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

The High Court’s indicia of employment test includes such factors as whether the worker supplies and maintains tools and equipment, whether the worker receives paid holidays or sick leave and whether the worker is integrated into the hirer’s organisation. It is important to note that the court has not seen any particular indicia as determinative of a particular relationship. It should not take a legal expert to see that a contract can be fashioned in such a manner that legally deems a worker to be an independent contractor when, for all intents and purposes, they are properly seen as employees.

Nonetheless, should it take a legal mind to convince the government that the current common-law rules are too broad and inexact and cause an injustice to many so-called independent contractors, there are many out there whose advice the government should heed. Creighton and Stewart in the 4th edition of Labour Law have argued that:

... with a modicum of care and ingenuity it remains possible for businesses to obtain work from individuals who are virtually indistinguishable from employees, in terms of their close connection to the organisation and subordination to its managers and supervisors, yet whom the common law does not characterise as ‘employees’. This can in most instances be achieved simply through a well-drafted contract that is designed to look as much like a client’ contractor agreement as possible.

That is outrageous, but it does not end there. The New South Wales government’s submission to the Senate Employment, Workplace Relations and Education Legislation Committee quotes labour law professor Andrew Stewart as suggesting:

... 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 ...

I disagree with Professor Stewart on one point here. It would not take a competent employment lawyer to construct such a contract. Such is the flexibility and broadness of the common-law rules that even an incompetent one would do. I could quote this sort of legal advice for hours, but what I have quoted will suffice. This advice is damning stuff, but it has been wilfully ignored by the Howard government during its blind pursuit of ideological ends.

Non-standard work arrangements, including the use of independent contractors, should not flourish when their mere purpose is to avoid employment rights and responsibilities. Industrial relations legislation and policy should recognise that many independent contractors are only so in name, not in substance. Many are disguised employees who do not carry on their own businesses and are not their own bosses, but are working in a dependent way for another firm. Calling these people independent contractors should not make them so if, in reality, they are in a form of disguised employment. They ought not be deprived of their entitlements, including leave and superannuation, on the basis of a fictitious construct, particularly when many of these workers are likely to be from a vulnerable demographic group, such as the unskilled or the young.

It is for this very reason that state governments have chosen to protect many so-called independent contractors from exploitation by introducing legislation that deems them to be employees. If it is good enough for unscrupulous employers to deem employees as independent contractors through the underhand use of contract law, it is good enough for state governments to deem independent contractors as employees through legislation.

These state deeming provisions redress the unequal bargaining power of certain categories of workers which may compromise their ability to negotiate fair working conditions. They ensure the likes of milk vendors, cleaners, blind fitters, bread vendors and painters are properly granted employee related entitlements. These state deeming provisions are also entirely consistent with international shifts to ensure employee protections are not lost through disguised employment.

Yet, in a monumental act of betrayal that sells out many ordinary Australian workers, the primary outcome of this bill is to override these deeming laws to appease critics that purportedly represent just 200 independent contractors and those that represent the big end of town. Clearly, it is necessary to remind government members of the International Labour Organisation’s conclusions in its ‘Resolution concerning the employment relationship’:

Disguised employment occurs when the employer treats a person who is an employee as other than an employee so as to hide his or her true legal status ... The effect of such practices can be to deny labour protection to the worker and to avoid costs ... There is evidence that it is more common in certain areas of economic activity but governments, employers and workers should take active steps to guard against such practices anywhere they occur.

This is just what the state governments have done through their deeming provisions, yet the Howard government has the temerity to override them in this bill under the guise of protecting independent contractors. If the Howard government is really concerned that genuine contractors can be deemed employees, it ought to also be concerned that genuine employees are being fashioned as independent contractors.

Let us be clear about this bill. This bill is not about enshrining the status of independent contracting as a wholly legitimate form of work. It offers no guidance, let alone a solution, as to who a genuine contractor or employee is. Given the ambiguity surrounding this legal definition, this bill is not about protecting independent contractors. It removes the mechanisms in place which ensure many so-called independent contractors have access to the protections they are due.

The minister may contend that anti-sham arrangement provisions in the consequential bill will adequately protect workers who no longer have the protections of state deeming provisions. It would no doubt disappoint the minister that these anti-sham provisions are themselves a sham—sham by name and sham by nature. The explanatory material accompanying this bill states:

A sham arrangement is an arrangement through which an employer seeks to cloak a work relationship to falsely appear as an independent contracting arrangement ...

However, the anti-sham provisions still draw upon the flawed common-law definition of an independent contractor.

As we have seen, there will be many occasions where workers are dependent on one source for income but still unwittingly find themselves under the law as independent contractors. These arrangements, though not reflecting the reality of the working arrangements between the parties, would not be considered a sham. They would only be a sham if the worker can establish that the contracting arrangement was really an employment arrangement and that the intended employer knew, or ought to have known, this. We know how easy it is to construct a contractual relationship out of what would appear to be an ordinary employment arrangement. It should surprise no-one if the most contrived contractual arrangement survives this test. Pity the poor worker when the odds are so stacked against him or her.

But that is not all. Even if by some legal miracle the worker passes the first hurdle, they then need to establish that the intended employer could reasonably have known that it was an employment arrangement. We have a common-law indicia of employment test that operates on a case-by-case basis and produces arbitrary and unpredictable outcomes. Other than with the most profoundly illegitimate arrangements, how could any worker unequivocally assert that a contractee knew, or ought to have known, they were entering into an employment relationship? How can a worker argue this with conviction when they too are uncertain about the true legal nature of the employment arrangements?

I suspect most workers would not have the time, money or capacity to bring this sort of litigation to a courtroom. I suspect the minister knows this also and has deliberately—not in error—left this deficiency in the bill. Let there be no doubt that the anti-sham provisions afford little by way of protection to dependent contractors or disguised employees.

There are many other objectionable parts of this bill, including the limitations of the new unfair contracts jurisdiction and the deceitful watering down of protections to outworkers and owner-drivers. Time does not allow me to go into these in detail. I will only comment that their continued existence in this bill is explicit confirmation by the Howard government that some workers and contractors require our protection. It is a disgrace that the government has chosen to destroy the fair and balanced protections previously provided by state legislation.

Before I conclude, I would like to make a comment about the feigned justifications that mask the real reasons for this bill’s existence. We hear that state laws, including deeming laws, create a barrier to the use of independent contractors in Australia. Yet we have not seen any haemorrhaging in the use of independent contractors in Australia as a result of the protections afforded by state governments to many unwitting independent contractors. We hear that contracting relationships are being dragged into the sphere of employment law by state deeming provisions, distorting the choice and intentions of the parties to a contract. That there have been so many cases taken to tribunals and courts by workers hardly bodes well for the minister’s claim that contractors wish to remain free of so-called ‘limits, constraints or barriers on the freedom to contract, the freedom to operate as a genuine independent contractor’. If this were true, we would not see shower repairers, forklift drivers and many other ordinary workers taking their cases to court.

When will the government accept that there is a proliferation of one-sided, unread and unbargained contracts in the workplace which often provide the catalyst for such legal action? When will it accept that the assumption that all contracts are entered into by choice or that all independent contractors have consciously chosen their work arrangement has ceased to be a commonplace reality?

We know that for many workers the notion of independence is an illusion. We know that on many occasions the choice and freedom in their working arrangements have been not for them but for the benefit of those who hire and fire. It is not a choice when a worker is shown a range of contracts on a take it or leave it basis and is forced to choose the least obnoxious of them. The minister speaks of respecting the freedom to contract. Is the minister suggesting that a worker choosing between two highly undesirable alternatives chooses freely? I certainly would not.

With the Howard government’s Work Choices legislation and now the Independent Contractors Bill, that is what is being suggested, and the result is this: many workers are now being left to fend on their own without state based protections, without access to unfair contract provisions and without access to employee deeming provisions. Shamefully, those who are most likely to be affected by this bill are those who are least able to stand up for themselves. Yet again this government is seeking to appease the big end of town by tearing down protections for the workers who need them most.

While we are used to the Howard government attacking workers’ rights, it is unconscionable that it would do so with no substantive reasons in mind. The government has not made out its case for overriding state independent contractor laws. As I mentioned earlier, besides ideology which is fundamentally flawed this bill has nothing to recommend it. I cannot find any justification for the government’s refusal to allow the states to guard against what Professor Stewart has termed the ‘antisocial outcomes that can be expected from an unregulated labour market’. These antisocial outcomes include low wages when families are already finding it hard to make ends meet and excessively long working hours when families are already finding it hard to spend enough time together.

The Howard government must put aside its infatuation with a free market and govern for all Australians. Given the Howard government’s unjustified antipathy towards the union movement, it would not surprise me if it has ignored their well-founded calls for restraint with this bill. It also would not surprise me if this arrogant government ignores the call of the churches to protect workers. Reverend Harry Herbert from UnitingCare has stated that the bill ‘deprives many low-paid workers of adequate protection against exploitation’. For this and many other reasons, I oppose the bill and urge every member of this House to vote against this unfair legislation.

Nicola Roxon (Gellibrand, Australian Labor Party, Shadow Attorney-General) Share this | Link to this | Hansard source

It is a pleasure to follow the member for Lowe on these matters, because many people on this side of the House are very concerned about the changes that are being proposed in the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, which come hot on the heels of the government’s extreme Work Choices legislation coming into force in the community. Like our opposition to Work Choices, Labor opposes these bills.

As we all know, courtesy of the exorbitant advertising campaign the government has run, the government has been making all sorts of claims trying to sell their extreme industrial relations agenda to a sceptical Australian public. And, like many of the claims the government has made about their Work Choices legislation and what it will deliver, we see that those claims will be even further from the truth if these bills become law. The government has been pretending for months and months that these changes will result in a simplified, unitary industrial relations system. They have been asserting that it will result in deregulation of the labour market. They have been claiming it will increase flexibility and freedom for workers. But these bills, like the Work Choices changes before them, do absolutely nothing of the sort.

Work Choices did not simplify the system. The government has not delivered a single national system. In fact, it has created more confusion and led to a High Court challenge by the states disputing the extent of coverage of this new law. I note that even if the government is successful in the High Court challenge, many categories of workers will not be or might not be able to be covered by Work Choices, and I dealt with this in more detail in my speech on the Work Choices bill. There is, of course, a natural limit to how far the corporations power can extend, even if the government’s arguments are successful in the court.

On top of this confusion, these bills will now add several more layers of complication. Ascertaining who will be covered by this new legislation, who will have the benefit of state protections continuing, who will no longer be covered by existing laws and what the myriad different standards are that will apply in different states puts the final nail in the coffin of the government’s now well-and-truly dead claim that their laws are simplifying anything.

It is the single biggest con on business to pretend that these changes will streamline anything. Look, for example, at just some of the variations and options that might confront a small business in trying to work out what laws will cover them. First they have to ask whether they are a corporation, which is easy enough to ascertain. Then they have to consider the other more dubious categories. How will not-for-profit organisations work? How will large not-for-profit organisations compare to small not-for-profit organisations? How will small businesses that are not incorporated, that do not operate interstate or that operate as partnerships interstate ascertain which set of laws they are covered by? Then, of course, there are all of the new distinctions in the ill-defined definitions in these bills. Who is an employee? Who is a contractor? What would be a sham contract? Who is a state protected contractor? And the list goes on and on.

The government claims that the Independent Contractors Bill will ‘enshrine and protect the status of independent contractors’ and ‘encourage independent contracting as a wholly legitimate form of work’. But in fact these bills will undermine the safeguards currently enjoyed by independent contractors and significantly weaken protections for outworkers. Rather than deregulating the labour market, the bills will introduce a highly technical and complex regulatory framework to the independent contractor sector. The content of the regulations will weaken protections, but ascertaining who is covered by which regulations and rules is much harder. The bills may also create an environment that encourages employers to reclassify their employees as independent contractors and thereby avoid their obligations altogether. On top of all of this, the regulation-making power that we see in these bills means that all sorts of other exemptions and exceptions could be made quietly and without the usual scrutiny of a normal piece of legislation.

Before I address all of these concerns, let me first explain the broad scope of the legislation and the sectors that it covers. The government has claimed in the past that virtually all workers would be covered by Work Choices, but the very existence of these bills shows that that was always untrue. The exact numbers have always been difficult to obtain, but estimates as to the total number of independent contractors operating in Australia vary from 800,000 to 1.9 million people. This represents between eight and 20 per cent of Australian employed persons—a rather large number of workers that the very existence of these bills demonstrates are not covered by Work Choices.

Independent contractors are predominantly located in the trucking industry and, as outworkers, in the textile, clothing and footwear industries, but are in a range of other industries as well. I must note, however, that these two groups have a very significant presence in my electorate. Because of the heavy industry in my electorate and the proximity and access to the river, the docks and the freeways, the trucking industry has had a strong presence in the area. ABS statistics show that over 3,000 people in Gellibrand are employed in the various industries categorised as transport and storage. While managing safety and traffic noise is always an issue for residents, no-one doubts that it is extremely important to ensure that the many workers in the industry who live and work in our area are adequately protected, not exploited and not left in unfair or vulnerable positions. Existing protections are important to provide reasonable working conditions and also to maintain the financial viability of the scores of owner-driver businesses in my electorate—businesses that would otherwise be forced to cut corners or be squeezed out of the industry. As we all know in this House, cutting corners in the trucking industry is to no-one’s benefit. It compromises the safety of workers and it compromises road safety for the wider community. No-one wins. These bills, as I will discuss, significantly increase the pressure on these drivers at great risk to themselves and to all of us.

The textile, clothing and footwear industries also have a notable presence in my electorate of Gellibrand. Unlike the transport sector, figures on the number of TCF workers and outworkers are very difficult to obtain, but there have been in the past and still are a number of large textile companies in my electorate. Unfortunately, some of them have not seen good times recently. But there are also many women in our community from diverse ethnic backgrounds who work from their own homes as pieceworkers. These women in particular are already in a vulnerable and exploited position, and these bills will do little to assist them. Rather, the bills will significantly weaken outworker entitlements, removing independent contractors from protections under state industrial laws. These workers will be even more exposed than they already are, losing entitlements such as sick leave and annual leave.

I will now address in more detail some of the particular concerns that I have with these bills. It is Labor’s strong view that these bills will undermine the safeguards currently enjoyed by independent contractors, increase uncertainty for independent contractors and introduce a highly technical and complex regulatory framework to the independent contractor sector. The independent contractor’s bill accepts the common-law definition of the term ‘independent contractor’, whereby a person is engaged under a contract for services without the legal status or protections of an employee. As such the independent contractor, rather than an employer, is liable for aspects of their working life such as superannuation and taxation responsibilities. The primary principle underpinning the bill is that independent contracting relationships should be governed by commercial law not industrial law, and it seems that the government’s intention is that as many employees as possible be categorised as independent contractors, thereby shifting responsibilities from employers to individuals. So it is clear the bill’s reach goes well beyond existing contractors to those who might currently get the benefits and protections of employees.

Like Work Choices before them, these bills will create an even more confusing system where businesses and employees will not know what laws they are covered by and what conditions they retain. When the government introduced its extreme Work Choices bill, I noted—as I have mentioned already—that the promise of a single national system, without support from the states, was a myth. The Independent Contractors Bill offers one more demonstration of where the federal government, despite its grand plans, is unable to deliver a single coherent system. Instead it is a bit of federal law here and a bit of state or territory law there all mixed in together. How the government thinks this will lead to greater efficiencies for business is beyond me.

Part 2 of the bill, for example, overrides all existing deeming provisions contained in state industrial legislation which deem certain categories of independent contractors to be employees and all existing provisions granting employee related entitlements on independent contactors. It therefore seeks to override the state and territory provisions on issues such as remuneration, leave, hours of work and disputes. Yet, confusingly, both bills simultaneously retain state and territory provisions relating to issues such as discrimination and occupational health and safety. Again we are faced with duplication of regulation and uncertainty for business, with one law applying in one area and a different law in another. The bill means that independent contractors can no longer access state unfair contracts laws.

Equally complex are the transitional provisions under part 5 of the bill. These provisions attempt to create transitional arrangements for people once recognised by state and territory laws as employees—and consequently afforded employee style entitlements—who are regarded under these bills as independent contractors at common law. The bill provides a complex structure of transitional arrangements, which stretch over three years, to define just what entitlements such people will continue to hold. So for that period of time it is going to be even more difficult for businesses and individuals to know what laws they are to have the protection of.

In relation to owner-drivers, the bill is just downright weird. It recognises that existing laws in Victoria and New South Wales will continue to exist but ignores the pending legislation in WA and the ACT. It even prevents states from legislating protections in the future. So it acknowledges—it even concedes—that owner-drivers are in a vulnerable position without the Victorian or New South Wales protections, and therefore maintains them, but it is happy to let there be a different standard in other states; it is not only happy to allow it, but it absolutely prohibits any action then being taken in the future by other states. So these bills guarantee that there will always be a differential between states in the owner-driver area. You have to ask, ‘Where is Mr Howard’s single system now?’ Soon I am going to go in more detail to the situation with owner-drivers, because it is something that I think needs specific attention. But like the Work Choices legislation, as I have already said, this bill is not about deregulation or streamlining; in fact it is all about over-regulation and politics.

One of the most worrying aspects of the bill is the significant weakening of protection for outworkers. Part 4 of the bill purports to protect outworkers because it provides a default minimum rate of pay of $12.75 per hour. However, that part excludes all the broader protections that were in existence for outworkers in state laws and federal awards, like holiday entitlements, overtime, superannuation, workers compensation and redundancy pay.

A so-called contract outworker under the bill will not be entitled to any of the minimal and inadequate protections maintained through Work Choices other than a basic minimum rate of pay. In states which do not have outworker laws, this will be the only protection for outworkers. In states which do have outworker laws, only a tiny subset of these laws would remain effective. This creates an easy loophole for unscrupulous employers to argue that outworkers are contract outworkers and thereby avoid federal protections.

These cognate bills are simply designed to allow workers to be further exploited, a particularly worrying thing in an area where we know that workers have already been seriously exploited. For workers in the textile, clothing and footwear industry, where outworkers predominate, existing poor conditions such as low rates of pay, irregular payment and substandard working conditions will be exacerbated by removing even the most basic of protections.

I think it is important to note in this place that the Senate committee unanimously exposed the government’s superficial rhetoric about protecting outworkers and recommended that the whole of part 4 be omitted. The government senators themselves stated that these changes ‘serve no useful purpose’. Even the government members acknowledged the ridiculous position that is being put forward by part 4 and proposed that it should be omitted.

I have already noted briefly that these bills will create an environment encouraging employers to reclassify their employees as independent contractors and thereby avoid their obligations. Of course this is bad for workers, but it is also not good for businesses. They will be forced to compete in a race to the bottom as employers increasingly transfer their employees, who no longer will be protected by state and territory deeming provisions, over to independent contractor status to avoid their responsibility for worker’s entitlements and to lower their costs. Even good bosses who may not want to take this approach will feel pressure to change, as they will otherwise lose a competitive edge against those businesses that are doing the wrong thing. It will become a downward spiral where workers become the biggest losers.

I want to come back to the question of the owner-driver issue. I have noted that these bills are just simply weird in this area. I note the different treatment for different states and the inconsistent views that the government has in this area. If, despite our opposition to these bills, this legislation does go through the parliament, one of its few positive aspects is that it preserves, at least for the time being, existing state arrangements and protections for owner-drivers—in New South Wales, under chapter 6 of the New South Wales Industrial Relations Act 1996 and, in Victoria, under the Owner Drivers and Forestry Contractors Act 2005.

But, as mentioned above, this concession recognises that owner-drivers are a unique and particularly vulnerable group who require a basic level of regulatory protection to avoid exploitation by transport operators. Once this recognition has been made by this concession, surely even the Howard government must concede that it needs to go further. Shouldn’t owner-drivers in all states be covered?

But, even if this is a small portion of good news, this reservation is only temporary. The fact that these bills allow New South Wales and Victorian legislation to continue is only a temporary protection. The legislation itself says that this part has to be subject to review in 2007. That is right: 2007 is only next year. Given the election is due in 2007, it seem very likely that there will be an immediate review after the election—and the mean and tricky Prime Minister, as he has been described by his own, is making no promise that this protection will continue if he again secures government.

So, even in the one aspect of these bills where we see there might be some sensible protection maintained, the government is only doing that with a sleight of hand. It is some sort of political arrangement which has been made. It recognises the value of those bills. It excludes other states from taking any action to get similar protection, and it does not even guarantee beyond the next election that those protections will stay in place in those states.

I do not think the Prime Minister is going to be able to convince owner-drivers in Victoria and New South Wales that this is a good enough guarantee or protection for them, and I am sure he will not be able to convince all the owner-drivers in other states, where legislation might have been forthcoming—as we know, it has been foreshadowed in the ACT and WA—that it will be good enough for them. So it seems to me that the one small provision which might provide some protection if you take this action is built on very flimsy ground.

Ultimately, I think the only conclusion you can be left with regarding these bills is that they are a total mess. There is not one system for employment regulation, as the government has proposed. There is not protection for individual workers, owner-drivers or contractors. There is not deregulation for business. There are confusing and inconsistent state exemptions and there are complex transitional provisions. All in all, it is a confusing, complex mess with no discernable benefit to either individuals covered by the system or businesses operating in these fields.

The working men and women of Gellibrand—the heartland of industrial Melbourne, in the inner west of Melbourne—deserve much better than these bills. They risk being attacked in all directions: losing their entitlements, losing protections and losing rights, making them even more insecure in their jobs. In government, Labor will tear up the extreme Work Choices laws and these laws too, as there is nothing good about them. They harm families, young people and ordinary, regular working Australians who are just trying to make ends meet. These laws must not remain on the statute books.

Craig Emerson (Rankin, Australian Labor Party) Share this | Link to this | Hansard source

At the outset, I would like to note that there is a grand total of three government speakers and 23 opposition speakers on these very important bills, the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. That tells us that these bills are motivated purely by political considerations, by an attempt to deunionise important sections of the Australian workforce. If this legislation were truly seen to be in the interests of the working people of Australia and the interests of the industries it affects, more than three government speakers would have had the drive and enthusiasm to make such statements in this chamber. But they have not, because they know that this legislation is nothing more than a political exercise—an exercise in ideology.

Labor supports genuine independent contractors—that is, those workers who freely choose to be contractors. Labor, at the same time, supports the right of genuine contractors to be represented by a union. Here, as on so many occasions, Labor diverges strongly from the position of the coalition government, because this government does not respect the right of working people in this country to be represented by a union. This government knows that, if it can deunionise the Australian workforce, it can achieve its ultimate goal of destroying the Australian Labor Party. It knows of the strong bonds between the ALP and the union movement. It knows that the true target in so much of this legislation is in fact the ALP, because the Australian Labor Party was born of the union movement and, very proudly, represents the interests of working Australians and represents the right of working Australians to be represented by a union.

The truth of the matter is that many employees are either enticed or coerced into entering into sham contractor arrangements. They can be employees on Friday and then turn up to work on Monday as contractors, when, in truth, the relationship between the employer and the employee has changed not in substance but only in appearance.

Let me deal with the enticing of employees into becoming sham contractors. That is done primarily through the income tax system because contractors, as distinct from employees, can claim extra tax deductions and be in a more beneficial tax position overall. They can, for example, put themselves in a position of being able to claim as an expense travel to and from work. They can put themselves in a position of being able to claim home office expenses and, indeed, more readily, of being able to split income between themselves and their partners.

The government recognised the revenue leakage associated with sham contractor arrangements in its consideration of the Ralph Review of Business Taxation. As a consequence of that Ralph review, recommendations were made to introduce into the parliament legislation dealing with the alienation of personal services income. That is a fancy set of words to describe legislation that would crack down on contractor arrangements that were shams designed purely to minimise tax.

As a result of the Ralph report, the Treasurer picked up the recommendations and, in a letter to the then shadow Treasurer that was negotiated across the table—I know that because I was also at the table at the time—he indicated that he was prepared to sign a letter to say that he would move decisively against sham contractor arrangements through legislation dealing with the alienation of personal services income. As on so many other occasions, the Treasurer failed to keep his word. His word was recorded in a letter signed by him. He showed no shame after being rolled in the cabinet by the Prime Minister and the Minister for Employment and Workplace Relations, who had one objective and one objective only—to continue the deunionisation of the workforces engaged in building and construction, in transport and in other occupations in our country. So the Prime Minister and the minister for workplace relations indicated that they were more than prepared to use taxpayers’ funds to achieve their goal of deunionising the workforce in those industries. In the process, they rolled the Treasurer, who came back into the parliament with a very ineffective piece of legislation called the alienation of personal services income. It was watered down very substantially from that which had been foreshadowed in the government’s response to the Ralph review.

It is worth reviewing what has happened in terms of the enforcement of that legislation, which passed through this parliament several years ago. Documents obtained under freedom of information legislation reveal that the tax office has never reviewed the operation of that legislation. It appears that the tax office has not audited anyone—or virtually anyone—who has been able to claim expenses under what could be sham contractor arrangements. More than 99 per cent of independent contractors have self-assessed, so there is no real picture of the ongoing revenue losses associated with sham contractor arrangements, but they could run into billions of dollars—such is the zeal and determination of the Prime Minister to deunionise the transport industry and the building and construction industry. The alienation of personal services income legislation is sham legislation to deal with sham contractor arrangements.

I have dealt with the matter of enticing working people into converting to sham contractor arrangements; I now turn to employers coercing employees into becoming sham contractors, and that indeed does happen. It includes sacking workers and telling them to come back to work as independent contractors if they want a job.

Under these arrangements, employees who become sham contractors are obliged to provide for their own superannuation so that the employer no longer has that responsibility, employees who become sham contractors are obliged to provide for their own insurance, and employees who become sham contractors are obliged to provide for their own workers compensation if they have an accident at work. This legislation generally removes the right of unions to represent employees who are forced into sham contractor arrangements. A lawyer can represent such people, an association can represent such people, but a registered employee organisation cannot represent such people—that is, a union cannot represent such people.

There is an exemption: the Transport Workers Union representing owner-drivers in New South Wales and Victoria. That exemption is a result of the hard work and determination of the Transport Workers Union to secure an exemption from this legislation. That came about not out of the good grace of this government—not because this government thought it was a good idea—but because this government was very apprehensive about what the Transport Workers Union might be able to achieve if it took another course of action to persuade the government to make these exemptions.

The irony is that, if the Transport Workers Union quite legitimately and correctly has been able to come to arrangements in New South Wales and Victoria that protect the interests of working people while at the same time ensuring a viable industry and the government has seen fit to make those exemptions, that tells us the story—that is, that this legislation is unnecessary. Life will go on in the transport industry in New South Wales and Victoria, but the government has insisted that life will not go on in the transport industry in my home state of Queensland or in the other states of Australia. So the government did not provide those exemptions out of good grace or common sense but because it felt it had no real political alternative but to do so.

This legislation is an integral part of the government’s single-minded desire to deunionise the Australian workforce. That desire is expressed more comprehensively in its Work Choices legislation, to which I now move based on the second reading amendment. It is called Work Choices, but it provides no choice for employees. In a most Orwellian way, it withdraws those few choices that remained for employees following the legislation of 1996 and subsequent second-wave legislation. The titles of all those bills that came through this parliament were very Orwellian—the fair dismissal bill, the fair termination bill and the better bargaining bill, which removed bargaining rights from working people. I could go on, because there were 13 such bills.

In removing the choice of employees to bargain collectively and to be represented by a union in such enterprise bargaining, the government has turned its back on enterprise bargaining in Australia. Yet in 1996 and all the way through, while it was trying to get these Orwellian pieces of legislation through the parliament, the government claimed its support for enterprise bargaining. The government pretended that it was its idea. The government tried to disguise the fact that enterprise bargaining was introduced by the Labor government in 1993 as a natural evolution of the system as we moved from the highly centralised wage-fixing system inherited by the incoming Labor government in 1983 from the then coalition government, the Treasurer of which is now the Prime Minister of Australia. It was Labor that inherited a highly centralised wage-fixing system that had resulted in wage increases of around 14 per cent per annum in the last couple of years of the Fraser government. Is it any wonder that the incoming Labor government inherited double-digit inflation and double-digit unemployment?

You do not hear the word ‘stagflation’ used that much these days. This is a term that was used during the late seventies and early eighties to describe the state of the Australian economy—that is, stagnation with inflation. That was a result of the policies pursued by the Fraser government and the then Treasurer of this country, now the Prime Minister of Australia. There was one other variable that is important to the quality of life of Australians that was also well and truly into double digits. I wonder if members in this chamber can remember what that variable is: interest rates. The now Prime Minister of Australia, as the Treasurer of Australia, holds the record for the highest interest rates in at least a quarter of a century. On 8 April 1982, 90-day bank bills reached 22 per cent. That was the cost of borrowing money in those hyperinflationary days.

So, when the Prime Minister talks about high interest rates under Labor, the truth is that he holds the record. The only reason mortgage rates were not higher is that they were capped by law, which meant that people with lower incomes were absolutely excluded from owning a home. They did not have the credit rating that banks required in order to lend them the limited lending funds available.

That was the economic situation inherited by the then Labor government, which dealt with it by reducing inflation, interest rates and unemployment. It did that initially through various incarnations of the accord and then gradually moved to a less centralised system and to enterprise bargaining. In the process, Labor did seek and achieve wage moderation.

We hear from this government—daily—that real wages have increased by 16 per cent under the coalition but increased by only one per cent under Labor. What happened during that period of the Labor government? Labor inherited an industrial sector that was on its knees—that was uncompetitive and that needed some wage moderation to help it reorient itself from a highly protected, narrow domestic market to one where it could compete in the international market, on the global stage. It was therefore important that wage moderation be achieved—to boost the competitiveness of those industries that had lost all competitiveness under the previous coalition government.

The trade union movement of this country cooperated in moderating wages. Instead of condemning the trade union movement, this government should thank it for boosting the competitiveness of Australian industry and helping the previous Labor government in a reform program—cooperating in a reform program that has set Australia up for 15 years of strong economic growth and allowing real wages to increase over that time.

In exchange for moderation in money wages, the then Labor government, through the accord and through understandings developed with the trade union movement and the working people of this country, entered into arrangements that boosted the social wage. It was Labor that introduced Medicare, providing universal health care for Australians. It was Labor that ensured that child care became affordable, by greatly expanding the number of childcare places. It was Labor that introduced a decent system of family payments in this country, which ensured that those who were not in work and the working poor were able to have their incomes boosted by taxpayers in exchange for wage moderation. It was Labor that opened up our universities to people who did not ordinarily have the financial capacity to go to university. It was Labor that introduced compulsory superannuation—nine per cent—as part of the social wage, as part of that wage moderation.

Every commentator knows that Labor achieved that wage moderation through improvements in the social wage and in order to ensure that this country had an economic future. Yet this government condemns the trade union movement for its cooperation in ensuring that wage moderation occurred and that Australian industry could become competitive, and it thanks the union movement with this extreme industrial relations legislation.

The Howard government says that industrial relations was not an issue in the most recent election in Queensland. Why did Lawrence Springborg promise to protect state government employees from the Howard government’s extreme industrial relations legislation? He understood that it was unpopular. He understood that it was bad for Queensland. He understood that it was bad for Australia. That is why he moved to protect working people from this government’s vicious legislation.

That is the history of wage moderation in this country. The legislation before us here today is an indictment of the government, because now employees have no choice but to toady to employers and do what they are told. The government has employees—the working people of Australia—right where it wants them: subservient to employers. (Time expired)

Rod Sawford (Port Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

I will come straight to the point. I am opposed to the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Like Work Choices, this legislation serves to undermine the living conditions and standards of Australian workers. The bills attack the rights, entitlements, conditions and protections that ought to be afforded to Australians in the workplace. The government is seeking to create a set of circumstances where workers can be forced onto sham contracts and have to pay for their own leave, including sick leave, superannuation and insurance. For contractors the legislation diminishes or eliminates protections by overriding state legislation.

No-one with any genuine concern for the interests of employees or contractors supports this legislation. In fact, the only real cheer squad I could identify is a rather shadowy organisation called the Independent Contractors of Australia.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

It’s a website.

Rod Sawford (Port Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

Despite its name, Independent Contractors of Australia is not a representative organisation; it just pretends to be one, as the shadow minister tells us. This was exposed during the Senate inquiry into the Independent Contractors Bill. Sustained questioning by Senator Steve Hutchins and Senator George Campbell revealed that the ICA’s claim to represent 1.9 million independent contractors is nothing but a total sham.

The ICA executive director, Ken Phillips, confirmed that the organisation has just 200 members, who each pay the princely sum of $5 a year, plus $50 for access to the website. The nature of the ICA membership was not revealed to the Senate—that is, it is not even clear how many of the 200 members claimed by the ICA are in fact independent contractors. According to Mr Phillips, the ICA has a ‘Don’t ask, don’t tell’ membership policy. In his own words, prospective members ‘put in an application’. He said:

... um, we have a look at it, give them a phone call, have a chat, um, there hasn’t been an application we’ve rejected so far.

Nudge, nudge; wink, wink. What is clear is that none of these members were consulted about the ICA’s position on the Independent Contractors Bill. According to Mr Phillips, the ICA’s position was drafted by him and discussed with the 12 members of the ICA committee of management only. That is a bit short—about 1,899,888 short—of the 1.9 million Australians purported to be represented by the ICA.

The founder of the ICA is a Mr Bob Day, the Liberal candidate for Makin at the next federal election—surprise, surprise. The links between the ICA and the Howard government do not stop there. The woman who succeeded Mr Day as chair of the ICA is Ms Angela MacRae. According to the ICA website, Ms MacRae was contracted to the Prime Minister’s office after the introduction of the goods and services tax to resolve ‘GST and BAS problems’. Asked in June this year whether the Independent Contractors Bill would affect the negotiating position of vulnerable workers, including the low-skilled and people from non-English speaking backgrounds, Ms MacRae told the Age newspaper:

If I can do it, pretty much anyone can ...

That statement reveals a lot about the ICA and its understanding of the Australian workforce. According to the ICA website, Ms MacRae is a former tax director of CPA Australia. As I have noted, she has been contracted to provide taxation advice to the Prime Minister’s office. In October 2005, Ms MacRae was appointed to the government’s taskforce on cutting red tape, alongside Productivity Commission chair Mr Gary Banks, former Australian Stock Exchange managing director Mr Dick Humphry and Mr Rod Halstead from Clayton Utz. Press reports reveal that Ms MacRae holds a first class honours degree in economics and a masters degree in commerce. If Ms MacRae genuinely believes she is in the same position in the employment market as a school leaver, a retrenched middle-aged labourer or someone who lacks English language skills, she is kidding herself.

I want to return now to Mr Bob Day, an individual I have referred to as the founder of the ICA and the Liberal candidate for Makin. That description sells him short. Mr Day is also a multimillionaire property developer and former president of the Housing Industry Association. He is a long-serving president of the Liberal Party’s Makin federal electorate council. Australian Electoral Commission records show that Mr Day is a major financial contributor to the South Australian division of the Liberal Party through his company Homestead Homes.

According to press reports, Mr Day took personal responsibility for funding Liberal Party election advertisements in the lead-up to this year’s South Australian election. He reportedly vowed to do ‘whatever it takes’ to give the Liberal campaigns in the state seats of Newland, Wright and Florey the resources to win. Unfortunately for Mr Day and the Liberal Party, even his immense personal wealth was not enough to defeat Labor in these seats. I am pleased to advise that in two of them—Wright and Florey—the Labor candidates were returned with an absolute majority on first preferences.

Mr Day is a long-serving board member of the HR Nicholls Society, an extremist organisation that has condemned Work Choices for its moderation. A biography published on the HR Nicholls Society website says that Mr Day has served as secretary of the organisation since 1990. A spokesperson for the Minister for Employment and Workplace Relations dismissed the society’s criticism of Work Choices by saying:

What would you expect? Let’s get a grip. The HR Nicholls Society is such a small group it is almost moribund.

I agree with the minister’s spokesperson on these points. The HR Nicholls Society is certainly small, it is certainly moribund and it is certainly out of touch with modern Australia. The problem is that it continues to wield considerable influence inside this government. We saw that earlier this year when another South Australian, finance minister Nick Minchin, gave a private speech to the HR Nicholls Society in which he pledged a further wave of extreme industrial relations changes. During his speech in February, Senator Minchin said:

... there is still a long way to go ... awards, the IR Commission, all the rest of it.

That is more than the government has admitted to the Australian people—so, when the speech got leaked, Senator Minchin and then the Prime Minister ran around denying the meaning of those plain words.

Mr Day is also a member of the Samuel Griffith Society board and, until his Liberal Party preselection, was deputy chair of the Centre for Independent Studies. Mr Day has been a vocal and influential supporter of the Howard government. The government has supported Mr Day as well. In 2003, Mr Day was appointed an Officer of the Order of Australia and awarded a Centenary Medal. But none of those prizes are as great as the prize before the House today. The Independent Contractors Bill delivers to Mr Day the legislative change he has long sought.

In 2002, he published a document entitled Contract Bridge: Independent contracting—A solution to Australia’s $64bn unemployment problem. It is a fascinating insight into the premise that underpins the legislation before the House and the motivation of its biggest spruiker. Rather than reading the crib notes provided by the minister’s office, members opposite would have done well to read it themselves before participating in this debate. It gets off to a really rollicking start by extracting, with approval, a claim that the Australian industrial relations system:

... transfers a large part of the post 15 and 16 year old cohorts from workplace experience, notably apprenticeships, into educational institutions where they waste their time and everyone else’s.

Bizarrely, the extract continues:

No one has asked whether the drug problem, which seems to be getting worse amongst young people, is related to this phenomenon.

Mr Day says that independent contracting offers more than a glimmer of hope in addressing this awful situation.

Regrettably, the connection between fairness in the workplace and drug abuse by young people is not quite explained, nor does Mr Day say how less fairness might redress the scourge of drug abuse by young Australians. Far from just providing an implicit endorsement of this ridiculous claim, Mr Day goes even further. He says:

Maintaining the existing Award System – the principle cause of Australia’s consistently high levels of unemployment and all its associated ills (drugs, crime, violence, poor health, teenage pregnancy and even suicide) has been estimated at costing the economy over $60 billion.

We have heard a lot of absurd arguments from the other side in support of the Independent Contractors Bill, but not even one member of the government has been so stupid as to lend support to that farrago of absurdities.

What Mr Day does in Contract Bridge is say that independent contracting offers workers the privilege of giving up what he calls the ‘familiar contents of traditional employment’—you know: annual leave, long service leave, sick leave, maternity leave, superannuation and redundancy payments. That is what he means. He says that independent contracting allows workers to ‘jettison all the old compulsory entitlements, including unfair dismissal protection’. In Mr Day’s view, a positive aspect of independent contracting is ‘the understanding that either party may terminate the contract at any time, for any reason’. Mr Day also talks about other benefits for business, including the ability to avoid:

… the time-consuming practice of contributing to long service leave and superannuation schemes and, most importantly, the responsibility to deduct tax.

That is not much of a deal for workers: no annual leave, no long service leave, no sick leave, no maternity leave, no superannuation, no tax deductions and no job security. What a sell!

It is an especially bad deal when it is forced on vulnerable workers who are in no position to say no. That, sadly, is what the legislation before us will facilitate. Let us make no mistake about that. At the time that Contract Bridge was published, not even the then-Minister for Employment and Workplace Relations, now the Minister for Health and Ageing and the Leader of the House, would lend it his support. Writing in the Adelaide Review in December 2002, the minister said:

... although the prescriptive nature of the award system undoubtedly inhibits economic growth, it is not necessarily “the principal cause of Australia’s consistently high rate of unemployment”, as Day maintains.

The minister was kind enough not to draw attention to Mr Day’s absurd and unsubstantiated claim that the award system costs the Australian economy $60 billion. This $60 billion claim is interesting. Is it $60 billion a day, a month or a year? Is it a parliamentary term? No-one seems to know. Who cares? The claim, like much else he has to say, is complete nonsense.

According to the minister for health, Mr Day’s vision is the replacement of employment law with self-employment and the replacement of labour law with contract law. It is a radical vision—one that is at the heart of the legislation before the House. In relation to employment matters, it is not just changes to the legislative regime governing independent contracting that Mr Day seeks.

In October 1996, Mr Day made a submission to a committee of this House advocating the full deregulation of youth and apprenticeship wages and recommending the medieval guild system as the model for a reformed skills training regime. In a further submission in November 1998 titled Slave Labour, Mr Day proposed that junior wage rates should be based on the value of the work to the person purchasing it and set by agreement between the employers and employees themselves. The previous member, the member for Rankin, talked about the Orwellian twist and here is another one: Mr Day said the current system enslaves workers. In a burst of hyperbole, Mr Day said:

... I feel compelled to liken the struggle for the liberalisation of the existing wage regime to the campaign against slavery and to invoke Ernest Howe’s description of it as “a bitter conflict with contemporary sentiment and interests of gigantic power”. Liberty. Freedom. The long struggle to break the shackles of workplace regulation goes on.

The title of Mr Day’s paper Slave Labour is appropriate, but not for the reasons he claims. With knowledge of Mr Day’s radical vision for Australia, as expressed in submissions to the parliament and published in a paper promoted on the Independent Contractors of Australia website, it is no surprise that the Independent Contractors Bill has been embraced so warmly by Mr Day.

Responding to some minor concessions for outworkers and owner-drivers announced by the government in early May, Mr Day said that an opportunity to revisit these concessions would present itself next year. He also said: ‘Everything is incremental, isn’t it?’ and ‘It’s always the first step that is the hardest.’ Doesn’t this language sounded familiar? I remembered someone uttering something similar about industrial relations changes, but I could not quite put my finger on it. It was not until I reviewed Senate Minchin’s words to the HR Nicholls Society in March that the penny dropped. In his private remarks Senator Minchin said:

This is evolution, not revolution, and there is still a long way to go ...

Mr Day could not have put it better himself.

The Independent Contractors Bill does not deliver everything that Mr Day and his fellow ideologues want, but for Mr Day it is a big step in the right direction. Mr Day is one of the people for whom the term ‘industrial ayatollah’ fits like a glove. This term was coined by Justice Michael Kirby in a speech delivered to mark the centenary of the Australian Industrial Relations Commission. Justice Kirby said:

... there are those who see no future whatever in the Australian Industrial Relations Commission. For them, it should be closed down, lock, stock and barrel ...

…         …         …

Persons of such views tend to live in a remote world of fantasy, inflaming themselves by their rhetoric into more and more unreal passions, usually engaging in serious dialogue only with people of like persuasion.

After recounting the circumstances of his own niece, who was the victim of exploitation by an unscrupulous employer and who successfully sought redress in an industrial tribunal, Justice Kirby had this to say:

For many young people in casual work and at the lower end of the spectrum of employment in Australia, there is still vulnerability. If we are committed as a nation to the protection of human dignity in conditions of work and “reasonable and frugal comfort”, we still need those who will help the vulnerable. We need those who will assert their rights. But we also need those who will uphold and defend basic rights. The market works miracles, as we all know. But at the edges of the market there are those who lose out. To pretend that everyone has equal power in the market is to indulge in a miraculous self-deception.

It is this same miraculous self-deception that underpins this legislation. The people who will pay the price will not include millionaire property developers like Mr Day or any of us in here. Those who pay the price will be the workers forced into sham contracting arrangements, contractors in dependent contract positions, owner-drivers, outworkers and so on.

It is important the Australian people understand that this legislation did not just emerge from a vacuum. It has been planned—and planned very carefully. Like the Work Choices act, the Independent Contractors Bill is the product of a sustained push by very wealthy and powerful individuals who have long occupied the margins of economic debate in this country. Under the Howard government, they have been brought in from the margin—and they are in there, centrefield.

As expressed by my colleague the member for Perth, the key message delivered to workers affected by this bill is, ‘You are on your own’. I trust that, at the next election, that is the message workers will deliver to Liberal and National Party candidates who have so shamefully sold out the interests of workers. I especially hope that it is the message delivered to the out-of-touch Liberal candidate for Makin. And I trust that the Labor candidate for Makin at the next federal election will be the Salisbury mayor, Tony Zappia, a person of the people who has a track record superior to that of any mayor in this country. He is the best mayor of any local government authority in Australia. I see the parliamentary secretary for water, the member for Wentworth, is at the table. He would know Tony Zappia. He would know Colin Pitman, the world expert on stormwater retention who was employed by the Salisbury council. I hope Tony Zappia will be the Labor member for Makin after the next federal election.

I restate my opposition to the Independent Contractors Bill 2006 on behalf of the people of my electorate and I commend to the House the second reading amendment moved by the member for Perth. Labor stands with workers in opposition to this further attack on their rights at work, and we stand strong and still and resolute. (Time expired)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Warren Snowdon (Lingiari, Australian Labor Party, Shadow Parliamentary Secretary for Northern Australia and Indigenous Affairs) Share this | Link to this | Hansard source

I commend the member for Calare for his contribution and his commendation to the Senate that there be enough of them over there to see the merit of the arguments that have been put forward by him and by those of us on this side of the chamber who are participating in this debate to ensure that the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 are defeated. There is no doubt that these bills are unfair and unreasonable. I make the observation that others have made: I think to date we have only had three government speakers on this legislation. We have already had a handful of opposition speakers and today another 15 or 16 opposition speakers will express their views about this legislation so that the voters in their electorates can understand their position.

I wonder what it is about the government that they do not feel their backbenchers ought to be given sufficient licence to be able to participate in debates in this parliament. I can only conclude that a decision has been taken by the whip or by the leader of the party to suggest to members that they not participate in these debates. Let me say this: they cannot hide. The Votes and Proceedings of this place will record how they vote. Even if they remain silent, we will know how they vote. We will be able to say to the electors in their individual electorates and to those people involved in areas where independent contracting is an issue, ‘This is what the government have done, this is why they have done it and this is how your member voted,’ so they can appreciate what has taken place here—the abuse of the rights of Australian workers.

We know that there are two bills that my Labor colleagues and I—and the member for Calare and, I hope, the other Independent members of this place—will not support. They are just a continuation of the Howard government’s extreme industrial relations changes and an ideologically driven attack on the working rights of all Australians. They are part of this government’s broader efforts to tear away from workers their rights, entitlements, conditions and the protections they were once guaranteed in the workforce. I note the second reading amendment moved by the shadow minister for industry, infrastructure and industrial relations which states that the bills continue the Howard government’s attacks on Australian workers:

... by allowing employees to be treated as ‘independent contractors’, thereby removing employee protections and entitlements and placing superannuation, tax, and workers’ compensation burdens on them;

and further:

... by removing protections from independent contractors who are in a dependent contract position and as a consequence in an unequal bargaining position;

It seems to me that we as an Australian community ought to be very concerned about the thrust of this legislation because what it is saying to people, and I know others have commented about this, is that, regardless of your situation, you will bargain your contract provisions with the person you are contracting to. Never mind the issue of collective bargaining or your rights as an individual. You will be subject to the conditions that are eventually going to be imposed upon you by the person you are contracting to. You will have to maintain and look after your own rights in terms of superannuation, sick leave, holiday pay, workers compensation, tax and so on.

What these bills will do is ensure that independent contractors are not seen as employees, when they ought to be, and ensure that independent contracting relationships are regulated by commercial law rather than industrial relations law. I note the phrasing used in the Bills Digest in explaining the purposes of the bills. It says:

The purpose of the Principal Bill is to move contracting relationships as far as possible away from the realm of employment and to place these relationships as far as possible under commercial regulation.

These bills seek to do this in a number of ways. I want to refer again to the second reading amendment moved by the shadow minister, which gives good expression to the concerns that I have about this legislation. The amendment states that the bills remove protection from independent contractors by:

(a)

continuing to use the common law definition of independent contractor as the basis of law without the guidance of statutory criteria;

(b)

allowing employees to be treated as independent contractors in a sham way by ineffective anti-sham provisions;

(c)

overriding State laws with employee deeming provisions;

(d)

overriding State unfair contracts provisions which provide protection to employees, contractors and small business;

(e)

overriding any future State and Territory owner-driver transport laws and putting existing State owner-driver transport laws at risk; and

(f)

failing to provide any genuine protections for outworkers through ineffective outworker provisions, significantly weakening outworker entitlements …

This is just a re-emphasis of the continuing message of the Howard government to Australian workers that ‘you are on your own’. We have it with AWAs, we have it with the government’s opposition to collective bargaining and the involvement of trade unions in the workplace, and now we have it with this legislation.

We know that the government have determined that they will not abide any proposition that there should be a process of collective bargaining freely chosen. What they are doing in this instance is ensuring that individual contractors cannot collectively bargain in a way in which they might otherwise do. It seems to me that when you are on the bones of your backside, as many Australian workers are, and you are forced into a position where you have to sublimate your desires for improved working conditions or improved contract conditions to the demands of a contractor who might well be unreasonable, it puts you at extreme risk. The people responsible for perpetrating this position on the Australian community are the Howard government. As I said, it is just a repeat of their continuing attack on the rights of Australian workers.

As Labor senators stated in the opposition senators’ report of the Senate Employment, Workplace Relations and Education Legislation Committee inquiry into these bills:

The basic policy aim of the Independent Contractors Bill is to turn as many employees as possible into contractors. In the Government’s view, and more particularly in the view of employer organisations close to the Government, industrial relations are greatly simplified by arrangements which put employees onto either Australian Workplace Agreements, or turn them into contractors. Work Choices is intended to encourage the first of these trends, and the Independent Contractors Bill is intended to encourage the latter development.

I do not know about you, Mr Deputy Speaker, but most of us in this place have families. In my case, I have four kids, not all of whom have left school—only one, and she is attending university. I can imagine what might happen in the case of a young person leaving school in a remote community—or any part of Australia. I talk about remote communities because of where I live. They might be seeking employment, and they might walk into the boss’s office—it might be a transport company or it might be something else—and the boss says, ‘You either sign this agreement as a contractual arrangement between you and me, or you don’t get the job.’ How intimidating would that be for a young person, particularly one who might not have done as well at school as we might have wanted them to? They might have difficulty in relationships. They go into the workplace and they find that they are being told what to do, when to do it and how to do it, but they are not given any capacity to seek advice or to be informed about their rights as Australian workers.

Despite whatever the legislation says, we know what happens in these cases. The intimidation will mean that invariably these Australian workers will be victimised. There should be no doubt, though, that Labor is more than happy to support Australians who genuinely want to start their own businesses. I did that myself, and I understood what my obligations were. When I set up a business, I understood that I had to look after issues to do with tax, superannuation, leave and the rest of it. I understood that that was what it was about. I did not seek to be an employee; I set up a small business.

What the government is seeking to do in introducing these two bills is create the impression that somehow small businesses and contractors are going to benefit. What we know about these two pieces of legislation is that these laws will do exactly the opposite. Genuine employees will be pushed out of the employer-employee relationship where they enjoy the entitlements and protection of industrial relations law—admittedly, only what is left of it after the way in which it has been trashed by this government. Nevertheless, they will lose what remains of those protections.

Instead, Australian workers will be pushed into sham independent contracting arrangements. As a result of that, the burdens that normally fall on the employer will now fall on some Australian workers—for instance, those burdens relating to superannuation, which I have spoken about, workers compensation and income tax. These bills also seek to override state and territory legislation dealing with employee deeming and unfair contracts that previously protected Australian workers under contract. The member for Calare spoke extensively about that in his contribution.

One particular area where these bills will have a major impact is in the transport sector, where there are high numbers of independent contractors working as owner-drivers. My electorate, Lingiari, extends 1.3 million square kilometres across the regional and remote parts of the Northern Territory. Road transport, road transport operators and owner-drivers are crucial. They are the lifeblood in terms of delivering products, goods and services to remote Australia. They are also vital in terms of taking goods to market. They are vital for the cattle, mining and tourism industries. Together, these industries comprise the bulk of the private sector activity in the Northern Territory.

I have often spoken in this place about the need to improve the conditions of roads in the Northern Territory to improve safety and the need to increase the carrying capacity of the vehicles that use those roads. This would in turn improve the performance of those Territory industries that rely on the road transport industry. But it is equally important that we look after the interests of those people who drive this industry, actually and metaphorically. We need to ensure that they are able to enjoy some protection of their working conditions and entitlements. It is true that not all people who drive road trains in the Northern Territory are independent contractors. Many are employees. Many have a good relationship with their employer and their interests are safeguarded. But we know that many independent contractors are owner-drivers in the transport industry, and we know that their relationships with their principal contractors are far closer in nature to employee-employer relationships than to commercial relationships.

The issue of owner-drivers in the road transport industry was the subject of extensive attention by the Senate committee which inquired into this proposal. There was a submission from the Transport Workers Union—and I hope the ears of the government are not offended by the use of the word ‘union’. I am proudly a trade unionist and I encourage any young person entering the workforce who I can discuss this with to join a trade union. I know the work of the Transport Workers Union in the Northern Territory. In their submission, they noted:

Owner-drivers are single vehicle operations the vast majority of which perform work exclusively for a single transport operator (principal contractor). Owner-drivers are often highly dependent upon those with whom they contract. Owner-drivers are price takers in the market place. This dependence leads to an inequality of bargaining power and the associated potential for exploitation.

I note that in the minority report Labor senators stated:

Exploitation of owner-drivers in the transport industry results in industrial instability, higher than average rates of bankruptcy and road transport accidents.

Understand that these people are price takers. If you are an owner-driver working in a remote part of Australia then added to the current cost of fuel is the cost of wear and tear on the vehicles, which, because of driving across these roads—the unmade roads, effectively; the off-bitumen roads; the dirt roads across remote parts of Australia—is absolutely stupendous. What happens as a result is that the contractors, and indeed transport owners generally, in those positions bear a tremendous cost and their margins become narrower by the moment in those circumstances. So they are in a very sensitive situation.

There is some protection in this legislation for owner-drivers in New South Wales and Victoria. These bills are prevented from overriding legislation in those states that seeks to treat owner-driver independent contractors as if they were in a normal employer-employee relationship. So the bills cannot override that legislation. But the government has not been as generous to owner-drivers in other parts of Australia, and particularly not to road transport workers operating in the Northern Territory. Unfortunately, they will be forced to cop the full brunt of the unfair changes contained in this legislation. That is unreasonable and unfair. After so many years in government, it is about time that, instead of continuing to attack Australian working people, this government saw the error of their ways and understood that a workforce that is productive, happy and properly remunerated and which has the right to the protection of a trade union and the right to collectively bargain is in the best interest of the Australian community and the Australian economy.

Gavan O'Connor (Corio, Australian Labor Party, Shadow Minister for Agriculture and Fisheries) Share this | Link to this | Hansard source

I rise in this House to oppose the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 simply because they constitute an attack on my constituents. There are many owner-drivers in the Geelong region and they work very hard to make a living in a very difficult economic environment. They are crucial to the operation of the Geelong economy and they are critical players in the movements of goods and services in and out of one of Australia’s largest provincial cities—and, of course, the hinterland that supports it. These owner-drivers are critical to that rural hinterland and they play a very important part in the transportation of grains, horticultural products and dairy products around the region.

Above all, these owner-drivers are family people. They work extremely hard, long hours. Increasingly their livelihoods are under pressure from a variety of sources. We know the transport industry is an extremely competitive one. We have seen massive rises in input costs, which have put a lot of pressure on transport companies in Geelong and elsewhere, and those pressures have come onto the drivers, be they owner-drivers or others. These are family people who contribute much to the Geelong and national economies. The question I ask on the floor of this House today is: why is this government choosing to deceive them through this legislation and why is it seeking to attack their livelihoods in a most unprincipled way?

This Independent Contractors Bill 2006 makes amendments to the Workplace Relations Act and further develops the adversarial industrial relations system that has been instituted by this government. Purely and simply, this is divide-and-conquer legislation aimed directly at the most productive unit in our economic system: the Australian worker. This bill follows on from the government’s extreme industrial relations changes, which have launched massive attacks on the living standards and conditions of Geelong workers by removing their rights, entitlements and conditions of work.

We have seen in the Geelong community some quite significant demonstrations against the government’s Work Choices legislation—and rightly so—because what is at stake in this legislation, as it was in previous draconian and extreme legislation introduced and passed by this parliament, is the living standards of all employees, including owner-drivers and others who are affected by this legislation. This bill removes the rights, entitlements, conditions and protections afforded to Australians in the workplace, whether they are employees or independent contractors. It simply does this by allowing employees to be treated as independent contractors, removing employee protections and entitlements and, as we have heard from previous speakers in this debate, placing superannuation, tax and workers compensation burdens directly upon them. It does this by removing protections from independent contractors, who are in a dependent contract position and, as a consequence, in an unequal bargaining position.

As we go through this legislation and its technical provisions, we see that the abovementioned changes are put into effect by continuing to use the common-law definition of independent contractor as a basis of law, without the guidance of statutory criteria necessary to give the clarification and avoid the confusion that is inherent in this legislation. It puts into effect these adverse changes by allowing employees to be treated as independent contractors in a sham way by ineffective anti-sham provisions. It overrides state laws with employee-deeming provisions. It overrides state unfair contract provisions which provide those essential protections to small businesses, contractors and employees.

It does not just stop there. It seeks to override any future state and territory owner-driver transport laws while at the same time putting the existing ones at risk. It is not only the transport industry that suffers under this piece of legislation; it is also the textile, clothing and footwear industry. Workers in that industry are likewise penalised by the provisions of this obnoxious piece of legislation.

Geelong has a very strong TCF industry and very strong textile, clothing and footwear working traditions. And the union movement in the Geelong region has played its part in ensuring that the workplaces in which Geelong TCF workers earn their living do abide by the standards that we would expect in a civilised community and that the remuneration in the form of wages and conditions paid to workers who create the wealth in those enterprises—along with the owners and the entrepreneurs and the management—get a fair return for their labour in this industry. But here we have in this legislation a failure to provide any genuine protection for outworkers through the ineffective outworker provisions which significantly weaken outworker entitlements.

The simple fact of the matter is that this is a piece of legislation that introduces even more confusion and complexities into our workplace laws. I say to members opposite: how can that be efficient? How can that be in the interests of businesses or employees or communities or the economy? But it is not the first time that we have had legislation proposed by this government that adversely affects the economic relationships between employers and employees. This particular matter is under examination by the parliament and the processes of the parliament. We have the Senate Employment, Workplace Relations and Education Legislation Committee currently investigating and reporting on this matter. Yet here we have this arrogant government treating the processes of this parliament and that committee with contempt by bringing this legislation into the House prior to any consideration of that committee’s report.

The reality is that it is not only in my electorate that owner-drivers and workers in the transport and other industries are going to be affected by this legislation. The bill, it is estimated, affects 800,000 to 1.9 million independent contractors across Australia. And the reason why this bill adds confusion and complexity is simply that it is highly prescriptive, it is technical and it makes little sense. Some types of contracts entered into after the commencement of the bill will be subject to relevant state laws and others will not. Time after time we have members opposite getting up in this House lambasting and blaming state governments for everything—well, for most things that occur in our society that adversely affect people. Yet here we have a piece of legislation that is inconsistent, highly technical, highly prescriptive, confusing and complex. I think that tells us why it is in the House today: because it is ideologically driven. It is the result of the coalition’s hatred of trade unionists and employees and its desire to strip away from independent contractors some of the benefits that they already have.

The bill creates a federal jurisdiction, but under this federal system there is no ability for employer organisations or unions to apply for unfair contract review on behalf of a party, which is inherent in and provided for by state law. I think this is indicative of how this government operates—that it seeks to bring legislation before this parliament that does not give anyone the ability to contest what they might consider to be an unfair contractual arrangement. We see this, of course, in the unfair dismissal laws that this government has put in place. Now we see it in this particular piece of legislation.

Let us strip it all away and look at this legislation. It is part of the extreme workplace relations legislation that is the ideological obsession of the Prime Minister. Once again we have legislation that is an attack on workers’ rights, their entitlements, their conditions, their living standards and those of their families. There is a clear underlying message in this legislation to either a vulnerable employee or a dependent contractor, and it is simply this: ‘This government is hanging you out to dry. You are now on your own, with no access to state based protections, no access to unfair dismissal provisions and no access to employee deeming provisions.’ This is in tune with the Prime Minister’s mean-spirited behaviour in the whole industrial relations area. On the issue of a minimum wage, the Prime Minister has opposed every national wage increase that the commission has agreed to since the government came to office. And the latest example of his indifference to working people and the maintenance of their living standards is the legislation that we have before us.

This legislation simply fails the fairness test, and it violates some very important principles and matters that are central to a decent working arrangement between employer and employee. Once again we have legislation that tips the industrial relations balance fairly and squarely in favour of employers and against employees and others. It violates any right to bargain collectively. That is one principle that we in the labour movement, with our union brothers and sisters, will eternally fight for in this place and outside of it. I deliver this particular message to the coalition: do your worst because when we come to power, as the wheels of democracy turn, we will undo it. We will undo it on behalf of the members of the AMWU, the TWU and the TCFUA in Geelong and around Australia.

We will undo your great edifice. Piece by piece we will strip it away and reconstruct the workplace relations of this country to provide fair protection for working families—those in this industry and in others—because this legislation not only violates the right to bargain collectively; it violates the right to appropriate occupational health and safety standards. The transport industry is one where the TWU, among other unions, have had to fight very, very hard to get some decent operating standards and conditions and to maintain them. This legislation violates the right to proper training and it violates the various other rights that are currently enjoyed by employees.

This legislation is opposed by the ACTU. Their submission is supported by individual unions as well as the state Labor governments, who represent millions of ordinary Australians. If members of the coalition want any guidance as to the electoral consequences of this legislation, we had it last Saturday in Queensland. You thought you had the Beattie government on the ropes, then you failed to make any headway at all. Members opposite in the coalition and members on this side of the House know very well that one of the key issues in that campaign at the state level was the workplace relations legislation of the Prime Minister. His magnificent obsession will lead you all like lemmings over the cliff.

As many of you ponder your political retirement courtesy of the working people of this country, the Prime Minister will not be affected because he will be the beneficiary of those very generous superannuation provisions that a lifetime in this place gives you. But now the Prime Minister is involved in wrecking the lives of working families. Do not think there is not a political cost for members of the coalition, because the union movement in Geelong stands firm against this legislation. I remind members opposite of the catchcry that we have at all of our rallies, and we will have them in the future: you touch one of us, you touch us all.

Maria Vamvakinou (Calwell, Australian Labor Party) Share this | Link to this | Hansard source

It is always a pleasure to follow on from my colleague who is such a passionate advocate for workers’ rights. Indeed, he is right: touch one, touch all. On that note, I join my colleagues who have spoken before me to make my contribution to the debate on the Independent Contractors Bill 2006 and the bill associated with it, the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. Like my colleagues I oppose this legislation as it is nothing more than a further attack on the rights and security of Australian workers. I want to support the amendment moved by the member for Perth, which I am certain will help ameliorate some of the problems that this bill, when implemented, will create.

This legislation is a betrayal to those hundreds of thousands of legitimate independent contractors, many of whom are in my own electorate of Calwell. It is a betrayal generally of those vulnerable workers who are at risk of exploitation under these provisions. These bills follow on from the government’s misleadingly named Work Choices legislation. They provide yet another attack on the rights, conditions, entitlements and protections in the workplace and on the living standards in general of the many hardworking men and women whom I represent in this place.

Despite the government’s assertion that this legislation is intended to protect independent contractors, the legislation actually does no such thing. It does not benefit independent contractors; it does not assist them in negotiating with unscrupulous employers or operators as it does nothing to redress the uneven bargaining positions of businesses and potential contractors. Just like this government’s Work Choices legislation, these bills rely on the incorrect presumption that all workers can negotiate an arrangement which is to the benefit of both the employer and the employee.

In reality, this could not be further from the truth. Whilst some workers decide to work for themselves as independent contractors, many do not. Just like the Work Choices legislation, which leaves employees who are unwilling to accept pay cuts out of a job, this legislation leaves workers who are unwilling to accept an independent contractor relationship out of a job. For too many people, there is no choice.

Firstly, this legislation allows genuine employees to be pushed out of the genuine employer-employee relationship and to be established as so-called independent contractors with the consequence that the employee’s conditions and entitlements are reduced or removed and further burdens are placed on the employee, such as workers compensation, taxation and superannuation arrangements, all of which would normally be carried out by the employer. Secondly, in my state of Victoria, we have many sound protections for contractors, and this legislation removes or reduces these protections by overriding the state provisions.

Looking at some of the detail of the bill, I have great concern with part 2, which seeks to override state laws with deeming provisions. Under state laws, certain categories of independent contractors are deemed to be employees. These provisions have been introduced to protect workers from what are effectively disguised employment relationships. Without these provisions, there is no definition of an independent contractor beyond its meaning under common law, which is problematic as no statutory criteria are provided as guidance. In Victoria, owner-drivers in the transport industry are currently protected by the state provisions for employment conditions. Whilst this legislation provides an exemption for such dependent contractors, this exemption is to be reviewed in 2007. This leaves the prospect of the exemption ceasing either before or after the next federal election, if the government is re-elected, and it also prevents other states from introducing comparable protection legislation.

This exemption raises further concerns. You have to ask: why is it there? Is it there because independent contractors will be facing reduced pay and conditions under this legislation? The minister has admitted as much. The minister in his second reading speech said that these provisions will remain because of the ‘special circumstances of owner-drivers in having to operate within very tight business margins’. In other words, owner-drivers are at risk of going broke if they are not exempt from the provisions of this bill and they therefore need to be protected. But what about everyone else? By the minister’s reasoning it is okay for everyone else to go broke, but not owner-drivers. I am pleased that owner-drivers will be exempt, albeit only in the short term, but I am very concerned about all the independent contractors that the government has decided not to protect.

Part 3 of this bill is also a concern as it deprives state jurisdictions of the power to legislate to set aside unfair provisions in contracts, which currently exist in state legislation. These state provisions are much broader and more easily accessible. The state provisions also allow employer organisations and unions to apply for unfair contract review on behalf of a party. This legislation does not. Instead this bill seeks to create an exclusive unfair contract regime in the Commonwealth jurisdiction, and unfair contract matters will need to be tried in the Federal Magistrates Court, a more formal jurisdiction, which will add to the expense, length and complexity of reviews.

Part 4 of the bill is perhaps of most concern and indeed the most contentious aspect of this legislation, particularly in light of the Senate Employment, Workplace Relations and Education Legislation Committee’s recent inquiry into these bills. The minister unfortunately chose to commence debate in this place prior to the conclusion of that committee’s inquiry. Of particular interest are the provisions in the committee report regarding contract outworker protection in Victoria, particularly given that the report notes that the committee considered outworkers to be more vulnerable to changes resulting from this legislation. As the textile, clothing and footwear industry is comprised in large part of outworkers, it is important to take note of what those who represent workers in that industry submitted to the committee. In short, these representatives made it clear that the protections contained in this bill were inadequate.

The committee also noted that it received advice from the Minister for Industrial Relations in Victoria that Victorian legislation contained comprehensive and appropriate protection for these outworkers and as such part 4 should be omitted to avoid unnecessary and confusing duplication of the laws. Concerns have also been raised that these bills will lead to greater confusion in the textile, clothing and footwear industry as outworker entitlements will be enforced under state law, whereas proceedings for a review of unfair contracts must be instituted under federal jurisdiction.

The legislation as drafted does little to protect outworkers who are already in a vulnerable and often exploited position. Instead this legislation as drafted will significantly reduce outworker entitlements. After investigating these concerns, the Senate committee report included a unanimous recommendation that part 4 of the bill dealing with protection for outworkers in the textile, clothing and footwear industry be omitted. The government’s own senators concluded that part 4 ‘serves no useful purpose’. It is extremely disappointing that the government contemptuously introduced this legislation prior to the completion of that inquiry and paid no regard to the good work of even their own senators on that committee.

It is now, of course, understood that the minister will dump this section of the bill, and I have to say that I commend that decision. The question is: what was the government’s rationale for introducing this legislation when it did? How narrow was its consultation and research in developing this legislation, and how seriously can we take a government which proposes legislation which it has no confidence in and now recognises as wrong? To me this is further proof that this government is simply seeking to impose its anti-worker and anti-union ideology on the people of Australia with scant regard for the consequences that this legislation will have on their overall working conditions and, indeed, their lives.

Finally, I would like to discuss the so-called sham arrangement provisions in this legislation. The provisions are intended to apply where workers are categorised as independent contractors where in fact they are in an employment relationship. These provisions in themselves are a sham and will be completely ineffective in preventing this from occurring. As the legislation does not define the difference between independent contractors and employees, it remains fundamentally flawed and invites exploitation.

As the ACTU have recently reported, this is particularly an issue for young workers who are especially vulnerable to exploitation. This legislation does nothing to protect teenagers from being recruited to sell food and drinks at football games for a 10 per cent commission or working on building sites on low wages and with inadequate accident insurance. This legislation does nothing to prevent this exploitation nor does it do anything to prevent employers contracting out their workforce and failing to take responsibility for the entitlements of their employees.

Those employees who are most likely to be exploited by sham contracts are those who are least able to stand up for themselves and least likely to be able to put together a case at the Federal Court or the Federal Magistrates Court or afford to have someone else represent them. This government refuses to protect those workers who most need protection and has again let down our young Australians in its attack on their job security.

In my electorate of Calwell, we are fairly lucky to have a number of community based organisations who provide assistance to people in financial or personal crisis situations. These crises largely result from job losses and strained household budgets. When people are detrimentally affected by this government’s legislation, be it the fallout from Work Choices or the fallout from Welfare to Work, it is organisations such as the Brotherhood of St Laurence and UnitingCare who are there to try to keep people’s lives together through emergency relief, financial counselling and family support services.

Given that this legislation is further putting at risk job security and entitlements of workers, it is important to note what groups such as the Brotherhood of St Laurence and UnitingCare have to say about the legislation, as ultimately they will be the ones left to handle the fallout in the community. In a submission to the Senate committee inquiry, the Uniting Church in Victoria stated several principles which the legislation should conform with, including:

… laws pertaining to independent contracting should be measured against the potential impact on those most vulnerable (those people with the least ability to bargain for decent remuneration and conditions at risk of ‘sham arrangements’ or unjust contracts);

…         …         …

Commonwealth laws should not override State laws in such a way that allows for less protection to be provided to those most vulnerable.

The submission concluded by stating their concern:

... that the proposed changes to independent contracting arrangements will unfairly disadvantage those most vulnerable, leaving them open to exploitation unless necessary amendments are made ...

Similarly, the Brotherhood of St Laurence recommended in their submission to the inquiry that outworkers be excluded from the legislation in order to preserve the protections provided to them under state laws. They also recommended that part 4 be removed in its entirety and that the sham contracting provisions be amended as they fail to provide specific provisions to ensure outworkers cannot be called independent contractors in order to avoid penalties.

Many other submissions were made to the inquiry that had similar conclusions. I think that these submissions need to be taken into serious consideration. I want to quote comments that were made by the Transport Workers Union in relation to their submissions, because, as I said, I have many owner-drivers in my electorate and in my state of Victoria, and the TWU work extremely hard to protect the rights and privileges of their members. It is the view of the TWU that:

While the exemptions do not go far enough to protect owner-drivers nationally, for owner-drivers and their families in New South Wales and Victoria, they will maintain a critical system of safe and sustainable rates that, without driver and public safety, would be threatened. They will also maintain the protection of the owner-driver small business model, which provides security to these unique small business operations and industry stability.

As my many colleagues before me have said—and my colleague before me used similar words—the effective message that this legislation has for the workers it affects is, ‘You are on your own.’ In an unequal bargaining position with a superior contract partner, they will effectively be on their own, with no access to state based protections, no access to unfair contract provisions and no access to employee-deeming provisions. For these reasons I oppose this legislation. It is a further attack on the rights and security of workers both in my electorate and generally in Australia, and I support the amendments moved by the member for Perth.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Jill Hall (Shortland, Australian Labor Party) Share this | Link to this | Hansard source

The legislation before the parliament tonight demonstrates the core differences between the government and the opposition. The legislation is based on a philosophy that is immersed in the ideology of the Liberal Party, one that is determined to deny Australian workers a fair go. It is legislation that delivers to backers of the Liberal Party. It is anti worker, anti union and anti a fair go. It embodies the values of the government rather than the values all Australians hold dear. It is market driven. It is legislation that is pure Liberal Party rhetoric, a present to its backers. It is a blatant grab for power. It once again demonstrates the hatred of this government. It demonstrates the government’s determination to take control of all areas of government, to take power away from the states and to place control in its own hands. This is a government that is drunk with power, and this legislation fully demonstrates that.

The Independent Contractors Bill 2006 sets out a regime to recognise independent contractors as bona fide workplace relationships, overrides state laws which deem certain workers to be employees, creates a framework of protection for TCF workers, moves unfair contracts jurisdiction from the Workplace Relations Act and limits review to service contracts. This bill makes amendments to the Workplace Relations Act 1996 to provide penalties for employers seeking to disguise employment relationships as sham contracting relationships and misrepresenting employment relationships as contracting relationships.

The central principle underpinning this bill and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 is that independent contracting relationships should be recognised and supported and that the appropriate mechanism for regulation is commercial law not industrial law. Commercial law is based in the hands of the federal government, as opposed to industrial law, which is based in the hands of the states.

I draw the House’s attention to an inquiry into independent contracting and labour hire arrangements that took place in this parliament. The report was tabled in August 2005 and it made a number of recommendations. Recommendations Nos 1, 2, 5, 6, 7, 8, 9, 10, 11 and 13 were supported unanimously. There were 16 recommendations in this report, and a number of the recommendations that members of the government supported were not included in this legislation. There were also recommendations put forward by the committee members on this side of the House, and I will talk about them a little later.

But first I need to put on the record that the process undertaken by that committee was flawed. ‘Why?’ you might ask. It was flawed because the Minister for Employment and Workplace Relations released his discussion paper during the inquiry. He pre-empted a lot of the findings of the inquiry, and he sought to influence that inquiry. We on this side of the House are not shocked by that because it has become common practice. This government is about one thing and one thing only: it is about achieving its agenda and satisfying those backers who benefit from the legislation that we have before us today.

This legislation increases the complexity of an already complex industrial relations system. It is highly prescriptive and technical and introduces a confusing array of concepts. As the New South Wales government has identified, there are examples of pre-reform commencement contracts, continuation contracts, related continuation contracts, remedy contracts, test contracts and a contractor law test designed to clarify the continuing application of state contracting or deeming laws. That is highly prescriptive and creates a lot of confusion in the workplace. In addition, some types of contracts entered into after the commencement of the bill will be subject to relevant state laws while others will not, depending on the satisfaction of certain technical requirements. It is a situation that will be very confusing.

Whether or not a person is an independent contractor will simply be decided at common law. Issues that will be looked at are: the degree of control the worker has over the work; the degree to which the worker is treated as part of the principal enterprise; if the worker wears a principal’s uniform; whether the worker uses his own tools and equipment; whether the principal pays the employer; whether the principal has the right to dictate hours of work or if it is at the worker’s discretion to work and they can refuse them; the provision of leave, superannuation and other entitlements paid by the principal to the worker; the place of work; whether the worker has the right to delegate work to others; whether the worker provides similar services to the general public; whether the worker is provided with skilled labour; and whether labour requires special qualifications.

In the inquiry into independent contractors the government members of the committee were very supportive of whether an employee was an independent contractor being decided in accordance with commercial law. But the members of the opposition who were on that committee felt that that was not the best way to deal with this matter. It was felt that the Australian government should provide a new definition of employee. That definition of employee would be used to determine whether a person was in an independent contracting arrangement or whether they were an employee simply on the basis of looking at whether that person satisfied the definition of an employee. Members on the other side were not supportive of that. They supported the common-law position. They adopted components of the income tax assessment alienation of personal services income legislation to identify independent contractors. That was their recommendation, whilst we in the opposition said there would be no need to define an independent contractor if the proposed employee definition were adopted. I do not think there could be a more vivid example of how ideology has driven where this government has gone on this issue.

The bill overrides all existing deeming provisions contained in state legislation, which deem certain categories of independent contractors to be employees and contain provisions granting employees related entitlements as independent contractors. In New South Wales, the state that I come from, there are certain categories of workers that are declared to be employees. These include milk vendors, cleaners, carpenters, joiners, bricklayers, painters, bread vendors, outworkers in the clothing trades, timber cutters and suppliers, plumbers, drainers, plasterers, blind fitters, council swimming pool managers and supervisors, ready-mix concrete drivers, road and traffic authority lorry drivers and others prescribed by regulation. These provisions seek to redress an imbalance of power in those categories of workers which compromises their ability to negotiate fair and reasonable working conditions. The state laws recognise the vulnerability of those workers. It is because of their vulnerability that they have been deemed employees under the legislation. The Commonwealth seeks to override the state industrial relations legislation. There is to be a three-year transition period from the date of the commencement of the principal bill and the preservation of existing deeming protection for outworkers and owner-drivers. Textile, clothing and footwear outworkers are deemed to be employees under state laws. They will continue to be deemed so.

The bill provides independent contractors who have previously been deemed employees under state legislation a three-year transition period after the commencement of the legislation, to give business and workers time to adjust. Only deeming provisions in industrial relations laws will be overridden. That is very interesting, isn’t it? It is only deeming provisions in industrial relations laws that will be overridden. Occupational health and safety legislation and workers compensation legislation will remain untouched. I see this as an example of a government driven by its philosophy to override and change the face of industrial relations in this country. It is not about a fair go for the worker; it is not about what is best for Australia; rather, it is about delivering to their backers a system that they believe Australia should have. It is about maximising profits to the big end of town whilst ignoring the needs of the little person who is involved as an independent contractor—an area, I might add, that is growing. More and more people are working as independent contractors, and this government’s legislation is pushing people into those relationships.

The state deeming provisions, as I have mentioned, will apply for three years, and parties may leave this earlier if they wish, or they can enter into a reform opt-in agreement. The bill recognises that unforeseen circumstances may arise which will lead to the loss of accrued entitlements of independent contractors who have been deemed by state or territory laws to be employees. In other words, the workers will miss out. Once this comes into force, those workers who are deemed to be independent contractors under this legislation will lose their entitlements. I do not think that is good enough.

During the inquiry that I referred to in my opening comments—the Making it work inquiry into independent contractors—the committee was privileged to take evidence from members of the Transport Workers Union. I think that the evidence the committee received from those workers—those owner-drivers—was some of the best evidence that has ever been presented to a committee of this parliament of which I have been a member. We had many drivers there who gave evidence to the committee and told the committee their stories. They told how they struggled on a daily basis to meet the repayments on their trucks, keep their trucks in sound working order and meet deadlines that were placed on them by the contract they worked to. All of those drivers worked for one large carrier. They had the name of that carrier on their trucks and they were 100 per cent responsible to that contractor.

The TWU expressed concerns about the broad regulation-making power of this bill. Subsequently, they also have expressed concerns about unfair contract provisions that are inferior to those in New South Wales and Queensland and how they are being overridden, the sham independent contracting arrangements—and I will be talking a little later about those sham arrangements—and concerns that misleading representations have to be made to an individual to be prohibited.

This government has given an exemption to owner-drivers in New South Wales and Victoria until 2007. I am highly sceptical of this exemption because this government has a way of manipulating situations. This government has a way of changing once it has achieved its goal. I think its goal in this case is to win the next election. It is worried about the flak it will get if it does classify all owner-drivers as independent contractors. It is interesting to note that the member for O’Connor has been quoted as saying that the position of the Minister for Employment and Workplace Relations is arrogant and that the review of legislation proposed for 2007 is just a way to quieten the backbench. The minister is saying that he is legislating for an exemption because of threats from the TWU but he might then revisit it in a few months before the election, after some kind of review. Well, pigs might fly! I have my concerns about where the minister is going with this review.

I have talked about the common-law test and how I believe it is an inadequate way to determine whether or not a person is actually an employee or an independent contractor. I have also mentioned the state laws and the deeming provisions that this government seeks to override. The situation of workers in the TCF industry is another area about which I am very concerned, because this bill will do little to protect outworkers without the proper application of state based outworker legislation, which this seeks to override. Finally, the section reflecting on sham arrangements is inadequate and I think the government really needs to revisit it and look at other definitions of sham arrangements.

In conclusion, I would like to say that this is mean-spirited legislation introduced by the most mean-spirited government Australia has ever had: a government that panders to the wishes of its supporters as opposed to legislating for the good of all Australians. The legislation is bad legislation and it will impact on the most vulnerable workers in Australia. (Time expired)

Kate Ellis (Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

In rising tonight to speak on the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, I would like to take the opportunity to express my fierce opposition to this legislation. Let us all be absolutely clear that this legislation will hurt ordinary working Australians. Ordinary working Australians like drivers, cleaners, clothing outworkers and electricians—whom this government is already slugging with interest rate rises and who are already suffering because of higher petrol prices—are well and truly in the government’s sights with this legislation.

In my contribution to this debate, I would like to outline my general opposition to these attacks, speak with particular reference to this nation’s owner-drivers, and then outline my support for the amendment which has very sensibly been put forward by the member for Perth. We have heard from several other speakers about the main implications this legislation will have if passed—particularly the distressing social and economic impact that it is likely to have. In particular, we have heard that this legislation must not be seen as a single attack on Australian workers but as a part of the Howard government’s wider agenda of extreme changes to Australia’s industrial relations system. I will speak further on this later in my contribution.

I would like to thank the other members from this side of the House who have spoken on these bills with a high degree of passion and with a very detailed understanding of the implications that they are likely to have for many Australian workers. I also take the opportunity to point out the very limited contribution by government speakers to this debate. Very few members of the government have bothered to even enter the chamber and advocate in favour of these proposals—which leads one to wonder whether they are actually unable to defend the indefensible and whether they too recognise that this legislation is fundamentally flawed and must not be supported. It certainly appears that way. If that is the case, I would urge those government members who do not have the courage to come in here and advocate in favour of these changes to have the courage to stand up with the Australian Labor Party and vote against them. I will not hold my breath that I will see this sort of courage.

The report of the Senate Employment, Workplace Relations and Education Legislation Committee’s inquiry into these bills made a constructive contribution to the legislative process. However, the fact that the Minister for Employment and Workplace Relations, Mr Kevin Andrews, commenced debate on these extreme laws in the House of Representatives before the committee’s report had even been concluded confirms the government’s arrogant, out-of-touch attitude to the Senate committee review system. It shows that they are being driven not by a view towards providing good public policy for the Australian people but by their own ideological obsessions.

Sadly, there are many problems with this legislation, and I will expand on some of them. This legislation makes our complex industrial relations system even more complex. It is confusing and it adds to an overburdened small business sector which is already being swamped in red tape. This legislation also overrides all existing deeming provisions contained in state industrial legislation which deem certain categories of independent contractors to be employees and it overrides provisions granting employee related entitlements to independent contractors.

Further, independent contractors will no longer be able to access state unfair contracts laws. This is something that I think is absolutely outrageous. Where are the protections for these people? Overriding state unfair contracts legislation could further water down protections for consumers and for many of our small businesses. These bills will do little to protect outworkers without the proper application of state based outworker legislation. As drafted, the legislation will have the effect of significantly weakening outworker entitlements.

According to research from Melbourne University, up to 40 per cent of workers said to be contractors actually work for only one principal employer and are therefore dependent contractors, not independent contractors as the government has claimed. In essence, these changes mean that if you are classified as a contractor, you will fall outside of the government’s minimum standards. That means, for you, that there are no minimum standards at all.

These proposals will allow genuine employees to be pushed out of the employer-employee relationship and to be treated as independent contractors. This means reduced entitlements, conditions and protections. This is a point which was recognised in the Labor senators’ minority report. The report states:

The basic policy aim of the Independent Contractors Bill is to turn as many employees as possible into contractors. In the Government’s view, and more particularly in the view of employer organisations close to the Government, industrial relations are greatly simplified by arrangements which put employees onto either Australian Workplace Agreements, or turn them into contractors. Work Choices is intended to encourage the first of these trends, and the Independent Contractors Bill is intended to encourage the latter development.

The minority report goes on to say that this bill:

… is intended to turn natural employees into unnatural contractors.

This exercise smacks of a readiness to misuse and misdirect labour skills across the workforce at a time of skills shortage. What is more, because the legislation does not seek to define the term ‘independent contractor’ beyond its meaning under common law, these employees will be subject to the added burdens that normally fall under the responsibilities of an employer, such as the burdens of superannuation, taxation arrangements and workers compensation. At common law, employees are engaged under a contract of services, whereas contractors are engaged under a contract for services. This means that an independent contractor is generally a person who is engaged on a labour-only contract, usually determined as a one-off flat rate. Typically, the independent contractor will be burdened with a range of responsibilities that usually fall on the employer.

Professor Andrew Stewart, who is very well versed in these matters, has aptly identified the practical limitations of the common law in stating that the definition of ‘independent contractors’ under common law means that they will be exempt from:

... 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.

This legislation further fails to address occupational health and safety issues, which were the subject of recommendations in the Senate inquiry.

What is more, this legislation introduces even more confusion into our industrial relations system. It makes things even more complicated. These bills will have a negative impact upon many workers, including outworkers, owner-drivers and other contractors deemed by relevant state and territory legislation to be employees. In addition to the removal of the state unfair contracts legislation, unfair contract matters will now be tried in the Magistrates Court, a much more formalistic jurisdiction. Some of the key problems that arise with removing unfair contracts jurisdiction from the state system include the expense, length and complexity of arguments and the exposure costs to order.

This legislation does nothing to address the increase in use of independent contractors by employers but strips independent contractors of access to protections under state legislation, such as superannuation and workers compensation. It allows employees to be reclassified as independent contractors and thus reduces the entitlements of employees and the financial obligations of employers. As the Australian Workers Union has acknowledged, the incentives for abuse are too great and the legislation fails to act as a reasonable deterrent to such abuse.

I would like to focus further upon the impact this legislation will have on owner-drivers. It is a very sad fact that, as has been reported, at least two truck drivers are killed each week, with accidents largely due to overdriving and the misuse of stimulant drugs. These statistics are appalling and are something which the government should be employing its legislative power to try and prevent. But instead, for these small business people or contractors in dependent contract positions, this legislation will take away access to laws which protect against unfair contracts and remove employee-deeming provisions that ensure protections for small businesses and contractors from a range of state jurisdictions. Many of the state based protections will be stripped away by this legislation, as well as many conditions, entitlements and protections.

Owner-drivers are a particular group who are likely to feel the impact of these bills. Owner-drivers are single vehicle operators, the vast majority of which perform work exclusively for a single transport operator. They are often highly dependent upon those with whom they contract. Such dependence leads to an inequality of bargaining power and the associated potential for exploitation. To the economists out there, owner-drivers represent price takers, not price makers.

The Transport Workers Union have run a very effective campaign to represent their members and have managed to achieve an exemption for owner-drivers in New South Wales and Victoria. While I think the government must be criticised for not going far enough to protect South Australian owner-drivers, I note that as a result of the Transport Workers Union’s campaign owner-drivers in New South Wales and Victoria will maintain a critical system of safe and sustainable rates, without which driver and public safety would be threatened, and the protection of the owner-driver small business model, which provides security to these unique small business operations and industry stability. These protections for owner-drivers in the New South Wales and Victorian legislation are in the public interest. They contribute to a stable, sustainable and productive industry, and there is no evidence that the New South Wales or Victorian systems which contain these protections are less competitive or productive.

I will refer once more to the Labor senators’ minority report, which stated:

... the bill still falls significantly short of delivering assurance for owner-drivers. While the vulnerabilities of owner-drivers have been recognised nationally, the bill as presently drafted ignores this fact. It will have the effect of overriding the operation of the pending WA and ACT laws and preventing any state from enacting future legislative protections.

The fact that the government is to review the exemption for New South Wales and Victorian owner-drivers opens the possibility that either before or after the next federal election the exemption for New South Wales and Victorian owner-drivers will be ceased. This means that the only part of this legislation which has not completely made a mockery of protections for owner-drivers could be stripped away. On the evidence that I have seen so far, I have to say that when the government says that they are going to review something just after an election it normally means that they are going to do something very unpopular.

We will certainly be working very hard to make sure that the government do not win the next election, because there is a whole host of things that they want to force upon the Australian people at that point. They would be very busy just after the election. Today, the sale of Medibank Private has been added to the list of the things that they seek to do after the next election. Many people can be forgiven for feeling cynical about the fact that the government also seeks to review this particular exemption at that time.

Transport Workers Union spokesman Tony Sheldon has said:

We have higher incidents than all other industries, including mining. Drivers have had enough. We need to take the economics out of long-distance driving by giving them minimum safe rates.

I absolutely agree with Mr Sheldon on this point. The member for Watson, who joins me in the chamber, has also been very passionate in his defence of owner-drivers and in his belief that we must do everything that we can to ensure the safety of these professions. I find it very disappointing that the government, in contrast, is being so insensitive. Minister Kevin Andrews has admitted that truck drivers have ‘particular vulnerabilities’ and thus need ‘special protection’. So why are we heading down a deregulation path that looks as though it will inevitably cut wages and encroach on vital security measures? Despite government assertions that the legislation is intended to protect independent contractors, the legislation does no such thing. When are we going to see some honesty and integrity from this government? When is their war on Aussie workers going to end?

I have already spoken about the safety concerns owner-drivers face every day. I believe that as a parliament we must ensure that these concerns are alleviated. We must do everything in our power to ensure the safety of owner-drivers and other drivers on our roads and highways. This legislation is not just about industrial relations, although it is clear that the passage of it will culminate in reduced wages, conditions and entitlements for Australian workers; this is once more about the government and their obsessions.

In defending this legislation the government has once again gone back to the argument that it is about choice. We see very clearly in this legislation that this is not about choice at all. Where is the choice when people are able to be represented by lawyers and employer associations—in fact, it would seem by just about anybody—but not unions. Under this legislation these people do not have the power to make the choice to be represented by a union. I think that is an absolute disgrace and shows very clearly just how false this government’s claims that it is doing this for choice really are. I am one person who is not particularly surprised by this. I have seen this in the government’s industrial relations reforms across the board.

In fact in my own electorate at the moment we have an ongoing industrial dispute which arose after the government introduced their so-called Work Choices legislation, which they say is about giving employees more choice as well. In my electorate there are currently 16 Radio Rentals employees who are being locked out of their place and denied any pay for the next month because they have decided that they would like a collective agreement. Where is the choice in that? Where is the choice for workers to try and pursue a fair collective agreement? Not under this legislation, it seems, at all.

I would also like to take a moment to commend the very sensible amendment put forward by the member for Perth. This amendment recognises a large number of the flaws in this legislation. It also notes that this bill follows on from the government’s extreme industrial relations changes, which are a massive attack on living standards and conditions, and that it removes rights, entitlements and conditions of Australian employees. This amendment also notes that this bill treats the Senate Standing Committee on Employment, Workplace Relations and Education reporting on these matters with contempt by dealing with the legislation prior to consideration of its report. But, again, this is something that we should not be surprised by. It is quite in line with the form of this government.

This government has absolutely no respect for the Senate committees or, in fact, any of the processes which have traditionally been set up in this place to ensure good public policy. This government does not seem at all interested in pursuing what is best for the national interest. Instead, rather than even seeking to hear what these inquiries have to say about this legislation, it is content to pursue its own ideological obsessions. I think that is incredibly sad. It is incredibly sad for the people of Australia that they do not have a government with their best interests at heart. They have a government that is so drunk on its own power, following the Senate election results, that it is doing everything it can to get rid of and attack unions and attack ordinary working Australians. I think it is outrageous and a disgrace. I will continue to argue both in this chamber and outside of it that this legislation should be defeated.

In introducing these so-called independent contractors laws, the government has only one message for Australia’s workers, and that is: ‘You’re on your own now. Don’t expect any of the protections that you are used to. Don’t expect to have any of the rights which most Australians would argue are what this country was built on. You’re on your own now.’ That is exactly the way this government wants it. That is exactly the reason they have included in this legislation that you cannot be represented by a union. They want all the workers on their own. They want the balance of power firmly with big business and not with ordinary working Australians. That is something that I will never stand for. It is something that the Australian Labor Party will never stand for. And I wish that it was something that not a single member of this House would support.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

I have to concede: when I watched the policy launch of the Liberal Party at the last election campaign, I did not see it coming. I heard the announcement from the Prime Minister where he explained that there would be independent contractors legislation. I sat there and thought: ‘That’s probably politically clever—putting legislation forward that no doubt will do something to improve the rights of independent contractors.’ I am sure that is what the Australian people all thought. None of us saw it coming. The position of independent contractors is extraordinarily important. It very much is the new economy, the new workforce. So many people who used to be in employee-employer relationships are independent contractors. But we have ended up with legislation before us that actually does one thing that independent contractors do not call for.

Independent contractors will tell you many things that they want to happen. They will tell you about the need for less paperwork. They will tell you about the irritation that comes with the various tax forms they are constantly filling out. They will tell you about the frustration for many of them when they were transferred—and many of them were transferred—from an employee situation to an independent contractor situation and told, ‘You’ll be so much better off.’ There is a frustration that a whole lot of the tax provisions that were in place at the time of the transfer were very rapidly cut off within a couple of years of those transfers taking place. The lucrative nature of the transfer at the time it was made from employee to independent contractor ended up not lasting for more than two tax returns for many of these individuals. They will tell you about frustration after frustration when dealing with the head contractor—particularly independent contractors who deal with one head contractor and one head contractor only and who have no choice but to do so, given the branding of the vehicle, whether they are tradespeople, drivers or whatever their independent contracting relationship is. When they are effectively dealing with one head contractor there is frustration about all the power of that one person.

There is one thing that I do not think any of them call for. I do not hear any independent contractors saying, ‘What we absolutely need, the fundamental thing that we demand from the Australian government, is to be able to earn less.’ I do not hear cries from independent contractors saying, ‘The fundamental thing that we need is the right, when it comes to negotiation, to have the floor of the bottom rates cut from under us.’ That is the entitlement this bill gets them. There is nothing more to it—the legislation before us is actually that simple. Independent contractors are to be given that fundamental contracting right: to earn less. Curiously enough, the Prime Minister never put that in his speech. At election time, in the campaign launch, that was the one detail that the Prime Minister decided that he did not really need to refer to.

And I tell you this: without this legislation there are enough independent contractors who are earning less already. There are enough of them who are already earning less because they carry significant debt, they carry a mortgage over their vehicle and a mortgage over their equipment, whatever that equipment might be, and they have been hit by seven back-to-back interest rate increases. It is not simply owner-drivers who have been hit by petrol prices. Petrol prices are a significant cost to business—and do not think independent contractors were not irritated when they were all told by the Treasurer: ‘The one thing business must not do is pass this on.’ Obviously, none of us wanted the business costs to be passed on to consumers, but the impact of that was that they were worn by independent contractors. So they have had to put up with the interest rate hikes, they have had to put up with a reduced income through the impact of the petrol price increases—and now they get a new opportunity from the government: the fundamental right to earn less. They get told they are on their own. And while the number of protections for independent contractors has always been fewer than for employees—even in deemed situations they have never received the full package—now they end up with less protection. They end up with that being stripped from under them.

Who gets to keep them? The ones that get to keep some basic levels of entitlement are the ones who ran the biggest campaign—the ones who were the most unionised of the workforces and who ran a very effective television and, particularly, radio campaign which the government decided they had to listen to. If you ever wanted an argument for the power of trade unions, if you ever wanted an argument for trade unions being able to deliver a result, it is the government’s behaviour on this one. But do not pretend that the government are actually trying to deliver anything long term because, for the review of those provisions, from the moment this legislation is carried the clock starts ticking—and the clock starts ticking and does not stop ticking until after the next election.

Owner-drivers were in a particularly harsh situation. But look at the arguments that were run and ask yourselves: why was it that the government did not make an exemption on the basis of where those arguments apply? Why did they make a specific exemption for the situation of owner-drivers? The arguments are arguments of safety. The arguments are arguments of goodwill. When people purchase a business in the transport industry they do not just pay for the value of the truck; they do not just carry a mortgage over the value of the truck, or the vehicle if it is a courier business. They also carry a mortgage over the goodwill because they pay for the goodwill that goes with the relationship with the head contractor and the client base. So all of that gets packaged up at the time that they take it on, and all of that is a debt that they carry throughout the business and is a cost to business the whole way through—a debt that then costs them more every time they get one of these back-to-back interest rate increases.

The second thing that is a carry-on effect for people in the transport industry is the safety issue. There is a very serious safety issue which, interestingly, the government think is only a safety issue if you are travelling between New South Wales and Victoria.

Kate Ellis (Adelaide, Australian Labor Party) Share this | Link to this | Hansard source

What about South Australia?

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

For travel to South Australia, as the member for Adelaide has raised, apparently the safety issue ceases to apply. Apparently it does not apply if you make it to Queensland. If you go on a really long drive and make it to Western Australia it does not apply there. I can understand that there is probably going to be a bit of difference because you do not get people travelling interstate to Tasmania by truck all that often. But what you do have is a situation where the safety argument is real, because if you drive rates down below a certain level then make no mistake about what will happen. You will put people in a situation where the way to make ends meet, the way to be able to afford the fuel and to continue to repay their debt and to service their debt, will be to travel more quickly and to sleep less. That is dangerous for those individuals. It is dangerous for everybody else on the road. But the argument is not limited to the road. It is dangerous if you have got an electrician who, in order to cut below reasonable rates, ends up in a situation where they have to work far more quickly than is a safe pace. It matters in a whole range of areas where you want to have thresholds so that you do not, under any circumstances, compromise safety.

The way you have been able to avoid safety being compromised in many of these industries has been to have minimum safe rates. They do not exist in every industry; they do not exist in every state. But from time to time arguments are made that we need to have minimum safe rates. That is the principle. Now why would it be that that principle only applies in New South Wales and Victoria? Why would it be that only that is carved out, and that not only does it only apply in those areas but it only applies for a little while into the future? The answer is simple. The government wanted to get talkback radio off their back, so they decided to embark on a temporary compromise: to give a win for the time being to the TWU—which has championed the cause—but not to actually apply broadly the principles that were the basis of the campaign.

There is no attempt to acknowledge in this legislation that safety is an important issue for independent contractors. There is no attempt to deal with that at all. What we have got is a determination from the government to reduce the costs for head contractors. For head contractors when they are in a situation of employment, the way the government has gone about this has been through the Work Choices legislation. The government has also decided that where the head contractor is in a straight contracting position, rather than an employment relationship, it will have the race to the bottom there. But where we had in Work Choices some concept of a minimum rate of sustenance for employees, what this legislation does is say, ‘No such minimum rates will apply to contractors.’

When I say that no contractors were calling for that, that is not quite true. There was one: the head of the Independent Contractors of Australia. When I served with you, Mr Deputy Speaker Barresi, on the employment committee we had the Independent Contractors of Australia appear before us. It might have been at the Perth hearing; I am not sure which hearing it was. I remember asking the question, ‘How many members do you have?’ And we had a pause. Apparently asking a representative of an organisation how many members he has is a difficult question. The response came back, and I am paraphrasing, ‘We don’t work as a membership organisation. That is not what we try to do.’ I said, ‘You must have some members. How many do you have?’ And after question No. 3 we eventually got a shrugging of the shoulders and, ‘Well, it’s in the hundreds.’

The government wants to turn a blind eye to any trade union. We have the TWU, which has been representing owner-drivers, independent contractors in the transport industry, since the 1920s. We have the trade union movement and, sure, the majority of the trade union movement members are employees. But name one small business organisation that has more small business members than the Transport Workers Union. Name collectively a group of business organisations that have more small business members than the ACTU. It does not mean that the ACTU is the sole voice; I would not say that for a minute. But here is a voice that is disregarded when every other organisation is littler, and the principal advocate for this bill is just minuscule: ‘in the hundreds’. I am not sure what that meant. I think it meant: ‘I really don’t want to ’fess up. Can you do me a favour and end the questioning there?’

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

It could have been 101.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

That is right—101 could well have been the answer, or 102 and we will take any advances. We do not even know if the independent contractors association has more members than there are members of the House of Representatives. There has been a lot of talk about sham contractors; what we have here is a sham organisation with a very clever name which means they are able to get media grabs by saying, ‘This is what independent contractors want.’ You cannot blame the media when the name of the association is the Independent Contractors of Australia. You would think it is a fair call that they might know something about it, until you look, firstly, at their membership and, secondly, at what they are trying to do.

I want to meet the independent contractor who wants his or her rates to be driven down. I want to find someone who is actually arguing for that entitlement, because they are about to be given it. They are about to be given that entitlement and nothing else. We have this all being framed as an issue of choice. Yes, choice is important, and so is feeding your family. You do not get a tremendous amount of choice, when it comes to making ends meet, as to what your minimum requirements for survival are. I do not want to see their families put in a situation of having real difficulties making ends meet—that is bad enough—but you then add to that the threat to their own safety and the threat to the safety of everybody who is either sharing a work site or a road with them.

These are actually really important, significant issues which were heralded to the election campaign audience as: ‘We’ll provide protection for independent contractors. They will be provided with protection from a safety net.’ When it comes to things you want to be protected from, a safety net is rarely on the list. But that is what is being provided here, and it happens in two ways. It happens first of all by taking people who have always been viewed as independent contractors and saying: ‘Right, you’re now not going to have any of these other rights which you might have been able to get under different parts of state awards. They’re gone. So, if you were enjoying having minimum rates, sorry, you’re going to enjoy more not having minimum rates. If you were enjoying an entitlement to workers compensation, well, you’re going to enjoy even more that you don’t get these entitlements anymore. Every entitlement you lose is a right you gain, and the right you gain is to earn less.’ That is what happens to the people who have always been known as independent contractors.

We then have the other group of people in what have been called sham relationships who have always been regarded as employees, and have seen themselves as such, who are now going to be told, ‘Guess what? You’re part of the new economy too. You’re also going to be an independent contractor. As such you get a new right. You get the right to charge as little as your most competitive competitor.’ This is less of a problem when people are running a bigger corporation, when people are running a business. When I ran my business we had three partners. It was a situation where you could bid lower than your competitors. You had a genuine tendering process and you had multiple contractors whom you were trying to gain business from. That was fine. That was just a straight open market, no worries.

It is much more difficult if you are tied to one head contractor, and that is the only relationship you are going to have. It is much more difficult saying, ‘I’ll pick up whatever courier work I can,’ if you already have Toll written on the side of your van. You do not have the same opportunity as other business people to just shop around and pick up whatever business you want wherever you want. In those situations, what the government says is, ‘You’re on your own and whatever rights you might have thought you had are now gone for good, be it superannuation or be it workers comp. And for the small group that we’ll give it to and say, “Yeah, you’re in a special situation,” we’ll tie it down to two states for a handful of years, and have a review date just after an election.’

The government should be up-front about what they are trying to do. If you want to have an argument in this House about, ‘Is it fair for independent contractors to have an absolute race to the bottom and undercut each other as far as they want, and if that ends up hurting them and making workplaces and roads dangerous, then so be it?’ then let us have the argument. But the government should not pretend to be on the side of independent contractors and do it by bringing in legislation that gives them nothing. It gives the dodgiest independent contractor the chance to undercut. It gives the dodgiest operator the chance to take contracts from others and operate in an unsafe way, to not spend money maintaining their equipment, or their vehicle if a vehicle is involved. It gives the dodgy operator the opportunity to do that. But what honest, hardworking people—the vast majority of people in contracting arrangements—will have by the time this legislation goes through is simple: they get less and they end up on their own.

So we end up with three pieces of legislation working together. We get the Work Choices legislation. We get the Dawson review legislation about collective bargaining under the Trade Practices Act. In that legislation, the government decided to abandon its rhetoric of choice and decided that independent contractors would be the one group that was not allowed to have a trade union represent them and would actually be banned from making that choice—a choice available to everybody else. I have to say, I used to believe the Prime Minister on his rhetoric that he was not against trade unions, that he just wanted to provide choice and that it was just compulsory unionism he objected to.

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

More fool you.

Mr Tony Burke (Watson, Australian Labor Party, Shadow Minister for Immigration) Share this | Link to this | Hansard source

True, sad though it may be. It took until this term before we actually had legislation that said: even if you want them to represent you, it will be illegal. Whom did he choose to take that right from? Independent contractors and small business operators. They are the ones who the Prime Minister decided would lose the right of choice. So they get the Work Choices legislation, they get those amendments in response to the Dawson review I just referred to and they get the Independent Contractors Bill. At every stage they lose rights and they earn less. Families will be in a tougher spot. Businesses will have the impact of this compounded with seven back-to-back interest rate increases compounded with what they are now paying in fuel. This will hurt people. The government knows that that is what will happen and it has not had the courage to be honest about what this bill is actually doing.

Kirsten Livermore (Capricornia, Australian Labor Party, Shadow Parliamentary Secretary for Education) Share this | Link to this | Hansard source

The first thing that strikes me about this debate on the Independent Contractors Bill 2006 and related bill is the incredible lack of speakers on the government side. Once again we have the Labor members of this House standing up in the dozens to represent the people in their electorates—standing up for the rights of workers in their electorates. The government side, which introduced this bill, is just missing in action. This was a major policy announcement during the last election. You would imagine that the government members who were there cheering John Howard when he made this announcement would be here telling us how great it is going to be and how many hundreds of people in their electorates—hundreds of workers—are just lining up, not being able to wait to cash in their rights as employees and embark on their wonderful careers as independent contractors.

It says a bit that there are not too many government speakers saying any of those things. In fact, it is left to the Labor Party members to speak on behalf of people in our electorates to say how difficult this is going to make life for many people in a range of occupations. It is estimated that there are between 800,000 and two million independent contractors in Australia, which makes the lack of government speakers even more noteworthy. Surely not all of those people are in Labor electorates. Some of them have to be represented by coalition members. But where are the coalition members speaking up on their behalf in this debate tonight?

The minister, Kevin Andrews, was, typically, very excited about all of this. He was expounding his view of this brave new world of independent contractors out there in Australia and how exciting it was all going to be. In his second reading speech he told us:

Independent contractors are entrepreneurs, and the one-person micro-business of today is often the employing small business of tomorrow.

For many, the attraction of independent contracting is to operate independently, not to work as an employee. The flexibility that independent contractors provide the workplace is an important component of a modern and dynamic economy.

All those workers out there getting their pay packets every week must be wishing they could be independent contractors. That is all they want. They must be saying: ‘No, no; don’t give me that pay packet. Don’t tell me when I’m working next week. Don’t tell me that I’ve got guaranteed hours or a roster that I can rely on when I’m making my family budget or planning child care for my children. Don’t tell me those things. Don’t give me a pay packet. I want to be an independent contractor. I want to be out there on my own in this exciting new world of everyone wanting to be an entrepreneur.’

Again, if it is so exciting—if people are embracing this in their thousands, as the government would have us believe—where are the coalition speakers telling us all about it? We need to know what people in our electorates are missing out on. If they are not getting it, maybe we need to understand it so we can go back and tell them what they are missing out on in this new dynamic world of being an independent contractor.

But it seems like a bit of reality might have set in. Those of us on this side of the House who are actually in touch with workers in our electorates are getting a sense that they are not really that convinced about the government’s brave new world of no security and its ‘look after yourself’ attitude. Perhaps some reality is actually setting in on the government side because on 23 August this year the minister actually conceded that perhaps existing private contractors and small businesses are not all that excited about utilising the changes in this bill. The minister was quoted on that day as saying:

... as a result of independent contracting legislation there won’t be, I believe, any change in the number of independent contractors.

If it is so exciting, as the minister would have us believe, why is he now saying that it is not really going to make any difference to the number of people wanting to be independent contractors? That is quite telling in terms of Australians’ pretty understandable scepticism about the government’s great promises of a brave new world in this legislation.

If there are not the numbers of people, as the minister has admitted, wanting to be independent contractors, what is this legislation really all about? Again, it was all in the minister’s second reading speech. He practically had only said the name of the bill before he launched into his usual attack on the union movement, which has a proud history in this country of protecting and making sure that there is fairness for working people. The minister made it very clear that as far as the government is concerned this bill is all about the usual attack on workers.

The Labor senators on the Senate Employment, Workplace Relations and Education Committee’s inquiry into these bills decided it was about that too. They said:

The basic policy aim of the Independent Contractors Bill is to turn as many employees as possible into contractors. In the Government’s view, and more particularly in the view of employer organisations close to the Government, industrial relations are greatly simplified by arrangements which put employees onto either Australian Workplace Agreements, or turn them into contractors. Work Choices is intended to encourage the first of these trends, and the Independent Contractors Bill is intended to encourage the latter development.

That was the view of Labor senators who served on that Senate inquiry—that this bill is really about turning as many employees as possible into contractors.

The question, of course, is what kind of contractors these workers are going to be. Many people are in genuine arrangements, where they have chosen to be independent contractors because it suits their occupation, it suits their skill set, and they have identified a particular niche market for their services and their skills. They are operating as genuine independent contractors, genuine microbusinesses. But that is not the case for an awful lot of Australians who are forced into contracting arrangements which are far from genuine.

I said earlier that it is estimated that between 800,000 and two million people are classed as independent contractors in this country. Of that number, 400,000 are contracted by one employer. So as many as half of the independent contractors are employed by one employer. They are more correctly categorised not as independent contractors but as dependent contractors.

The situation of dependent contractors in Australia got quite a bit of attention in the Senate inquiry. One submission came from the Australian Institute of Employment Rights, which is part of Monash University. They devoted part of their submission to looking at the very vulnerable situation of dependent contractors. They said that the bills:

... fail to recognise and distinguish dependent contracting from independent contracting. In so doing, they will enable the continuation and expansion of dependent contracting and disguised employment. Research has consistently identified negative outcomes associated with these practices. These include:

Absence of minimum employment entitlements designed to protect workers’ economic, social and health wellbeing, including a satisfactory work/life balance;

Excessive working hours without commensurate remuneration;

Higher risk of occupational injury to contractors;

Higher risk of occupational injury to those working alongside contractors;

Shifting the cost of injuries away from workers’ compensation systems onto injured workers and their families, and onto the general health system; and

Absence of investment in skills and training.

But of course the Howard government is not letting any of those extremely negative consequences for dependent contractors dissuade them from their ideological crusade in these bills.

Looking at that analysis and the negative consequences for workers who are in reality dependent contractors—they are contracted to one employer—what would the response of a responsible, caring government be? We know what the response of a responsible, caring government would be because the state governments in Australia have addressed this situation through deeming provisions in their laws. States have recognised that there are workers who are in vulnerable situations, particularly workers who are in these sorts of sham contracting arrangements and are deriving their income from, and are contracted primarily to, one employer. They are in a very vulnerable position and need protection.

There are state and territory laws which deal with this situation. Due to concerns about worker welfare, state governments have introduced deeming legislation to ensure that such workers have protections under their industrial relations legislation. They consider that many of these workers are dependent contractors or disguised employees, which we have just heard defined in an earlier quote from the Monash submission.

As a Queenslander, I take particular interest in what the Queensland government is doing in this area. In their submission to the House of Representatives Making it work inquiry, the Queensland government states:

The increasing move away from the conventional employee/employer relationship towards workers engaged under labour hire arrangements and under dependent contractor status, has effectively taken these workers outside of the industrial relations system and the benefits and protections associated with being defined as an employee under relevant industrial laws.

Under the Queensland legislation, persons or workers that this deeming applies to include outworkers, lessees of equipment or vehicles, drivers who wholly or partly own their vehicles and persons working as partners in a business or association.

Those state laws have been made for very good reasons. They were made with the welfare of workers in mind. They were made to prevent workers from being unduly exploited by these sorts of dependent contractor or sham contractor arrangements. But the bills that we are debating now seek to override these state laws that seek to uphold workers’ rights and uphold some security. As a result of these laws, genuine employees will be pushed out of the employer-employee relationship and into sham independent contracting arrangements. That means a huge shift in responsibility from employer to individual. The responsibility for statutory items such as superannuation, PAYE taxation arrangements and workers compensation cover moves from the employer to the individual.

We are seeing more and more evidence of sham contracting arrangements with workers who, under traditional definitions of ‘employee’ and ‘independent contractor’, are in every way correctly considered to be employees. Ads in the papers for cleaning jobs are calling for applicants to have their own ABNs. We are seeing some extreme examples of people being forced into acting as independent contractors when traditionally they would have been considered employees. State legislation has been in place to protect those people, but these bills are out to end those arrangements. In these situations, the employee—or former employee—also has reduced bargaining power because of reduced access to union assistance or collective bargaining to protect wages and conditions. We know what this is all about. It is about reducing people’s wages and conditions. That is what this government is always about. Work Choices was the end of a long campaign by the Prime Minister to attack unions, to take away protections for workers and to reduce wages and conditions, but he was not content with that and we are now seeing this additional piece of legislation, which will achieve the same thing for certain groups of workers.

This attack on people’s security and protections is happening at the same time that they are struggling under the weight of many additional costs for their families. Petrol prices are at record highs, interest rates are on the way up—we have had seven successive interest rate rises in the last few years under this government—and the costs of health care and child care are rising. The amount of money people need to meet their obligations is making life harder all the time. People must be reeling out there, not just from the added pressures coming with the increases in the cost of living but because this is happening under a government that promised them it was not going to be this way. This is the Prime Minister who promised that, during his term, people would be relaxed and comfortable and that no worker would be worse off and who promised, at the last election, that interest rates were not going to rise. People must be feeling incredibly betrayed by this government, and that is certainly the message that I am getting as I get around my electorate. The facade that John Howard has had up for many years, particularly since the last election, is crumbling. The world that people thought they were living in under this government is not slipping away; the government is basically smashing it to pieces, and people are feeling very insecure.

I want to take a couple of minutes during this debate to talk about a particular trend that is occurring in the mining communities in my electorate. It is very much of a piece with what we are talking about where, in the new workplace that this government wants to create and encourage and is presiding over, responsibility is shifting more and more away from employers and onto individuals. In the mining communities in my electorate, the mining companies, when coming in, investing in mines and setting up operations, traditionally provided accommodation. They supported the towns and communities, because they were quite remote or rural areas—they were often created on what were originally cattle properties—and people moved from their homes to work in the communities. The mining companies accepted the responsibility of creating homes for people, creating communities, providing services and making sure that there were schools, medical facilities and housing for the communities and for the miners who worked there.

Once again we are seeing an incredible boom in the coalmining sector in Central Queensland, but this time it is completely different. If you want to work out there now, you are on your own. If you go out there and work a 12-hour shift for the company, the company could not care less about what happens to you after that—whether you live in your car, as some people are doing, or whether you sleep in a donga for 12 hours and then another person comes in off their shift to sleep for 12 hours while you are working.

I wanted to bring to the debate that this is where the encouragement of employers to abrogate their responsibility for employees takes us, and it is what we are seeing in Central Queensland, particularly in the mining towns. Where once the companies took responsibility for their workers’ lives outside of work, they now no longer accept that, and we are seeing some pretty dreadful social conditions in the towns as a result. It is about time the Prime Minister took up my invitation—I wrote to him a few weeks ago—to come to Central Queensland and see it for himself. (Time expired)

Annette Ellis (Canberra, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to have the opportunity this evening to speak on the Independent Contractors Bill 2006 and related bill. To me the government’s intention to legislate in this area has been quite clear, and the disturbing fact is that, despite evidence and suggestion that they should be careful, the government’s determination is seen very clearly in this bill. We on the Labor side strongly support people who genuinely enter into their own businesses and genuinely set up their own subcontracting or contracting businesses, as has been done from time immemorial. But for the government to try to create the impression that this legislation is going to make an acceptable difference for small business and contractors is, in my view, very misleading.

However, let us just look at a little bit of the history. On 9 December 2004, the Minister for Employment and Workplace Relations requested the Standing Committee on Employment, Workplace Relations and Workforce Participation to inquire into independent contracting and labour hire arrangements. That committee, of which I was a member, got under way and began its work. While that inquiry was under way, the minister then also, for some strange reason, had an inquiry of his own. He began an inquiry after requesting this particular parliamentary committee to look into these issues. He then basically set up a parallel inquiry of his own to look into the same issues. That frustrated some of us on the committee, and we wondered why on earth that was being done. However, it was. Then we also saw, with the production of the legislation, a Senate Employment, Workplace Relations and Education Committee inquiry take place properly, as it should, into the bill.

A great deal of evidence was received through all of these processes, and in particular I want to refer to the report of the House standing committee, the committee of which I was a member, called Making it work. I want to speak about one specific aspect that we came to understand in our work. In doing this I want to put it in this context: we have seen Work Choices, the industrial relations changes brought in by this government; we have seen the Welfare to Work changes come in, and we are only now just beginning to see their impact; and now we have in front of us what I believe is the third part of this triple whammy, and that is the independent contracting arrangements. They all sit together in a very neat package for the government, but from my point of view they all sit very uncomfortably, not only together but in our community, for all of the reasons that we on this side of the parliament, at least, understand.

I refer to that because I want to make particular points in relation to evidence that we took in that committee inquiry. In fact, the evidence came from my electorate. It appears on page 125 of the Making it work report. It is an example that I think the government and all of us need to be extremely aware of because with the changes that are going to occur under this Independent Contractors Bill I fear that this is not going to be an isolated case. In fact, I am sure it is not already. The example is where a Salvation Army officer came to my office. As I said, subsequently this became part of the inquiry. They were very concerned about a client of theirs, a young woman who had a mild intellectual disability. She was on the disability support pension and had been so for four years. She had worked part time as a cleaner since October of 2004. The client informed Centrelink each fortnight of her income, and they adjusted her disability support pension accordingly. I am quoting here from the paragraphs in the report:

The client is concerned about not paying tax, as the employer is not deducting the tax from her earnings. The cleaning agency informed the client that she was a sub-contractor as she had signed a contract stating the arrangement. The client did sign a contract; however she had no idea what it meant for her employment. She receives a weekly pay, and does not invoice the agency. She is offered work on a weekly basis; however, she does not have regular customers of her own—

obviously. The report continues:—

It was made clear to the Salvation Army that some cleaning agencies were moving to sub-contractors rather than employees in the hope of avoiding responsibilities in regard to workers’ compensation, superannuation, pro-rata long service leave and holiday pay. The client was to apply for an ABN; however, it was stated she did not understand the implications this would have on her rights as a worker or her possible taxation debts.

I was really alarmed when I heard this story, and I made sure that the evidence of the Salvation Army in this case became known to the inquiring committee. Particularly when we look at the Welfare to Work changes and the changes in Work Choices, it is not at all outrageous for any of us to imagine that there is going to be many a case, with this particular legislation as the third part of this triumvirate, where we will see people in similar situations to this young woman, who genuinely believed that she was an employee. She genuinely believed that she was doing the right thing, and she realised she was not only when the authorities started to be aware that there were some obligations that she was not meeting. Thank heavens she walked through the door of the Salvation Army and that that particular agency—or a similar agency in any other case—was able to argue her particular position.

But the point is that, yes, she did sign the agreement; she had no idea what the implications of it were. It was quite apparent that in the arrangement between her and who she thought her employer was, they did not make it quite clear either. It was to their financial advantage to do what they did, and the outcome is there for us to see in that report. So I have a range of concerns, but I think that outlines one of them very distinctly. As I said, we must see the Independent Contractors Bill as not only an isolated bill but also part of this whole move that government is making in relation to employment arrangements in this country.

I also refer to the Labor senators’ minority report, which was done as part of the Senate inquiry. The senators say:

The basic policy aim of the Independent Contractors Bill is to turn as many employees as possible into contractors. In the Government’s view, and more particularly in the view of employer organisations close to the Government, industrial relations are greatly simplified by arrangements which put employees onto either Australian Workplace Agreements, or turn them into contractors. Work Choices is intended to encourage the first of these trends, and the Independent Contractors Bill is intended to encourage the latter development.

Under this legislation, genuine employees are going to find themselves, in many cases, moved into what we call sham independent contracting arrangements, reducing or losing their entitlements, their conditions and their protections—protections, I might add, they now need more than ever they have before. These workers will find themselves having to carry the costs of superannuation, workers compensation and so on. Those workers most affected will include drivers, and I commend the Transport Workers Union for its submission to the Senate committee inquiry. The legislation will also dramatically affect cleaners, electricians and clothing outworkers.

In relation to clothing outworkers, the Senate report unanimously recommended that part 4 of the bill be omitted. This part 4 relates to clothing outworkers, and I refer to a briefing note in relation to part 4 of the bill that I have. This briefing note says:

Part 4 creates a new category of worker: contract outworker. This definition ignores the fact that outworkers have previously been afforded employee-like protections and status due to their particular vulnerabilities. It also has the potential to create confusion about the appropriate classification for outworkers, and gives unscrupulous employers the opportunity to reclassify their workers as contract outworkers to come within the terms of the bill and avoid other outworker entitlements.

Under part 4, the bill, under the guise of protecting outworkers, has the effect that contract outworkers are entitled to a default minimum rate of pay. Where a minimum rate of pay is not specified in state law, this particular bill provides that the federal minimum wage of $12.75 is the default minimum rate. However, in legislating a minimum rate of pay, the government has excluded the broader protections provided to outworkers under state laws or in federal awards. These protections include things like annual leave, public holidays, ordinary hours of work and overtime, superannuation, workers compensation and redundancy pay.

To me, it is extremely significant that senators across the political board recognised the effect of part 4 and recommended its omission.

These laws attack the protections and entitlements of those workers who happen to be in inferior bargaining positions. The cleaning profession is one, but we have named many. Should you be a worker or a small business seeking a remedy for any unfair or sham contract arrangement, you will have to resort to costly court processes. I make the observation that most people who would find themselves that way affected through this legislation probably cannot afford the process. It is unrealistic to most of them to imagine going down that path in the first place.

We on this side of the House are opposed to this bill. I personally see it as very bad legislation; I cannot see any public policy gain by it. Sadly and realistically, however, despite all of our protests and the protests of others, this bill will proceed. On that basis, I strongly support the amendment moved by the member for Perth, and I would like to conclude by reflecting. It is very easy for all of us in this place to get a bit carried away with self-importance sometimes, and it is all very easy in this place for any one of us to get a bit carried away by our base philosophical beliefs. But I firmly believe that it is the role of government in this country of ours to come up with legislation that is good for everybody and that considers the rights and the roles of everyone in our society.

These words are very easy for me to say here, but I believe in them very passionately. I do not agree in following a pure, blind, philosophical direction just because it is what you want to do. There might be a whole heap of other people who do not agree with you, but people fall into the trap of being so convinced that what they are doing is absolutely correct because it follows their philosophical basis that they do not see any other view. This legislation falls straight into that category, along with the Work Choices and the Welfare to Work legislation. When we see these three pieces of legislation reflecting on each other, I really worry for the genuine role that people can play in our workforce in a fair way.

There is a lot of debate about Australian values. One of the greatest values we have here is a fair go, and I cannot see that a fair go is reflected in this legislation. I think about that young woman with a mild intellectual disability who thought she was doing the right thing by working as a cleaner part time through the week, on a regular basis, for an employer while being supported by the disability support pension, only to be led into this whole deception. The real question is: how many more people in her vulnerable position are going to be affected, let alone owner-drivers and a whole list of other people? At the end of the day, yes, this legislation is going to go through. Will that stop me or others from objecting to it? No, because we also have a responsibility—that is, to stand up in this place and say why we think it is wrong and what we think should be done to fix it. And you never know, one day the government might just fix it.

Tanya Plibersek (Sydney, Australian Labor Party, Shadow Minister for Childcare) Share this | Link to this | Hansard source

As the previous speaker, the member for Canberra said, the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 are part of a set of legislation that also involves the Work Choices and the Welfare to Work legislation. It is part of the government’s extreme ideologically driven attack on the valuable protections that used to exist for workers in our industrial relations system. It is part of the race to the bottom for workers’ pay and conditions. It allows—indeed it encourages—independent contractors to compete by taking pay cuts and losing the protections that should be available to them when they are in an employee-employer relationship.

Labor support any person who wants to set up a small business or to be a genuine independent contractor. What we do not support is a system that pretends it is about flexibility but is actually about pay cuts and cuts to conditions of workers. This legislation comes at a time when the families of these workers are already under enormous financial pressure, particularly in the case of owner-drivers. Owner-drivers may well have taken out an enormous loan to have bought their truck in the first place. Across the board these workers are facing mortgage interest rate rises. They have borrowed more than ever before for their homes, so any little change in their financial situation puts enormous pressure on their ability to repay their ever-increasing mortgages. That is why we are seeing greater rates of mortgage defaults than ever before. We are also seeing increases in fuel prices on top of that. In this instance they are affecting owner-drivers more than other workers, but they are obviously affecting all of the workers who are covered by this legislation.

So you have an ideological position from the government that is all about supporting employer choice and employer control over their workers and not at all about supporting the workers generally and, in this case, some of the most vulnerable workers in our community. The Prime Minister talked about work and family balance as a ‘barbecue stopper’ issue. The provisions in this legislation will mean that people are forced to work longer hours to make the same amount of money and that owner-drivers will be forced to drive for unsafe periods of time and, as many of them have felt they had to in the past, to take illegal stimulant drugs to stay on the road to meet their basic expenses. This legislation makes all of that so much worse. The idea that the Prime Minister is in any way interested in work-family balance or indeed in supporting families more generally is really given the lie not just by the Work Choices legislation and by Welfare to Work but also by this Independent Contractors Bill.

The previous speaker spoke of a constituent of hers, a young woman with a mild intellectual disability who was given a contract to sign and signed it. We do not know how many cases like this one there are in the community. If people who are facing this situation, such as cleaners or outworkers, were really good at reading contracts, perhaps they would be lawyers and not cleaners. A lot of people in the cleaning industry and in the outworker industry in particular have English as a second language and do not have a particularly high educational attainment. That is obviously not true of all of them, but there is a significant proportion for whom English is a second language. The idea that they will negotiate the details of contracts with unscrupulous employers and do okay out of it under this new legislation is absolutely fanciful.

The government is quite happy to talk about the sense of responsibility that people should feel and that they should and must discharge their responsibilities as Australian citizens. What about the responsibility that an employer has to a genuine employee? Is it not the case that someone who employs a worker should be responsible for basic things like paying their superannuation and ensuring that, if they have an accident in the workplace, they will be covered for that? This is one more way that costs that should rightly be borne by genuine employers for their genuine employees are to be shifted onto those employees or onto the general public. They are borne by individual employees if they have an accident and they go from being able to support a family to requiring the support of their family. The family picks up the caring bill and the public hospital system picks up the rehabilitation bill. We have a WorkCover system for a very good reason: by each contributing a small amount to cover their employees, employers are able to minimise the costs to themselves, to the individual employees and to the Australian community. Why would we retreat from a system that insures us against the sorts of terrible workplace injuries that we see? The same goes for superannuation. Why would we want to retreat from a system that has a small to moderate contribution from employees and employers over time so that people have a decent retirement income to live on when the time comes?

I think there is pretty common agreement that the bill is likely to force people into sham independent contracting agreements; that their entitlements, their conditions and their protections will be reduced; and that the laws will tear away protections that people have taken for granted for some time. Basically, the government are saying: ‘Well, too bad. You’re on your own.’ They are saying it to workers generally with the Work Choices legislation but in this instance with this legislation they are saying it to some of Australia’s most vulnerable workers. If you look at outworkers in particular, there was unanimous bipartisan agreement on the committee that looked at this legislation that part 4 of the bill is not going to work. It is contrary to the intention in the bill’s explanatory memorandum and it will in fact undermine existing conditions and make things worse. It will effectively render outworker protections that exist under state laws largely ineffective. The Textile, Clothing and Footwear Union made this case very strongly, but it was not just the union. The Victorian government agreed, and obviously they were pretty successful in convincing a bipartisan group of parliamentarians. What is the point of having committees that inquire into bills if when you actually get bipartisan agreement—and I keep stressing: bipartisan agreement that one piece of the legislation is seriously flawed—the government persists in ignoring all sensible advice from all sources in order to continue on an ideological jihad against the protections currently afforded to ordinary Australian workers?

Owner-drivers are seriously affected by this legislation. These people have enormous debts to start with: the debts that they incur to buy their trucks to set up. There are significant protections in state legislation for the very reason that keeping owner-drivers safe is not just good for them and their families but vitally important for safety on our roads.

Debate interrupted.