions—it should have listened to the evidence provided by Professor Andrew Stewart. Professor Andrew Stewart is an eminent academic who not only is an expert in the field of employment and contract law but has more employer clients than union or employee clients. He makes that admission himself. In relation to the evidence he gave to the House of Representatives Standing Committee on Employment, Workplace Relations and Workforce Participation’s own inquiry into the independent contractors and also in relation to the submission he made to the Senate inquiry in August this year, he said that it is clearly important that we first seek to define the term ‘employee’ and then from that determine what is an independent contractor—not allow the reasoning that we should first define independent contracting and conclude that therefore what is left is an employee.

The suggestion he made should have been properly considered by the government. There is a whole host of problems as a result of us not being able to clearly delineate the two legal creatures of independent contractor and employee. Those problems range from taxation issues about what particular level of taxation a person must pay to whether a person should be paying his own workers compensation and superannuation. These issues have taxation, workers compensation and insurance implications, and implications for the way the government defines superannuation and who is obligated to provide the employer contribution. So it is not just about the exploitation that can arise if people are forced into what are clearly dependent relationships which are being called otherwise. It is also about the good governance of this country and whether the tax office can clearly understand whether a person is an employee for tax purposes. Indeed, it is also critical for the government at this level and at the state level to understand who the employer is for other tax purposes.

These failings by the government to properly embrace the complexities and find solutions so we can distinguish the two creatures has shown that the government are not interested in finding solutions but only in seeking ways to hurt the most vulnerable people in our society. That is the only conclusion I can draw. They do not seek to fix the problem that has now been in existence for some time—the significant growth of independent contractors and the significant confusion between the terms ‘employee’ and ‘independent contractor’ and all the obligations and requirements that fall from those two definitions. If you cannot clearly delineate those two definitions, if you cannot separate one from the other, then how do you attend to all those other matters that governments must attend to, including taxation, superannuation and workers compensation?

The government have instead chosen to engineer a set of laws that will make it very difficult for unions to represent the most vulnerable in our society. They have made very few exceptions in relation to that matter, and the exceptions they have made were purely because they believe that that part of the workforce that may have genuine independent contractors are so well organised that the government would find themselves getting into some grief from the TWU—and I say good luck to the TWU. Clearly, they have placed enough pressure on the Commonwealth for them to accede to some of the demands they made of them.

Critically, because the government’s focus is primarily on removing the rights of unions to represent employees and on shifting employees—in many instances genuine employees—into independent contracting arrangements it has not looked at the taxation problems. We may have a shrinking revenue base as a result of people being able to reduce their taxation burden. While that may seem to be a benefit to those employees who can reduce the burden of taxation, those same people are now being forced to pay workers compensation, their own superannuation and other imposts that have been placed on them because the government seeks to shift employees onto independent contracting arrangements and therefore make it very difficult for them. The government has failed in seeking to solve the problems in this area. The chickens will come home to roost as this becomes an increasingly larger problem for the Australian Taxation Office and other agencies. (Time expired)

Justine Elliot (Richmond, Australian Labor Party) Share this | Link to 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)

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I have just come from the Food and Grocery Council dinner. It just so happens that the Food and Grocery Council of Australia and its dependent businesses are almost entirely dependent upon owner-drivers from New South Wales, Victoria and other states. In the two most populous states, New South Wales and Victoria, grocery businesses are supplied by people who work under award conditions, who will, by virtue of the Independent Contractors Bill 2006 and the guarantees given to them by the minister for workplace relations, have their current situation of being protected by award provisions and entitlements entirely protected until a review, some 12 months hence, in 2007. In all of the other states we have a situation where there are already independent contractors.

I was at one of these facilities in Villawood in my electorate talking to people who will be turned into independent contractors. They are not now independent contractors; they are still employees. There was a great deal of rejoicing from the Transport Workers Union, and that was rightly so, because it was a great victory on the day. There was some rejoicing from the employees of this company but also a great deal of trepidation because they were not sure what the future held for them. The minister’s press release indicated that the special conditions of New South Wales and Victoria had been taken into account and that there was a moratorium in relation to them—they would be protected, at least for a 12-month period, because their particular situation had been recognised. But the sting in the tail of the minister’s press release was that 12 months down the track there would be a review aimed at looking at the national scene and—from a national point of view, what is the fundamental word that is important here?—that the review was directed towards a ‘harmonisation’ of a national approach.

I do not think a single one of those employees who are owner-drivers would not be in a position to understand that in 12 months time they are going to be harmonised into becoming sham independent contractors by virtue of this bill. This is a sham government which has delivered a sham bill in relation to independent contractors, and it is a measure of the corruption of this government over a 10-year period and of how far they have debased our legislative system. If this were brought into the House as a taxation measure, it could not survive but, where it is an industrial relations measure, the full force and weight of the government is behind it.

There are sham provisions in this bill which argue that if there are particular arrangements made such that there is a sham situation where a person who is really an employee is deemed to be an independent contractor then that can be taken to the Federal Magistrates Court and exposed. I think this is entirely ludicrous. The whole point of this bill is to create an entirely farcical situation in which people who have been, are and in the normal course of events would continue to be deemed as employees are set up as independent contractors.

Why are the guys in my electorate who take cars from one end of the country to another—the people I was talking to on that particular day—concerned about their circumstances and the change? Why are they sticking to the notion of collective agreements and the protections that they have in relation to the award? Why are they so at variance with their employer, whom I politely went to see as I walked onto the property and who then read me the riot act about how wonderful the government’s approach was and how he hoped that the government would be entirely successful in striking down the award system in New South Wales and in turning every one of his employees into independent contractors? It was very clear and very stark. His argument was simple. What does the government promise to people who become independent contractors? What do some in the industry promise? They promise that independent contractors will get a higher income, that they will be able to access benefits of the taxation regime because they are independent contractors and that they will be better off, as people are in other states.

Not a single person I spoke to in Villawood believed that that would be the case. As owner-drivers, who are employees, all of them were under immense pressure—and this was some months ago now—because of the costs of running their businesses and the increased costs of fuel, which have risen to extremely high levels. That is impacting on them very significantly. But they also know that the pressures are such that, if this legislation were to be entirely approved without having any special provision for them, they can see themselves going to the wall. It was completely apparent from what they told me that their concerns were about not only surviving, in terms of running their businesses, but also the impact that that would have on their families.

This is at one with the government’s general approach in terms of the wider workforce. Translate those people from award conditions to Australian workplace agreements—a minority situation at the moment, but something the government hope will become a majority after the next election if they survive. In the course of time, as awards come up for renewal, they hope that people—through the exercise of the Workplace Relations Act and the force behind that for moving broadly to Australian workplace agreements—will be moved onto that, so that one single individual, the atomised human being, will be there to face the panoply of power that an employer can display, without the benefit of collectivism, without the benefit of being able to join with their mates to put a case and without the benefit of a union or other representation. They will be left entirely on their own.

Or they can cop this act, where although they are owner-drivers who pay a great deal of their costs for themselves and although they are employees of companies at the moment—and rightly so, under New South Wales and Victorian law, because that is in fact what they are in all of their ramifications; they carry higher costs but they still have some protections from the awards system—they will be deemed to be independent contractors. If the Treasurer walked into this joint and put this kind of legislation in place, as the person responsible to the people of Australia, through this parliament, for the protection of the revenue against sham acts that could be entered into by people setting themselves up as independent contractors even though they are not, then he would be laughed out of the parliament. He would be laughed out of the country. And yet this is a central piece of what this government is trying to do.

This legislation is very significant. It is as significant in its own way—as part of the puzzle that we have looked at—as the original Workplace Relations Act that Peter Reith, the then member for Flinders, tried to put in when he was the minister for workplace relations. After he did not succeed, it was broken into 12 parts. This is one part of the government’s mosaic for reshaping Australia. What are the fundamentals in this? Why are they pursuing it? The fundamental reason, I think, is locked up in the psyche of the Prime Minister, in his experience as Treasurer and in the fundamental ideological imperative that drives a number of people in this government. Take the member for Corangamite. I mean, Stewie is a nice bloke, with respect. But the member for Corangamite in this is utterly and totally ideological. He sat with the member for Bennelong and others in 1985—21 years ago—and conjured up this set of workplace relations arrangements and the arrangements that are in this bill. He spoke on this bill earlier tonight, and if it is achieved it is nirvana for the member for Corangamite. He is such a nice and personable fellow you would not think that that outward exterior would hide the fact that there is a drive for ideological purity and a drive to hunt down workers’ conditions and their incomes.

At the dispatch box, day after day, the Prime Minister attempts to put the argument that everyone is better off because there are more people who will get more jobs. He parades this during a $29 billion minerals boom time. The fact that this boom time eluded Malcolm Fraser led to another conditioning factor for the member for Bennelong. There was no minerals boom, but what we did get was wage-push inflation as a result of the metal workers seeking 20 to 30 per cent increases and the other strong unions trying to do it. And there was a recession in 1982-83 on the back of what the then Treasurer achieved—double-digit inflation, double-digit unemployment rates and double-digit interest rates. All of those pressures combined, together with the wage-push inflation, led to a very significant recession in Australia. This was something that took us many years to climb out of when we came to government.

But the key driver in this, from that point on—if you think of 1982-83 and its conditioning effect—is that just three years later, in 1985, the member for Bennelong sat down with the member for Corangamite and started crafting the new world—the utopian vision—for the coalition of what workplace relations should be like. Those workplace relations are based on smashing the unions and leaving individual employees at the mercy of employers when they put their cases to them. Thank you very much, I would rather go to the Remuneration Tribunal than front up to the Prime Minister, or anyone else, trying to get an increase in this place. There is safety in a collective approach, as members of parliament know. And there is some safety as well for those who are otherwise relatively powerless in dealing with tribunals, commissions or other things.

But think of the impact of this on the textile, clothing and footwear people in my electorate of Blaxland—those people who are at the very margin of the workforce, who are represented by the Textile, Clothing and Footwear subsection of the Transport Workers Union. Those two unions have aligned themselves into one group under Barry Tubner, who is doing a very substantial job of trying to protect Australian jobs, to lift standards, to help the people who work for piece rates—who have historically been exploited and who still are being exploited in Australia—and also to protect those industries against the competition they face from overseas. They are at one in this legislation with their comrades in New South Wales and Victoria who are driving trucks, except that they feel the full force of this legislation when it passes through this parliament.

There is 12 months grace for the truck drivers in New South Wales, but inevitably and inexorably the review after that 12 months grace will result in a harmonisation of this Australia wide. Four states have independent contractors. Despite the relative smallness of such operations in New South Wales and Victoria, those two states will inevitably, because of the drive and what is in the head of this government, also end up with these sorts of workers being independent contractors. The Commissioner for Taxation should then pull this piece of legislation to pieces. He might as well do it now. If that vast bulk of people who want to stay under award conditions are incorporated into this legislation with a set of sham provisions that say, ‘We’ll make sure that this is properly done and that we won’t be conned or gulled,’ the whole thrust of this legislation will be to gull the Commissioner for Taxation into believing that these arrangements—so transparently sham like—should be accepted as the norm for Australia. What depths have we reached in this Commonwealth of ours that any sane, normal person—in the parliament, in the courts or in the polity at large—could believe this is true and real? I do not think very many could do so—certainly not the people who will be at the end of this.

At that dispatch box, day after day, the Prime Minister has been scuttling from the considerable number of barbed arrows that have been launched against him in the past few sitting weeks with regard to his history of double-digit inflation rates, interest rates and unemployment rates. His government now is responsible for increases in interest rates and, where it has encouraged and pushed along a massive increase in the amount of investment in property, we have exorbitant amounts of debt within this country. That means that every small increment places immense pressure on people. It places pressure on the owner-drivers who have to run their rigs and pay for most of the costs of those rigs—not just the diesel but the tyres, the insurance and the rest of it. To take from them the range of provisions that make their position relatively safe and sure from now into the future and to put them at hazard with this legislation means that there will be even greater pressure on them, and they know the likelihood is that more of them will fail.

Do this government and this Prime Minister really care about that? Not a jot. Not a tittle. Why? Because this is the fundamental design of this government. There are a whole range of other areas where you might say they are doing the right things in terms of the national interest. But day after day at this dispatch box we get the Minister for Employment and Workplace Relations arguing a national interest case in relation to the dismemberment of what we have known through more than a century of utilising the Industrial Relations Commission to try to realise the notion of a fair go for most of Australia’s workers. The Prime Minister and the Minister for Employment and Workplace Relations simply argue that, if you look at Australian workplace relations and the key targets for the electorate and workers at large, their approach has delivered tremendous results in higher wages and all the rest. The reality for ordinary working Australians is that it has delivered, as in the Spotlight case, lower wages and lower entitlements—and that is the whole point and purpose of it. Why? Because this is a government driven by on costs.

This is a government that takes pride in saying that Australian businesses should be entirely delivered from all the normal attachments that are legislatively incumbent upon them—that is, the normal responsibilities you have if you have an employee. You have responsibilities in terms of the superannuation contribution—they would like to get out of that if they could—long service leave, sick leave and a range of things which, from 1974 on, the member for Bennelong has argued should be stripped down and cut away in order to make business more effective.

If you take away all regulation, which is one of the things this government wants, you might be able to make business more effective and more efficient, but it will not be an Australian business environment that you are dealing with; you will be dealing with a ‘Thailandised’ business environment, one in which the workers are stripped naked in the face of the economic forces that they confront, one in which the Master and Servant Act of the 19th century is transplanted again into Australian soil. The effect of this Independent Contractors Bill is exactly the same as the effect that is sought in the workplace relations legislation: to put one individual up against the might of a company, to allow that company the full freedom to run away from its responsibilities, past, present and future, and to say that such companies will be a lot better off because they will not have all of those extra costs and they will be more competitive as a result.

When we were in government, we did a pretty good shake-up, transferring to Australian companies the burden and the benefit of their profitability and allowing them to dramatically expand and take themselves to the rest of the world. But we did not create a position in which the ordinary working person was then impelled to take all of those on costs onto themselves. This bill is about making bunnies of the people who are currently employees, making them not only take on the costs of, in this instance, replacing the tyres, doing the insurance and buying and maintaining the rigs, but take on all of those costs which have, since the beginning of our system and through its fundamental development, been the responsibility of an employer. This is irresponsible government and this is disgracefully conceived legislation which is an utter sham in its conception and an utter sham in practice. The Commissioner for Taxation should be brought to look at this and should throw it out as a contrivance of the first order. (Time expired)

Harry Jenkins (Scullin, Australian Labor Party) Share this | Link to this | Hansard source

Early in his contribution, the member for Blaxland used the expression ‘the corruption of the government’. The chair has taken the not overly narrow—and hopefully not overly generous—view that it was not the intention of the member for Blaxland to imply dishonest, illegal behaviour but rather one of the other definitions of the expression that could be purloined from a dictionary.

Michael Hatton (Blaxland, Australian Labor Party) Share this | Link to this | Hansard source

I thank you, Mr Deputy Speaker. I was referring fundamentally, and may have done so not very felicitously, to the corruption of the process that the government have put in train—which I would imagine is what you have in mind.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

To have expressed it otherwise would have led to a withdrawal. I thank the member for Blaxland.

John Murphy (Lowe, Australian Labor Party, Parliamentary Secretary to the Leader of the Opposition) Share this | Link to this | Hansard source

I begin by congratulating the member for Blaxland on his very erudite contribution to the debate. I hope that all his electors living in Bankstown and elsewhere in his electorate of Blaxland were listening to his contribution tonight. I wish that the minister had been here to hear what he had to say. I too must respectfully disagree with this government’s ideological statements, and I object in the strongest terms to the Independent Contractors Bill 2006.

During this debate, as the member for Blaxland has pointed out so succinctly, it has become apparent that ideology, and ideology alone, is the driving force behind this bill. There has been a litany of ideological claims, including the sophistry that all independent contractors have chosen to work for themselves to gain the benefits of choice and flexibility—that somehow parties are always able to determine the most appropriate form of their working relationships, as if the workers always have a choice to determine the structure of those relationships.

Members on government benches have spent considerable time throwing around words like ‘choice’, ‘flexibility’ and ‘freedom’ as if these words were confetti. Like never before, this government has become bogged down in a mire of 19th century classical contract theory with notions of presumed free will, presumed assent and misguided justifications for regulatory nonintervention. It should come as no surprise that the government has to conjure up an impression that the moral force behind this purely ideological bill is autonomy: that all independent contractors should be held in the strictest terms to their contracts because they have chosen to be. The picture painted by the government is far removed from reality. In truth, many independent contractors bargain from a position of economic weakness and are offered contracts on a ‘take it or leave it’ basis. Many have not consciously or willingly chosen to become independent contractors.

Without ideology, the bill has nothing else to recommend it. The official object of the bill purports to enshrine the status of independent contracting as a wholly legitimate form of work and to protect the freedom of independent contractors to enter into contracts of their choice. The first of these aims appears entirely reasonable. There can be no doubt that there has been a quiet shift in the Australian labour market which has seen an increase in the number of employees who have become independent contractors. This has also seen a concomitant shift in many employment obligations—including, but not limited to, the provision of superannuation, leave entitlements and professional indemnity cover—becoming the responsibility of workers rather than employers.

I am aware that many individuals have made a genuine, conscious choice to have their rights and obligations determined by contractual provisions and have established their businesses accordingly. I do not begrudge this choice, nor do any of my colleagues. Many people with marketable skills have chosen to work for themselves, have successfully negotiated a reasonable basis upon which to sell their services and have reaped the benefits of setting their own hours. The Senate Employment, Workplace Relations and Education Legislation Committee was provided with an example of an occasion when independent contracting can work. Mr Kenneth Phillips, Executive Director of the Independent Contractors of Australia, disclosed to the committee that he received income from around 20 sources in 2005. Among other activities, Mr Phillips has been able to ply his trade writing articles for newspapers and acting as a consultant to companies on a wide range of issues.

I do not doubt that an efficient, modern and evolving economy can have a reasonable mix of working arrangements. There is a public interest in providing flexibility and diversity in the way people perform their jobs—so long as all Australians have the opportunity and means to clearly articulate their choice. Mr Phillips has reaped the benefits of his conscious choice, and we do not begrudge him that. For others, a conscious choice between remaining an employee and becoming an independent contractor does not present itself so neatly—which brings me to the second purpose of this bill: the purported protection of independent contractors.

The question is: just who will this bill protect? An independent contractor is often described as someone who is their own boss—a person who contracts to perform services for others while not having the status of an employee and the benefits that come with being an employee. Estimates vary as to the number of so-called independent contractors operating in Australian workplaces. Productivity Commission estimates from the Australian Bureau of Statistics Forms of Employment Survey data suggest that there were around 800,000 independent contractors in 2004. Nonetheless, many of these so-called independent contractors lead very strange lives for people who have been painted by the government as being masters of their own domain and their own bosses.

A recent study published in the Australian Journal of Labor Law, titled ‘Non-standard workers in Australia: counts and controversies’, has shown that as many as 400,000 of these so-called independent contractors actually do all of their work for the one employer. Therein lies the inherent conflict and misnomer in the use of the term ‘independent contractor’. Many are not independent of their employers but are dependent and easily open to exploitation. Despite the mirage being created by the government that these people are their own bosses, many are not. What a ludicrous proposition it is to suggest that someone is independent or a contractor when they receive income from the one source, are compelled to plaster that income source’s logo on their uniforms, and must commit to working only for that single income source. These people are de facto employees and are designated as contractors for the convenience and financial advantage of employers. Many are merely Clayton’s employees—employees which employers sign up as so-called independent contractors when they do not want the associated costs of hiring employees. The practice is abhorrent but it has been given implicit permission to continue by the Howard government. The reason is that this legislation, despite being willing to destroy the many protections available to these Clayton’s employees, does not even attempt to define the term ‘independent contractor’ beyond its meaning under common law. The seminal case of Stevens v Brodribb, while laying down superficially simple indicia of employment to determine whether a worker is a contractor or an employee, leaves many workers vulnerable to exclusion from basic employment protections.

Debate interrupted.