Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I was speaking last night in favour of both the bills before the Senate, the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. The thrust of the policy and the foundational views behind the legislation are that we want to build a spirit of enterprise in this country, a spirit of entrepreneurship. We want to encourage incentive, we want to encourage reward for effort and we want to encourage creativity amongst business, particularly small business, microbusinesses, which are so important across our nation.

I had the privilege of being appointed by Peter Reith, a former minister for employment and workplace relations, some years ago, in the late nineties, as a member of the Australian government’s microbusiness consultative committee. As a member of that committee, I recall that 82 per cent of all small businesses are actually microbusinesses—that is, businesses with fewer than five employees. That is a huge number and a very important part of the Australian business framework: they provide jobs and they support families.

I want to pay credit to those types of businesses. Indeed, I want to pay credit to the independent contractors—in many cases, very small operators of fewer than five employees. Many of them are family based businesses. According to the Productivity Commission, there are around 800,000 in Australia. The Independent Contractors of Australia estimate the figure is as high as 1.9 million. These businesses put their necks on the line. They probably have a mortgage on their own home. They provide jobs, obviously, for themselves and perhaps for other family members and others in the community. They are certainly the jobs generators in Australia today. Nearly 50 per cent of the private sector workforce in Tasmania comes from the small business sector. Tasmania is very much a small business state, and I think our nation of Australia is very much desirous of encouraging small businesses to prosper and do well. Certainly that is the objective and the intent of the Howard government.

I want to acknowledge and thank federal minister Kevin Andrews for the work he has done in supporting the operations of small business throughout this country and, specifically, for following through on the 2004 election commitment to support independent contractors. They are a vital ingredient to the success of our economy. They have grown in numbers significantly over the last many years because they love that flexibility. They love the ability to prosper and do well as a result of the options and the choices they have. This is what we have done. We have actually fulfilled an election commitment. We have done what we said we would do in 2004. We are following through on that promise and delivering for those independent contactors.

Of course, the Labor Party and the union movement across the country oppose this legislation. They oppose it because they want to rope in all of these independent contractors—or at least the bulk of them—to be subject to our industrial relations regimes. This is exactly what has happened with the various state governments around Australia. They have deemed these independent contactors to be employees for the purposes of roping them in to be subject to our industrial relations legislation or their own state laws. Once they do that, the unions are thrilled because, as I said last night, he who pays the piper calls the tune.

The union movement has contributed over $47 million to the Labor Party since 1996, and I think it is a payback now because it has committed to provide, I understand, around $20 million in the lead-up to the next federal election. It is payback. The Labor Party are doing the bidding of their union masters and saying no to this legislation, and that is disappointing. This legislation, as I say, confirms and builds on the commitment that we made as a government in 2004 to the independent contractors of Australia, and we have fulfilled that commitment. Last night and yesterday many members opposite were waxing lyrical about the extreme industrial relations objectives of this government.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Senator Marshall interjecting—

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Marshall, I take your interjection. You made two specific allegations against our workplace relations legislation. The first was that there would be a decrease in the number of jobs and the second was that there would be a cut in wages across this country for working men and women and their families. What has happened since Work Choices came in? I can tell you: the exact opposite has happened. Labor senators know that. They have not admitted their mistake and they have not apologised to the Australian people for making that mistake. They know that the number of jobs has gone up. Real wages have increased 16.5 per cent in the last 10 years, where of course under 13 years of Labor they went down—D-O-W-N—by 0.2 per cent in real terms.

I would like to thank the Senate committee of which Senator Marshall is a member, the Senate Standing Committee on Employment, Workplace Relations and Education. They had a look at these two bills and delivered their report. As a member of that committee under the chairmanship of Senator Judith Troeth, I want to note what the government senators’ report says in summary about the legislation before us today. It says:

This legislation delivers on a 2004 election pledge,—

which I have just indicated is correct—

in which the government promised to recognise the special status, and growing importance, of independent contractors, who constitute an increasing proportion of the workforce. ... parties which choose to enter independent contracting arrangements should not be prevented from doing so by laws which elevate industrial relations principles over commercial considerations.

This is the nub of it. The state Labor governments deem these independent contractors to be subject to their own industrial relations regime.

Kate Lundy (ACT, Australian Labor Party, Shadow Minister for Sport and Recreation) Share this | Link to this | Hansard source

Do you know what you’re saying?

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

This is the nub of it, Senator Lundy, and you know that. You want these independent contractors to be subject to the industrial relations regime when, in fact, it is a separate commercial arrangement and that should be noted and acknowledged. Minister Andrews put it this way during his second reading speech. I am going to note it for the senators on the other side and, indeed, for members of the public. He said:

State deeming laws have become so absurd that they can result in completely arbitrary distinctions—an independent contractor who drives a bus can be deemed an employee, while a taxi driver is not; or a person who packages goods under a contract for services is deemed to be an employee if they do so at their home, but not if they do so on business premises; a blind installer is deemed to be an employee but a plumber is not.

The existing regulation of independent contracting across many of the states is a regulation of entrepreneurship. It is job destroying.

Minister Andrews is correct. The approach that Labor is taking to this bill is job destroying. As I said earlier, what we are trying to build in Australia is a spirit of entrepreneurship, a spirit of enterprise. I would like to see Australia leading the world in providing the foundation for the growth in enterprise, the growth in entrepreneurs. It is something of which we, as a country, can be proud. As a member of the government, I am certainly proud of the efforts to make that happen.

Senator Siewert also made a number of comments about the workplace relations legislation amendments in terms of them being thrown into the Senate and that she had little notice. I want to remind Senator Siewert and other senators opposite and elsewhere that this was based on a government announcement on 13 November this year.

Kate Lundy (ACT, Australian Labor Party, Shadow Minister for Sport and Recreation) Share this | Link to this | Hansard source

A press release.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

It was set out in a press release by Minister Andrews in which he made the objectives of those amendments very clear to all and sundry. That is what happened. I will tell you what they related to. They addressed unintended consequences arising from the operation of the act since it came in on 27 March and introduced protections for redundancy entitlements and new provisions dealing with the standing down of employees. That is set out; it is on the public record and it has been for several weeks now.

Yes, you oppose many of the provisions that were announced, and that is your right and entitlement—we live in a democracy—but I think those particular amendments are actually very sensible. Do you know why that is? It is because we have had feedback from the community with respect to improving the bill. We have a concept of continual improvement in our government—Senator Marshall has a wry smile on his face, but that is exactly right—and we have listened to the community, particularly to small business.

I want to acknowledge and support Minister Andrews and his efforts with respect to record keeping requirements. This is one of the amendments before the Senate and which was announced several weeks ago. I want to thank those small business operators that contacted me in my role as deputy chair of the Prime Minister’s workplace relations task force and, indeed, as a member of the Senate Standing Committee on Employment, Workplace Relations and Education.

I want to thank the Tasmanian Chamber of Commerce and Industry for their feedback on the legislation, particularly for expressing their concern about the record keeping requirements. I also want to thank the Tasmanian Farmers and Graziers Association and their members, the Master Builders Association and their members, the Small Business Council of Tasmania and many others for expressing their views. It was not only those organisations but also small and microbusiness operators in and around Tasmania that expressed their views. And guess what? Those views were acknowledged, they were listened to and they were acted upon. This is democracy in action, and it is continuous improvement in action. This legislation will remove significant administrative burdens for those small business operators, and regulatory arrangements will be improved. There will still be some record keeping requirements, but essentially we have lifted the red tape so that small business can get on and do the job that they want to do.

The other provisions relate to redundancy, providing protections for workers and, in my view, an improvement of the status quo. There are provisions relating to stand-downs and the operation of the Australian Fair Pay and Conditions Standard. The details are set out in the legislation.

Finally, I want to wrap up by saying that this legislation does not override the protections for owner-drivers in New South Wales and Victoria. The government believes that protections applying to owner-drivers in those states should not be disturbed at this stage, but there will be a review. The minister has announced that there will be a review of owner-driver arrangements. That will be undertaken with a view to achieving national consistency, if possible. I hope that that does happen; I think it would be a good thing. The review will begin next year, and I strongly support it. I have supported it both privately and publicly, and I think it would be better for all of us across this country to have a national approach to this matter. All in all, I believe this is good legislation. It will underpin the importance of enterprise and entrepreneurship in this country, and it will provide further encouragement to that—which is exactly what the Howard government is all about. (Time expired)

John Hogg (Queensland, Deputy-President) Share this | Link to this | Hansard source

It is good to follow Senator Barnett, because I think that Senator Barnett epitomises the lack of intellectual rigour that is applied to this debate by some senators on the other side. Certainly the Labor Party is not against people who are genuine independent contractors. That should be clearly and firmly on the record, if it has not been said a thousand times already. Clearly, we support those people who are genuine independent contractors. However, when the government stoops, as it has, to trying to bring down sham provisions which will take away basic and fundamental working rights of those who are genuine employees in the workforce, and tries to dress them up as independent contractors, then we are rightfully opposed.

I am someone who has had 30 years ongoing experience in the trade union movement—for which I make no apology whatsoever—and I am still a serving official in an honorary capacity in my union. I make no apologies for the stance that I take on this legislation. The first thing that I will refer to is the second reading speech of the Minister for Employment and Workplace Relations. If you have got to start somewhere to see where the devil in this lies, look at the second reading speech. I did not have to go too far. As a matter of fact, I did not even go beyond the first paragraph, where I read:

I remind the House that everyone’s life opportunities are diminished by restrictions on the freedom to work.

Over the past 25 years Australia has been witnessing one of the most important, yet least remarked upon, shifts in the history of our labour market—the rise of the independent contractor.

What an absolute pack of nonsense that is. To start off with, from my experience in the trade union movement over a long period of time, as a full-time official and honorary official, I have seen the push over a long period of time for people to be shifted from a genuine employee status into an independent contract status. Of course, it has not been a genuine shift that has taken place; it has been forced upon the workforce, in some instances by the employers and in some instances by governments, where governments have had that opportunity. However, it should be quite clear that it has not been the option, for people who genuinely believe in a fair go, that being an independent contractor gives them the necessary freedom to work and freedom from restrictions that this government claim.

There has clearly been an orchestrated campaign over at least the 25 years—and even longer in my living memory as an official of a trade union—that the minister referred to in his second reading speech. Why was that so? It was basically to avoid basic award provisions. It was one way of trying to circumvent the basic rights of individuals in the workplace. The award provisions that were fought for and hard won over the last 100 years emerged not only because of the view of the trade union movement or the view of the employers but also as a result of the industrial relations system that was in place. But people wanted to destroy the industrial relations system and get around the reasonable conditions and reasonable awards that had formed over that long period of time—things that had been won, such as a minimum guaranteed wage, minimum and maximum hours of employment, overtime, meal breaks, rest pauses, paid annual leave, sick leave and the like.

I have vivid memories of my days as a full-time union official, seeing employers trying to convince people that they should no longer be employees and they should go out and work independently, call themselves contractors, and thereby overcome the obligations that the employer had to those employees. It was really about getting the work done at a cut-price rate, in spite of what Senator Barnett and others from the other side have said. It was about the lowering of standards and conditions for the working class of Australia. It was not about better or greater reward for effort, as was implied in the minister’s second reading speech. That is just the jargon that one would expect to see this government dish up—and which it has dished up in not only this second reading speech but also others that I have seen accompanying similar bills before this parliament.

The movement to independent contracting certainly was not about removing restrictions on the freedom to work; it was really cheating by another name. That is the best I can call it and is the best I have ever called it. It was not about security of employment; it was about insecurity of employment. It was about shifting the responsibility from the employer to the employee. But it was also not just about shifting responsibility but also about cost shifting from the employer to the employee in areas such as superannuation, workers compensation and the like.

It was done under the guise of appealing to the egos of some workers in the community by falsely convincing them that, by being so-called independent contractors, they would be in a class above the rest. In other words: when all else fails, appeal to people’s egos. That happened in many instances. I am not talking about those people who are the genuine contractors—let us get that quite clear. I am talking about people who were being exploited and were being used as a means of shifting the cost and shifting the responsibility from the employer to the employee. As I said, I have first-hand knowledge of it.

It was really about appealing to the vanity of a class of people who really were nothing more or nothing less than employees and who deserved to be treated in no way other than that. It was about appealing to their vanity—saying that they would in some way be different by calling themselves independent contractors—so these people might see themselves as being in a class above the rest of the working class. It did not involve a different form of work. It did not involve a different class of work. It was not about, as the minister referred to in his second reading speech, choice and flexibility. Neither of those things came into it. The only flexibility that was obtained out of this was the flexibility of the employees themselves.

This is about the nature of the work being performed and the relationship the entity offering the work has with the worker. That is what this bill really is about, and that is what industrial relations really is about. It is not about flexibility; it is not about choice. It is about the relationship. That is the one thing that is glossed over—or, if not glossed over, totally missed—by this piece of legislation. The nonsense that people will be more productive and more flexible and will offer a greater productivity output is not sustained by the arguments from the other side. Work is an exchange of one’s own possession of skill and effort in exchange for monetary reward. It is not about providing some with the opportunity to opt out of the award system or simply the basic protection that is offered by the award system.

The second reading speech, in my view, shows the ideological fixation of the government in trying to destabilise the working conditions established over the last 100 years and to debase unions—unions that are unions of employees and unions of employers—who so diligently over a long period of time established the framework that was there and which has now been destroyed by Work Choices, with a second attempt through the piece of legislation before us today. What had been established over that last 100 years sought only to improve the lifestyle of people. That was something that a number of employers could not stomach. Of course, there were those on the employer side who were very good indeed and saw the merits of what had been achieved during that period of time.

It is worthwhile to look at the views that were expressed by my colleague Senator Marshall in the opposition senators’ report in the former Senate Employment, Workplace Relations and Education Legislation Committee’s report of August 2006. Senator Marshall, in that report, debunked some of the criticisms that have been raised by the other side of Labor’s view on this particular piece of legislation. I want to refer to a couple of brief snippets from that report. At page 12, the report, under the heading ‘Swelling the ranks of contractors’, states:

The basic policy aim of the Independent Contractors Bill is to turn as many employees as possible into contractors.

I have no doubt about that at all. Whilst it is not specifically stated in the legislation, that is the undercurrent of the legislation, and that is why I addressed the opening part of the minister’s second reading speech.

This is not just an emerging trend, or a trend that has gone unnoticed and not commented on by either the trade union movement or others over the last 25 years; it has been a deliberate plan to get people out of the award system. The report went on further, at page 12, to state:

The committee grappled with the problems of turning employees into contractors in questions to a number of witnesses at its hearings. Both Labor and ACTU policy recognise the importance of contract employment as a necessary component of the workforce and enterprise arrangements.

That is clearly out there in the marketplace for everyone to see. It is clearly on the Hansard record and on the record of this report that Labor accept the importance of contract employment as a necessary component of the workforce and enterprise agreements. The report goes on:

Contractors work across all sectors of the economy. They are a diverse category of workers. The concern of Opposition senators on the committee has been for that segment of the contractor workforce which is made up of de facto employees, and designated as contractors for the convenience and financial advantage of employers.

That is a genuine concern. The government’s claim to get around the sham arrangements that can be put in place under this legislation does not hold true. The report goes on, at page 13, under ‘Common law protection of sub-contractors’:

A high proportion of sub-contractors are employees for all intents and purposes. They work exclusively for a single firm in continuous engagement. Opposition senators reject the notion that this bill creates more certainty for sub-contractors who continue to work as de facto employees, without the entitlements of employees. The committee received strong evidence of the inadequacy—some would argue the irrelevancy—of provisions in the bill which purport to protect contractors from sham arrangements; that is, disguised employment relationships.

If a person walks like an employee, talks like an employee and acts like an employee, the chances are they are an employee. That is really the nub of this. A lot of these people—not all contractors but a number of these people—to all intents and purposes are employees. They are nothing more and nothing less than that. They take on all the attributes, all the functions, all the roles, of employees, and yet the government are trying to get around that by saying that these people no longer should be called employees and we should appeal to the entrepreneurship of these people. They can still be entrepreneurial and be an employee. There is no harm in being entrepreneurial and being an employee and getting ahead and being rewarded for your efforts. There is nothing wrong with that whatsoever. But having to go down the path of calling them independent contractors just does not gel at all.

How confused are the government on this? One only needs to read the explanatory memorandum, the other source that I generally turn to. At page 3 on the explanatory memorandum to the bill, the government address the issue of who is an independent contractor:

An ‘independent contractor’ is a person who contracts to perform services for others without having the legal status of an employee.

Isn’t that bright and intelligent! The explanatory memorandum goes on:

The term is generally used to refer to a person who is engaged by a principal, rather than an employer, on a labour only contract.

None of this gets to the heart of what really is an independent contractor or what is an employee. I note in the report that that debate was sought but it did not get very far. The explanatory memorandum goes on:

Under such a contract, the principal pays the independent contractor a one-off flat rate.

So what? The fact that you pay someone a flat rate does not make them an independent contractor. It goes on:

There are generally no legislatively prescribed minimum entitlements or other employee-style benefits and the independent contractor is responsible for a number of aspects of the relationship that would usually be the responsibility of an employer (for instance, remitting income tax to the Australian Tax Office and contributing to a superannuation fund).

That is right. That attempt to explain what an independent contractor is says nothing at all. It talks about a principal. When I go to the legislation and try to find out what a principal is, there is no definition, none whatsoever. This is just a ruse on the part of the government. They are just using jargon to cover their own tracks. All that this will do out there in the workplace is lead to confusion.

I read somewhere in the material that was put to me that the Australian Taxation Office have a test whereby if a person earns 80 per cent of their income from one source then they are taxed as an employee. Here, though, with the attempts the government are making to create independent contractors, we will end up with a pineapple being the answer. In circumstances where a person is an independent contractor under this bill and earns more than 80 per cent of their income with the same employer, according to the bill they will be an independent contractor but, as I understand it, according to the Australian Taxation Office they will be an employee. So these people will be even more confused about their own state.

As I say, Labor is not opposed to independent contractors. I cannot say that often enough. There is a role for them, there is a place for them, but creating a sham category of people out there in the workplace and leading them down a path where they have unrealistic expectations of their own role in the work relationship is quite wrong indeed. This bill is going to add a layer of complexity that is not needed and will only serve to cost individual workers in the hip pocket in the longer term.

I am disposed to say that the ideas put forward in this bill should be sent to the scrap heap. The government should relook at the bill and, if they want to come back and do something genuine for genuine independent contractors, by all means they should do so. This bill is not about the dignity of the individual, it is not about security of employment, it is not about choice and it is not about flexibility for the worker. It really is about the exploitation of these people, a class of people that deserve their basic entitlements protected under the laws of Australia. Going down the path of trying to convince some people that they are something that they are not is quite wrong indeed. The bill needs to be defeated. If the government want to bring back some realistic conditions for independent contractors, they should do so at a later date.

Trish Crossin (NT, Australian Labor Party) Share this | Link to this | Hansard source

I rise this morning to provide my contribution to the debate on the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. What we have before us here in this parliament again this week is legislation that is most unfair, unreasonable and a further attack on and abuse of the rights of workers in this country. This legislation will negatively impact on workers, including outworkers, owner-drivers outside of New South Wales and Victoria—and I will speak about the Northern Territory in a minute—and other contractors deemed by relevant state and territory legislation to be employees.

The bills introduce a layer of additional complexity to an already complex industrial relations system. They override all existing provisions contained in state industrial legislation which deem certain categories of independent contractors to be employees and provisions which grant employee related entitlements to independent contractors. This legislation will mean that independent contractors can no longer access state unfair contract laws. It will override, in fact, the state unfair contracts legislation and will water down protections for consumers and small business. This legislation does little to protect outworkers, without the proper application of the state based outworker legislation. As drafted, the legislation will have the effect of significantly weakening any outworker entitlements.

I want to mention three key points of this legislation that have been highlighted not only in discussions by my colleagues previously but also by our Parliamentary Library, in the Bills Digest that they produce. In reading that, I notice that they have summarised this legislation pretty well. The Bills Digest says:

This legislation complicates an area of law unnecessarily. The preservation of State laws in some areas and in some States, reliance on the common law test of employee/independent contractor and the introduction of very complex transitional provisions, which will last for three years, will compromise the hope that this legislation will cut through red tape for business.

Another key area of this legislation is that it provides a costly system of redress for small business and for workers. As mentioned in the contribution from my colleague Senator Hogg, it is not just the impact on employees and workers that we are going to see with this legislation; I have not heard too many people talk about the cost that this will also incur on small business. The Bills Digest says:

While the Bills contain protections to prevent unfair contracts and sham arrangements, they only provide the remote option of taking an employer/contractee before the Federal Magistrates Court or the Federal Court, both costly jurisdictions and therefore unlikely to be available to the majority of workers who these Bills should be protecting.

The legislation leaves open the opportunity to significantly expand its scope by a heavy reliance on regulation making. The legislation confers a very broad law-making power upon the executive government, including provisions which will enable the executive to make, for example, regulations capable of overriding states’ laws, as well as changing this proposed law itself.

I think the central principle, though, that underpins both of these bills is that independent contracting relationships should be recognised and supported and that the appropriate mechanism for regulation is commercial law, not industrial law. We do not agree with that. Estimates vary as to the total number of independent contractors operating in Australian workplaces. The Productivity Commission estimates from the ABS forms of employment survey data that the total number of independent contractors was 787,600 in 2004. That is about 8.2 per cent of all employed persons. It is down from the 1998 figure of 843,900, or 10.1 per cent of all employed persons.

It is interesting to note that on 9 October 2006, in the Financial Review, the Independent Contractors Association and the Australian Chamber of Commerce and Industry, ACCI, effectively said that unless the government makes changes to this legislation it ought to be dropped. But they were not saying it in the same context that my colleagues Senator Hogg and Senator Marshall have been talking about. There is one problem here: ICA and ACCI want the bills to go even further. They want the bills to be even more extreme or to be dropped. I agree with my colleagues that these bills should be scrapped, but not for the reasons that ICA and ACCI gave.

There is clearly dissent among government ranks and dissent in the industry about the effectiveness of the government’s independent contractors legislation. We opposed it in the House and we intend to oppose it now in the Senate. The government may well assert that the Independent Contractors Bill is intended to protect independent contractors, but, like all other legislation coming from this government, it does nothing to protect any worker in this country—in fact, far from it. This legislation adds to an already massively complex workplace relations system. It makes life perhaps a bit more complicated for employers, who have to do more administration, but it makes life, pay and conditions far more precarious for workers across a whole range of industries.

We know that this legislation was shunted off to the Senate Standing Committee on Employment, Workplace Relations and Education. Labor senators, not surprisingly, have produced a dissenting report for that committee. My colleagues who produced that dissenting report 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 we have seen that; Work Choices encourages and, in fact, pushes workers onto AWAs—

and the Independent Contractors Bill is intended to encourage the latter development.

So, if you are not on an AWA in this country, you will be pushed to become an independent contractor. Furthermore, my colleagues went on to say:

Evidence was given that the protection of contractors through penalties against sham contracts would be largely ineffective. Not only are they a doubtful deterrent, but even if a firm or a principal contractor is found to be in breach of the law, it would be of small comfort to an aggrieved contractor.

              …              …              …

Even if the legal case of an individual contractor forced to work for minimal remuneration is taken up, through legal aid being available, the consequences for the individual amount to a pyrrhic victory. A case can be won, and a contracting principal penalised, but there is no guarantee for the aggrieved contractor of the same job at a decent contract price. The contract can be terminated. Nor will a judgement of a court in a particular circumstance necessarily have a deterrent effect on sham contracts generally.

I note that Senator Murray, in his eminent wisdom in these matters—as he always provides fine contributions—in his dissenting report said:

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

He went on to say:

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

With this bill it will seem even easier to hire Australians as contractors and not employees, not just because of the cost savings but because it will save them having to cope with the complexity and the flaws in the new industrial relations system. It abrogates, I believe, employers’ rights to comply with superannuation, occupational health and safety, long service leave and a whole raft of entitlements that employees in this country should be entitled to.

In introducing these so-called independent contractors laws, the Prime Minister and Minister Kevin Andrews have two messages for Australian workers. One message is: under this government’s industrial relations scheme, there is no genuine choice for people. The choice is: ‘Either cop this or cop the door and take a walk. Take an AWA or don’t take a job. Either become an independent contractor or go and find a job somewhere else.’ The other message for Australian workers is: you are on your own; you are an island, by yourself; you are out there battling an industrial relations world in which you are left to your own devices in order to survive. Not only that but also: we are going to push you out to sea in a rowboat and take all the paddles from you, so you will be just floating around out there and doing the best you can. Certainly, as a worker in this country you would not want to rely on this government to support you in your endeavour to seek fairness and your rights when it comes to the workplace.

These laws amount to nothing more than the Howard government’s latest attempt to slash wages and strip away the conditions of working Australians. We support Australians who genuinely want to start their own business and, as Senator Hogg said, we support independent contractors. But the government is trying to create the impression that these laws are somehow beneficial for small business and contractors. In fact, these laws will do precisely the opposite. We have no problem with people who want the freedom and flexibility to operate as an independent contractor. This gives me an opportunity to refer to people like my colleague Senator Sterle who, in fact, has spent many months and years on the road as an independent contractor, carting stuff to and from Darwin. In our communities we sometimes pay little homage and give little respect to the people who spend many long, tedious hours on the roads, moving our goods in this country from one place to another.

People who want to operate as an independent contractor have the freedom and flexibility to do that, but we are concerned about the government using this as an excuse to strip away protections for vulnerable workers and to force employees of a business into a position where they must become independent contractors. As a result of these laws, genuine employees will be pushed out of the employer-employee relationship and into sham independent contracting arrangements, reducing their entitlements, conditions and protections, and placing additional burdens on them.

If you are already in a bona fide contracting relationship, this bill does nothing to support you, encourage you or protect you. When introducing the bill, the minister said that Australia’s continuing prosperity requires a system which encourages creativity and rewards initiative. However there is nothing in this bill which does encourage or reward Australians who choose to be and are bona fide independent contractors. Instead, if you are a principal with bona fide contractors, you should be careful because you are now threatened with $33,000 fines if you cannot prove the arrangements are genuine. And, by the way, these fines will apply as soon as the bill passes. The minister has sold out on genuine contracting arrangements by imposing the threat of these high fines and leaving genuine contractors unsure of their status.

I turn to the unfair contracts element of the legislation. Not content with removing protections for vulnerable workers, the government has done away with unfair state contract laws for all contractors. These bills override state based employee deeming provisions and unfair contracts legislation which protect not just employees but small businesses and contractors. Under this bill, contractors have to take their chances with the government’s new unfair contracts test, which has been removed from the Workplace Relations Act and placed in this bill. Firstly, under this law, there is no ability for employer representatives or unions to apply for a review of a contract on the basis that it is unfair. Instead of going to the state or federal industrial relations commissions, workers now have to go to the Federal Magistrates Court. This is likely to raise difficulties for employees, including, of course, the expense, the length and complexity of arguments and the exposure to a costs order.

The test used in the bill to determine whether a contractor can get relief is that the contract may be unfair or harsh. In doing so, the government wants the courts to look at, amongst other things, the relative strengths of the bargaining parties and any person acting on their behalf, and whether undue influence or pressure has been used. However, the courts must now see whether the rates paid to a worker who claims their contract is unfair are commensurate with rates paid to other workers performing similar work in the industry. This means that, where all, most or some of the workers in an industry are getting low or unfair rates, according to the minister the courts should not find that this is unfair.

So, even if you can demonstrate that a contract is unfair, the courts have powers only to set aside or vary it, not to order compensation to you or your workmates for your losses in the past. Lastly, even if you are successful and you get orders to vary or set aside the contract, you need to make separate orders to enforce the first orders. I am not sure how this convoluted process is helping employees or, for that matter, their bosses in a small business area. As a result of this law, burdens will now be placed on workers which normally fall on the employer. We should not be too surprised about that under this government. For example, the burdens of superannuation and workers compensation will become the responsibility of the employee, now deemed to be the new independent contractor under these laws.

These laws will hurt ordinary Australians like clothing outworkers, drivers, cleaners and electricians. These laws tear away the protections and entitlements for Australians who are in an inferior bargaining position. If you are a worker or a small business wanting a remedy for any unfair or sham contract arrangement then you are going to have to go through the costly court process—an option not realistically open to most people that this legislation will affect.

I just want to have a quick word about the impact of this in relation to the Northern Territory, where we have a majority of owner-drivers. In relation to some of the amendments that were put up yesterday by the government, the government has promoted their new unfair contracts provisions as an additional protection for owner-drivers. However, amendment (6) that was put up by the government guts any protection for owner-drivers, especially in states other than New South Wales and Victoria. So this will have a significant impact, of course, in the Northern Territory. This amendment ensures that the only things that can be reviewed by a court are the black-and-white terms of the contract and other matters at the time the contract was made. This has devastating consequences for owner-drivers. Here is just one example of this: in reviewing the fairness of a contract over a 10-year period, you will not be able to take into account a spike in the cost of fuel in years 7 and 8. That makes the remuneration structure unfair. You will only be able to consider if the fuel component of the remuneration structure was fair at the commencement of the contract. The amendments put up yesterday do nothing to protect the fairness of a contract and will allow a situation to occur where drivers are operating below cost recovery. That has a significant impact on the safe and sustainable operation of a small business and it is without remedy.

The new unfair contracts provisions are not an additional protection, as promoted by the government. Rather, they are the creation of a situation where drivers will be working below cost recovery and where they are unable to seek effective remedy because of this amendment. The solution to this is the proposed amendments by the Democrats. We believe they will ensure the proper capacity for a review of contracts that may be considered unfair.

Finally, I just want to say that there was an amendment moved by Mr Stephen Smith, our shadow minister in the House of Representatives, in relation to this bill. I commend that second reading amendment to people. But I certainly note that this bill follows on from the government’s extreme industrial relations changes which were and still are a massive attack on living standards and living conditions. They remove the rights, entitlements and conditions of Australian employees. What this bill does, essentially, is push people into becoming independent contractors in the same way that this government has tried to force and push employees in the workplace onto Australian workplace agreements. This bill introduces more complexity and confusion into Australia’s workplace relations laws and provides a system that, as I said at the outset, is unfair and unreasonable. (Time expired)

Dana Wortley (SA, Australian Labor Party) Share this | Link to this | Hansard source

I rise to speak in opposition to the Independent Contractors Bill 2006 and the related bill, the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006. These are bills that introduce even more complexity and confusion into Australia’s workplace laws. Labor will continue to stand up for workers and their families against this onslaught of anti-worker legislation constructed by the Howard government. This is legislation that is intent on destroying the Australian tradition of a fair go for all.

This is legislation that will ultimately have a negative impact on the day-to-day lives of thousands of Australian workers and result in slashing the wages and stripping away the conditions of working Australians. This legislation ignores the structural disadvantage with which a worker is encumbered when they have no choice but to be engaged as an independent contractor when in fact the relationship should be that of employer-employee. The proposed changes that will result from the passing of the Independent Contractors Bill 2006 created by this government, with perhaps just a little help from their friends, sends a very clear and distinct message to these workers. That message is: ‘You are on your own.’

The intention of this bill is to turn natural employees into unnatural contractors, placing considerable stress and hardship on tens of thousands of workers and their families. There are genuine independent contractors who willingly go into independent contracting, in many cases for entrepreneurial reasons. I repeat what many of my Labor colleagues have already said: we are not opposed to independent contractors. However, with the passing of this legislation, we are likely to see a significant increase in a different type of independent contractor, because this bill paves the way for genuine employees to be pushed out of a genuine employer-employee relationship and be set up effectively as independent contractors, without any say or choice and through no fault of their own.

What will this mean for workers whose status changes from employee to independent contractor? It will reduce or remove their conditions and entitlements, award wages, holiday pay and sick pay. It will place the burden on them for workers compensation arrangements, taxation arrangements and superannuation arrangements—arrangements which until now have been the responsibility of the employer.

The bills before us today cover five key areas: state laws with employee deeming provisions; state transport owner-driver laws; state unfair contracts jurisdiction; outworkers in the textile, clothing footwear industry; and the sham arrangements. Currently, at a state level, protection exists for contractors who are effectively in a dependent contract position. This legislation removes or reduces that protection for dependent contractors because it overrides provisions in state legislation—provisions which act as a protection for the benefit of consumers, contractors and small business.

In addressing state transport owner-driver laws, I acknowledge the valuable insight and contributions made by my Labor colleagues senators Sterle, Hutchins and Conroy, particularly regarding the plight of owner-drivers. Over recent months I have met with many owner-drivers and had discussions with them about the impact that this legislation will have on their working life, and the burden it will create for them and their families.

While this bill now provides for an exemption of existing New South Wales and Victorian owner-driver legislation, it has the effect of preventing other states from introducing legislation to protect dependent contractors. For owner-drivers and their families in New South Wales and Victoria, the exemption means that they are able to maintain a critical system of safe and sustainable rates, without which driver and public safety would be threatened. It also protects the owner-driver small business model, which provides security to these unique small business operations, along with industry stability. But the question is: how long will this remain the position?

Will the review proposed for 2007 lead to the welcome inclusion of the other states and territories benefiting from these exemptions or will this government buckle under the pressure from its friends in high places—and not only continue to rule out the other states and territories from claiming exemption from the provision of the bill but also remove New South Wales and Victorian legislation from being exempt? Through these bills, this government has provided even more uncertainty for thousands of workers and their families across Australia and a fear that there will not be a secure future for owner-drivers in the other states or for those workers forced into the position of being independent contractors—those workers who lose their employee-employer relationship and its associated benefits.

One does not have to look far to see who is in the shadows behind the introduction of such antiworker legislation. On Monday I received an email from Independent Contractors of Australia also known as ICA, an organisation with only a relatively small number of members who should consider a name change to better reflect their membership and what they are on about. It is probably fair to say that it is not those workers who will be pushed from an employee-employer relationship to a sham independent contractor arrangement. The email said: ‘ICA has informed the government that we oppose the bill in its current form. If two amendments are made, we will support the bill.’

The first amendment the ICA wants is that ‘any exclusion of more independent contractors from the act should be made by legislative change only’. One may well ask: why would Independent Contractors of Australia want such an amendment? In Western Australia and the Australia Capital Territory, industry support has been demonstrated throughout the consultation process for the development and introduction of owner-driver legislation that will seek to address the vulnerabilities recognised as being unique in this part of the transport industry. The bill as presently drafted will override the operation of those pending state laws as well as those in Queensland, where there are currently legislative provisions utilised by owner-drivers.

The minister in his announcement in May identified the vulnerabilities unique to owner-drivers as a reason to maintain this legislation for owner-drivers in New South Wales and Victoria. These vulnerabilities are not limited by borders and are the same vulnerabilities experienced by owner-drivers in all states, including in my own state of South Australia. With the passing of this legislation, owner-drivers could be forced to work longer hours or maybe even sacrifice the maintenance of their vehicles to make payments on their loans. They could be forced to choose between losing their business and putting themselves at risk on the road. In this scenario everyone is a loser. At the very least, these exemptions should be expanded to include all of the states and territories.

The bill as it currently stands confers a broad regulation-making power which makes express reference to the exemption provisions. If the relevant minister in this government or a future government gets some sense and decides to broaden the exemptions to include those in the other states and territories, it could be done simply through regulation. However, the ICA does not want this to be the case and is actively lobbying the government to make this process more difficult.

The second amendment being sought by the ICA reads: ‘Only a government authority should conduct a sham contract prosecution.’ Why would they want this? Owner-drivers are single-vehicle operations, the vast majority of which perform work exclusively for a single-transport operator, a principal contractor. Owner-drivers are often highly dependent upon those with whom they contract. The current legislation in New South Wales and Victoria allows for a degree of basic regulatory protection to ensure the owner-driver small business model operates in an economically viable and safe way.

The Transport Workers Union has represented owner-drivers in collective negotiations since the 1920s. The New South Wales experience is that owner-drivers simply do not bargain or seek representation other than through their union. The lesson from this is that preventing union representation of small business in the transport industry will ensure that big business gets its way in cutting costs through exploiting its superior bargaining power. As part of its representation, the TWU is also active in ensuring that the relationship accurately reflects that which has been entered into. Owner-drivers are not employee drivers and vice-versa. By excluding the union, the capacity to conduct and the inability to investigate a sham prosecution will effectively deny owner-drivers effective and established representation.

So, in reality, the idea behind the Independent Contractors of Australia is to prevent unions from representing their members. We will now have to wait and see how much influence the ICA has on the Howard government. This government’s continuous attack on the working conditions and rights of workers is an attack on the security of working families and the values of Australian society. It is an attack on the conditions and job security that we should be protecting for our children and for future generations. Labor supports those who genuinely set out to start their own business. The Howard government is out there trying to create an impression that these laws are somehow beneficial for small business and contractors, but the reality is that they are not.

These laws will result in genuine employees being forced out of the employee-employer relationship and into independent contracting arrangements, reducing their entitlements, conditions and protections and pushing additional burdens onto them. They will remove protections from thousands of independent contractors who are in a dependent contract position and, as a consequence, in an unequal bargaining position. They will override state unfair contract provisions, which provide protection to employees, contractors and small business. They will allow employees to be treated as independent contractors in a sham way through ineffective, weak anti-sham provisions. And, if you are a worker or a small business seeking a remedy for an unfair or sham contract arrangement, you will have to go through the costly court process—an option beyond the reach of most of the people this legislation will affect.

The bills before us today will ensure that thousands of Australians will have no choice when it comes to their status as workers. That is the reality of this legislation—another Howard government no-choice piece of legislation forced onto Australian workers with far-reaching, ongoing consequences for them and for their families.

Joe Ludwig (Queensland, Australian Labor Party, Manager of Opposition Business in the Senate) Share this | Link to this | Hansard source

I rise to speak on the Independent Contractors Bill 2006. It really is the latest chapter in the Howard government’s extreme industrial relations reform. It is, sadly, the latest chapter in the government’s abuse of the Senate as well in its pursuit of its ideological agenda, since the Prime Minister promised to use the government’s majority ‘carefully and not provocatively’. They are the words he used, but, when you look at this legislation, and the extraordinary, late supplementary explanatory memorandum to the bill and the original supplementary memorandum, you really do wonder whether he said those words ‘carefully and not provocatively’ with tongue in cheek.

It is the latest chapter in this government’s attempt to ride roughshod over the states and territories since getting the green light from the High Court. Ever since Senator Minchin himself let the cat out of the bag in his secret speech to the HR Nicholls Society, there has been little doubt that the Howard government was not content with the reforms in its so-called Work Choices package. The ink had not even dried on this bill and there was Senator Minchin speculating about his wish list for future reform in this area.

In that sense these bills are, unfortunately, inevitable. With our ideologically driven government having gotten their hands on the honey pot in the form of control of both houses of parliament—and I might remind Senator Vanstone that in fact you do have control of this Senate—they could not resist the urge to push more and more of their extreme agenda through. And they are pushing so far that the rest of Middle Australia—working Australians, including many who voted for the government—are watching with amazement as this band of warriors runs off into the distance on some ideological crusade. The government just keeps on pushing, not even bothering to turn around to see that they have left the rest of the country far behind.

You can see this in the Prime Minister’s reaction to the results of last Saturday’s Victorian state election. Despite the Labor Premier being returned with a strong majority, having campaigned strongly on the impact that Work Choices is having on family life, Mr Howard is in complete denial about the impact his reforms had on that election result. The Prime Minister did not so much as utter the words ‘industrial relations’ during the last federal election campaign, but he then turned around to claim a mandate for some of the most extreme, regressive and, when you look at this independent contractors legislation I think you can also add, experimental reforms in this nation’s history. Talk about self-delusion in truth!

This bill shows how out of touch this government is becoming. It has shown no vision for the future of Australia—no vision for how to secure our future prosperity to build the wealth of tomorrow, only a vision for squandering the wealth of today. Just like the Work Choices legislation, this bill sends a very clear message to Australian workers: you are on your own now. Forget about looking after your workmate; forget about working together in the workplace; cooperation under this government is a thing of the past. If you want to get ahead and provide for your family, you have to squeeze every last dollar out of your boss—that is the unfortunate message that this sends.

It is sending the wrong message to business as well. The message it is sending to business is: if you want to stay afloat, drive down the wages bill; if you want your employees to work harder, add hours to their work, rather than taking a cooperative approach that drives productivity up. That is what we know will happen if you take a cooperative approach in the workplace. Productivity will be driven up, taking wages and profits with it.

In introducing this bill the government argued that it is built on the principle that genuine independent contracting relationships should be governed by commercial not industrial law. If the Independent Contractors Bill was genuinely about independent contracting and not just the latest instalment in this government’s extreme industrial relations reform, then it would have come out of the Treasurer’s mouth, in truth, and not that of Mr Andrews. But we know that it is not about that at all. When the minister in his second reading speech says:

... everyone’s life opportunities are diminished by restrictions on the freedom to work—

I could not agree more, because it is about this government. After all, that is why I voted against the so-called Work Choices legislation, which restricts the right of employees to bargain collectively and enables employers to offer individual contracts on a take-it-or-leave-it basis. There is no proper freedom and no dignity in that. For the government to try to argue that this latest assault on the employment conditions of Middle Australia is about ‘respecting’ and ‘protecting’ the Australians who make the ‘choice’ to work for themselves, they can only have had a Hobson’s choice in mind when they said that. Like Mr Hobson, Mr John Howard offers Australian workers a very simple choice: under Work Choices sign the AWA or there is no job; and under this bill become an independent contractor or there is no job. That is the choice you are given. In truth, there is no choice in that. This is yet another excuse for stripping away the protections of vulnerable workers.

Turning to some of the specific measures in this bill, this bill will force genuine employees out of the employer-employee relationship and into some sham independent contracting arrangements. As a result they will lose all the protections that go along with being an employee, being stripped of entitlements like sick leave and annual leave, and made to administer their own superannuation, tax, and workers compensation arrangements. It makes it easier for employers to force people into these arrangements, people who do not want to be in these arrangements and people whose work does not suit that style.

The bill will do this in a number of ways. It does it by overriding employee deeming provisions contained within state and territory legislation which would otherwise see certain categories as independent contractors deemed to be employees. In New South Wales, for example, this occurs for occupations such as cleaners, painters and bricklayers. It does it also by overriding state unfair contract provisions, which otherwise provide protection to employees, contractors and small businesses. Under proposed changes these groups will lose the ability to apply for an unfair contract review through an employer organisation or their union. Talk about removing choice! Talk about driving people onto sham arrangements! Talk about ensuring that the whip will be in the boss’s hand! That is what this legislation is about.

It introduces anti-sham arrangements that are themselves a sham. Even if an employee manages to satisfy the extraordinary burden of proof placed upon them, they would probably find themselves without the protection of unfair dismissal if their employer has fewer than 100 workers. Even if they managed to get to that point, they will be given the ‘no choice’ option—take it or leave it or go. The bill weakens the protections for outworkers and diminishes their entitlements, ignoring that many outworkers had previously been awarded employee-like protections because of their particular vulnerabilities.

This bill also puts at risk existing state owner-driver laws and overrides any future owner-driver legislation from the states and territories, which many are actively considering. The government should not be overriding any of these laws. This is a government that has lost control of itself. It has managed to use its legislative fiat to override state and territory law without consulting, without ensuring that there will be a positive benefit and without using a cooperative federalist model. It is using a unitary system approach to ensure that it will drive its view through to every corner of Australia. It is a negative view, a hardline view, an extreme view, and it justifies it on the basis of the inconsistency between different states and territories. What a furphy.

What this bill relies upon to determine who is and who is not an independent contractor is a complex common law test. It is a test that is stacked in favour of the employer, otherwise we would not have had legislation agitated and argued for, and finally introduced in states and territories to address it. It is not unusual for that to happen. It happens in a range of industries. But in this area we are taking a backward step. We are going away from ensuring certainty for business and for employees and ensuring that there is a fair test. We are driving it back to the courts for an independent contractors test, which has been oft argued about and will continue to be oft argued about. In many cases it could be enough for them to simply say, ‘I believed it was a contracting arrangement,’ and it is then left to the employee to prove otherwise. The employee will not have the senior counsel or the silk on their side. They will not have the legal advice. In many instances, they will be faced with an employer who will probably not even need senior counsel or legal advice either, because the choice will again be: take it or leave it.

The problem with the government’s refusal to provide a statutory definition of ‘independent contractor’ is that it will lead to inconsistent treatment. At the moment a person earning more than 80 per cent of their income from one source is taxed as if they are an employee. So we will have the absurd situation under this legislation where Commonwealth law considers someone an independent contractor for industrial or commercial purposes but an employee for tax purposes. With the latter comes financial responsibility for withholding income tax, superannuation and workers compensation—all of which come with a significant administrative burden.

Let me talk briefly about what happened in Queensland: it provided an alternative. If the federal government were serious about protecting independent contractors, rather than overriding state and territory laws, it would actually work with the states and territories and pick up some of their models. Even if you disagree with some of their models, you can argue for a consistent principal treatment to ensure that you have consistency across the system. You can argue for your model. That is what the Commonwealth heads of agreement is about, that is what SCAG does and that is how the Attorney-General works through difficult laws. It is about arguing from a principal position. If you do not have a principal position then do not expect to win the argument.

In my home state of Queensland, the Beattie Labor government introduced section 275—amending the Queensland Industrial Relations Act—which gave the Queensland Industrial Relations Commission the power to declare persons to be employees. Unlike some of the other deeming laws criticised by the government for their arbitrary listing of individual occupations in regulation, these provisions simply list matters to be considered by the commission in making a determination. Importantly, the section does so in a clear and simple manner, in stark contrast to this government’s reliance on the more complex common law test. The factors listed are:

(a)

the relative bargaining power of the class of persons;

(b)

the economic dependency of the class of persons on the contract;

(c)

the particular circumstances and needs of low-paid employees—

not that the Howard government would care—

(d)

whether the contract is designed to, or does, avoid the provisions of an industrial instrument;

(e)

whether the contract is designed to, or does, exclude the operation of the Queensland minimum wage;

(f)

the particular circumstances and needs of employees including women, persons from a non-English speaking background, young persons and outworkers;

(g)

the consequences of not making an order for the class of persons.

That list of factors is in stark contrast to the complex common law test and the indicia created under it. Those factors are not indicia that point to one or the other, as in the common law test, but a simple and reasonable list of matters that is easy for all to comprehend and that genuinely puts a stop to sham independent contracting arrangements.

The Queensland government also introduced section 276, which gave the commission the power to amend or void contracts deemed to be unfair. Similar to the previous section, this provision adds clarity to the process and actually gives practical protection to genuine independent contractors.

The Queensland government has managed to achieve in two provisions what the Howard government has failed to do in an entire act: provide genuine protection to employees from being forced into sham independent contracting arrangements and also provide genuine protection to genuine independent contractors. Independent contractors do exist and they do not want to be accused of being in a sham arrangement or argued about either; they want to continue to do their job as they always have. But what we need to make sure of is that the potential for abuse of the system that can be generated in these areas is put to bed, that it is not allowed to fester.

I remember a case—and I will leave out the name of the firm—where, depending on the times, they would directly employ drivers to drive cement trucks. If the business case for that changed, they would then sell the drivers the trucks and say, ‘You’re now an independent contractor.’ When the business case for that expired, they would say: ‘Those trucks are old. We think we might replace them. We might end your contracts. We’re not going to buy the trucks back. You’re an independent contractor—we can end the contract. We can sublet or directly employ drivers again.’ So we go back. The business case changes depending on the nature of the industry, the nature of the work and also the economics that are applied, and you will find that employers will exploit the arrangement unfairly and disingenuously.

But there is nothing in this bill to ensure that adequate protections do exist for employees and employers, and that there is fairness in the system. Otherwise there would not have been a drive for sections 275 and 276 in the Queensland legislation—but there was significant agitation for it, and the Beattie government perceived that there was a need to introduce it. The section is not often used, but it is there underpinning the system. It provides a floor on which people can rely, unlike spinning them off and saying, ‘We’re going to rip the floor from under you and let you float and see how you go.’ Some might do well, but what you are ensuring is that there will be inequities in the system and some people will do badly, some people will be exploited. But it really is the way of the Howard government to say, ‘That’s not a bad thing.’ I reject that proposition.

Labor is opposed to this bill because it is bad law and will only serve to further undermine workers in this country. In the committee stage, my colleagues will look at all amendments in the hope of improving the bill. The government have the numbers, but sometimes, as we saw in the families bill, even you lot can be embarrassed by the nature of the legislation that you are putting forward into withdrawing it. However, in the end I suspect your ideological agenda will drive this bill forward.

It is shocking that this Senate’s processes are being abused in the way the government are bringing in bills. You send them off to committees for which you set short timetables for hearings and then you do this—you bring in large amendments right at the end and say, ‘Well, some of these we may have already indicated.’ You could do this whole thing in a much smarter and much better way, but you do not want to do that; you want to drive this ideological agenda forward with these types of tactics, which you said you would not do. Well, Senator Minchin, you are doing it. You are doing it here today and you should be ashamed of yourself.

Steve Fielding (Victoria, Family First Party) Share this | Link to this | Hansard source

Family First is the true champion of workers and families. Family First is proud of the fact that we were the first party to point out that, under the government’s anti-family Work Choices bill, workers on agreements or contracts would no longer be guaranteed public holidays, meal breaks and overtime. Australian workers and their families want to feel safe and secure. Job security is a huge issue. We all know that many workers, particularly unskilled and migrant workers, are not in a strong bargaining position with their employers, and the government’s Work Choices legislation makes them even more vulnerable, which is why Family First voted against it.

Family First proudly stands up for workers and their families, and it is those workers and their families that Family First has as its top priority when considering this bill before us. But the Independent Contractors Bill 2006 is not about Work Choices; it is about giving people the option to work as independent contractors if they want. This bill is interesting because it appears that no-one wants it in its current form. It is a compromise between two sides of the debate.

Both the Independent Contractors of Australia and the Australian Chamber of Commerce and Industry do not want it unless it is amended. On the other side, the Transport Workers Union also wants amendments. In broad terms, the bill states that anyone who says they are an independent contractor is an independent contractor. The bill will override state and territory laws on independent contractors which deem many of them to be employees. The problem is these state laws are frustrating people who want to be independent contractors but are prevented from doing so. These workers want to set themselves up as small businesses subject to commercial law rather than operate as employees subject to industrial relations laws.

The bill before us therefore empowers those workers to become independent contractors—in effect, small businesses—if they choose. Family First believes this is a good thing. However, there is also the risk that employees could be made to become independent contractors against their wishes, and that is a concern to Family First. The main incentive for companies to employ independent contractors rather than employees is that employers do not have to pay the 25 per cent on-costs, such as nine per cent compulsory superannuation, along with workers compensation and payroll tax.

It has been suggested that minimum conditions could be introduced for independent contractors. But, once you start imposing minimum conditions, the person is in effect no longer an independent contractor and can no longer freely negotiate their contract with an employer. Family First supports workers becoming independent contractors if that is what they want. But Family First wants to ensure that employees are not forced to become independent contractors if they do not want to, so they are not exploited. Groups of most concern are outworkers in the textile, clothing and footwear industry as well as owner-drivers.

As always, the challenge is to get the balance right. The government has recognised that some workers would be vulnerable if they were not given extra protection, and Family First is pleased that outworkers and owner-drivers will be exempted from the legislation and protected by state laws which specify minimum pay and conditions. It is here that some industry groups disagree with the legislation. Owner-drivers often take on a very large debt to purchase their trucks, have very little room for error in making a profit and have little bargaining power with the big businesses they contract to.

The exemptions for owner-drivers are appropriate because owner-drivers do not operate on a level playing field. Their livelihoods would be threatened if they did not have in place rates for minimum cartage. Without minimum cartage, a driver can lose the value of a truck run, which affects the goodwill value of the truckie’s business. Without this exemption, big contracting firms would be in a position to force owner-drivers to accept cuts in their payments, which would run many small businesses into the ground.

We all know that workers do not have equal bargaining power with their boss. For example, owner-drivers tend to contract to one firm, and this is recognised by the governments in Victoria and New South Wales. Family First is pleased that this bill also provides for action to be taken against unfair contracts. Most independent contractors lack the resources of the contracting firm. For this reason the bill includes a reverse onus of proof, meaning that the employer must prove they are not taking advantage of an independent contractor. The court, in checking whether a contract is unfair, has to consider the relative bargaining strengths of the parties, whether there was undue pressure and, importantly, whether the contract offers less money and anything else the court thinks relevant.

Family First’s main concern is to ensure that this bill does not leave workers and their families worse off. But we also do not want to stand in the way of families starting small businesses. I also acknowledge that the government has announced a review, which will be done next year, to examine the issue of owner-drivers in Victoria and New South Wales and whether there can be nationally consistent laws in this area.

The associated Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006 includes a range of amendments to the Workplace Relations Act. It was difficult to work though the detail of these amendments in the time available as they only arrived late yesterday. These amendments are part of a political package which offers something to workers and something to employers. For example, employees will be able to cash out sick leave entitlements and will have the assurance of minimum redundancy payments. Employers will have easier record keeping compliance rules.

But Family First is concerned about the stand-down provisions in the bill and will be considering moving an amendment to take these sections out of the bill. On balance, there are enough benefits for workers and their families and for small businesses to support the bill overall.

(Quorum formed)

Ruth Webber (WA, Australian Labor Party) Share this | Link to this | Hansard source

It is no secret that the state I represent, the great state of Western Australia, is home to the most isolated city in the world—that is, of course, our capital, Perth. While WA is blessed with significant natural resources, the prosperity of our state still relies on strong transport links with the rest of the country. This is as much to aid in the export of Western Australian goods and services as well as in the importation of eastern states’ produce. Consequently, my home state relies very heavily upon the truck drivers of this nation. That is one of the reasons I oppose the changes proposed in the Independent Contractors Bill 2006 and the companion Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006.

Since the coalition gained control of this Senate following the last election, the Australian people have been witness to a series of industrial relations atrocities perpetrated by the Prime Minister and his henchmen. The union movement has done an outstanding job, in my view, to bring this debate and the consequences of the Howard government’s industrial relations changes to the fore. The Labor Party is dedicated to ripping up these laws after the next election. Perhaps that is why these bills were so very attractive to the government. How does this government respond when people rally behind workers’ rights? It is simple: they stop calling people ‘workers’ and start calling them ‘contractors’. That may sound like a cynical assessment of these bills but that seems to be what these pieces of legislation boil down to.

My Labor colleagues and I are extremely interested in bills that clarify or simplify legal process yet, despite the significant legal problems already present in defining a contractor rather than an employee, this bill does nothing to remedy such ambiguity. As has been consistently the case with the Howard government’s industrial relations changes, this legislation is heavy on ideology but light on empathy and functionality. It must be easy for government parliamentarians to lose sight of the victims they create in these bills. One of the great things about the labour movement is that we on this side of the chamber are more regularly in contact with the people whom these laws will affect. However, the good work of the Transport Workers Union in lobbying both the government and opposition parties really should mean that the government could see exactly what it was doing. The fact that the government is pressing on underscores the mean-spiritedness of the legislation and its advocates.

I would like to spend a moment discussing the role of the Transport Workers Union in defending the rights of owner-drivers, who are one of the groups most affected by these bills. My colleague Senator Sterle, from my home state of Western Australia, you, Mr Acting Deputy President Hutchins, and several other members from the New South Wales branch of the TWU first brought this issue to my attention last year. Since that time, I have been in regular contact with the TWU about the rights of owner-drivers, and the clarity and efficiency of the union has been first-rate. The union has also claimed some success throughout the course of its campaign against these changes by gaining exemptions for owner-drivers in New South Wales and Victoria. While I am delighted to see some forward progress has been made in these states, it beggars belief that the government can admit its folly in two states but then willingly apply the same appalling legislation to the rest of the country. The justification for this seems contrived to say the least. After all, the transport industry is defined by the very process of crossing state boundaries. To argue that a driver in Victoria is worse off than a driver in South Australia seems flawed. In reality, the concession is an acknowledgement from the government that this legislation is a poison pill. In that spirit, I reiterate my congratulations to the TWU for having generated such a potent degree of awareness in the community.

I know that owner-drivers in Western Australia will be feeling particularly left out in the cold by this Prime Minister. The minerals and subsequent real estate boom in WA have placed significant upward pressure on the cost of living, and this is without taking into account the already high cost of fuel. I am aware that the government will conduct a national review of legalities surrounding owner-driver rights. They seem to be hoping, yet again, that the community will infer from this that people in the states without owner-driver exemptions will eventually be granted the same rights. Unfortunately for the government, they have asked the Australian people to take them on faith far too often.

Both this legislation and the industrial relations changes that have been rammed through this place in recent times overlook the massive impact that these laws have on hardworking Australians who are simply trying to make ends meet. What makes these reforms grotesque is that people like owner-drivers have already stuck their necks out by investing in heavy duty vehicles and maintenance. These should be the pride and joy of a government with an allegedly free market agenda—people working hard with their own capital to become active players in the market economy. It seems to me, however, that this government wants free market principles in place only when a corporate entity or an ideological ally stands to benefit. Furthermore, dismantling large working populations like owner-drivers and outworkers has the added benefit of obscuring collectivism and making life harder for trade unions.

This legislation is another hallmark of Mr Howard’s ‘divide and conquer’ regime. I harbour serious concerns about the safety of our roads upon the successful passing of this legislation. Removing the basic safeguards that come with employment means that drivers will lose security of income and therefore have to work more—for less—when the work is on offer. This means more time behind the wheel, less time and money to spend on maintenance, and ultimately the creation of a class of vehicles and drivers not fit for our roads. This is not the fault of the drivers, who are acting only out of a desperate need to provide for their families. It is the obligation of a responsible government to care about community safety—but, sadly, this bill negates that duty.

I also look at this legislation as a concession due to the government’s inability to protect the transport sector from the relative giants of the retail industry. The TWU regularly encounters members who are running truck routes at a loss because of the low rates on offer from the contractors. Often the transport companies that offer such low rates of pay for service do so because of the paper-thin or loss-making margins they have agreed to with major retail players. I grant that small margins are a consequence of an efficient market; however, deliberate loss-making ventures are not.

If the Australian transport sector is being bullied into untenable and unrealistic market positions by virtue of its small size relative to the massive retail sector, then something is seriously amiss. If the ultimate consequence of this is that Australian workers are themselves running at a loss, then we have a significant problem. No matter what the government may claim, owner-drivers and outworkers are acting as employees, not as contractors. The government is of the opinion that, by labelling these employees as businesses, the Australian community will somehow accept their ill treatment as part of the dog-eat-dog world of private enterprise. My Labor colleagues and I have a far greater respect for the Australian people. Then again, we on this side of the Senate should not be surprised by deceitful legislation from this government.

The government is telling anybody who will listen that this legislation has strong protection against anti-sham contract arrangements. The irony of this legislation itself being a sham has not been lost on those of us on this side. The Prime Minister would have you believe that he is saving small business and independent operators by clarifying the confusion that existed prior to this legislation. However, this legislation serves only to further complicate the matter and does nothing to resolve it for genuine contractors and their employers.

I would like to share some of the personal experiences of the people who will potentially be affected by the passing of this legislation. I will quote from a book called The Human Toll, which the TWU put together in aid of defeating this legislation. While this example is from New South Wales, a state with some shelter from this bill due to the owner-driver exemptions, it is still a telling account of the victims-to-be of this legislation. Tony Upton is an owner-driver who has spent some 23 years in the industry and is someone who I think has great authority to speak on this legislation. He says:

The Contract Determination gives us an even playing field. Without it, drivers will just take the lowest rate to survive. Unable to turn down work, drivers would be accepting work for unsustainable rates, and the reality is people will be starved out by companies.

We have to keep the work coming in. The pressure to make repayments is too great. Drivers will accept work at any rate. Driving the prices too low to survive.

If you don’t have a safety net, then you don’t know how much you can spend on maintaining your vehicle. Without a safety net, you can’t figure out how much you’re going to earn in a week, so you take every job going, you don’t sleep, and you don’t stop. You just keep going and that’s when things get dangerous.

Without the state system we don’t have a safety net, and things will go back to the dog eat dog days.

I would urge every member of government in this place to obtain a copy of this book and read it. These are real Australians who are working hard and are, by the way, the backbone of the resources boom that we are currently enjoying. Without quality road transport drivers, the high productivity that mining companies enjoy in Australia would be lost. It seems illogical to me that the government would want to expose these people to the potential for unscrupulous treatment from faceless corporations. These employees deserve support, not condemnation.

Another account I found particularly moving was that of Eddie Purcell, a former owner-driver and subcontractor for Australia Post. His experience demonstrates clearly that the state system, whilst complex, was working to ensure the protection of drivers. Mr Purcell said:

I have been an operator, independent sole trader, subcontractor ... and company for over 55 years. In 2002, I was a subcontractor for a public corporation body, Australia Post. The Royal Mail then terminated my services in July 2002.

I appeared before the IRC in August 2002 and the hearing lasted for seven days. The decision was brought down in July 2003 that I was to be reinstated. Without the IRC I would not have been re-employed. I found that the IRC had industrial knowledge, experience and resolve, and if I had followed any other avenue, I would not have achieved the same result. It is clear there is nothing better we can call on; therefore, the IRC must stand.

Under the conditions set out in this legislation, people like Eddie Purcell who live outside of New South Wales and Victoria will have no access to traditional arbitration proceedings. Instead, they will have to pursue negligent and unscrupulous employers in court, a process that will almost certainly increase the time and cost of dispute resolution. A lot of contractors and outworkers who require access to dispute resolution mechanisms will inevitably be priced out of such options. This legislation stacks the process in favour of corporate entities over employees. Mr Purcell alluded to another negative impact of this legislation, in that it effectively sets aside the expertise, substantial experience and knowledge of people within the IRC around Australia.

Perhaps I am lamenting the poor treatment of workers too much. After all, the federal government has a long-term agenda to deprive all workers of their basic rights, not just contractors. I can assure the government that efforts like the Independent Contractors Bill will act as a further motivation for the labour movement to see an end to this madness at the forthcoming federal election. Unions and Labor alike are determined to see fairness restored in the workplace, including for contractors and outworkers. I would like to leave the final word with Mr Purcell. He said:

It’s all about profit. Sub-contractors are a cheap source of labour, cheaper than having an employee or even a slave. You do not need to shackle a sub-contractor, you can bind him with laws and you do not have to feed them. Cancelling sub-contractors access to the IRC will place the people hiring sub-contractors in a very powerful position.

That is the reason I oppose this legislation.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

I thank honourable senators for their contributions to this debate. In summing up on these two bills, the Independent Contractors Bill 2006 and the Workplace Relations Legislation Amendment (Independent Contractors) Bill 2006, I note that many senators have made a contribution and I will take issue with some of the comments that have been made. It may be helpful if we reflect first on the government’s intention in relation to the bills. The government’s intention and firm commitment is to ensure that those who choose to work as independent contractors may do so without excessive regulation. These bills are built on the tenet that independent contracting arrangements are commercial arrangements and should not be governed by industrial legislation. This belief is reflected in our approach of having stand-alone legislation for contractors rather than including non-employment relations reforms in existing workplace relations legislation.

To briefly recap, the bills will: recognise and protect the unique position of independent contractors in the Australian workplace; override state laws which deem certain categories of independent contractors to be employees for the purposes of state industrial relations legislation; maintain existing protections under state legislation for outworkers in the textile, clothing and footwear industry; maintain existing protections under state legislation for owner-drivers in the road transport industry; replace existing state unfair contracts jurisdictions with a single national jurisdiction; and protect genuine employees from sham contracting arrangements and from threatening or deceptive behaviour aimed at making employees change their status to independent contractors. The passage of these bills will be accompanied by funding of $15 million over four years to support enforcement and education activities.

I would now like to reflect on a number of the issues raised during the debate. First of all, there was some talk about the common law definition. The use of the common law definition of an independent contractor will be that which is in the Independent Contractors Bill. There has been some criticism of the bill’s retention of the common law distinction between who is an employee and who is an independent contractor. This criticism has called for the proposed legislation to provide a statutory definition of these terms. The government carefully considered the feasibility of a statutory definition, and had regard to the recommendations of the relevant House of Representatives committee.

The government considers that the common law is the best arbiter of the distinction between an employee and an independent contractor. The common law test looks at the totality of a relationship between a person and their hirer, not just the formal contractual arrangements between the parties. It considers all the relevant circumstances of the particular relationship, making it both flexible and fair. It is highly unlikely that a statutory definition would, as has been claimed by some, reduce the number of disputes over the status of any worker. There will always be some doubt around the fringes of the definition that will result in a court having to determine the true nature of a person’s status.

In retaining the common law definition, the government has rejected the use of the incorporation of the alienation of personal-services income test to determine who is an independent contractor for the purposes of the Independent Contractors Bill. Senator Siewert asked yesterday why the government has not accepted this recommendation. In response to the honourable senator, I say that this test has been developed to address taxation policy needs and is unsuitable for use in the context of this bill. Not only does the self-assessment nature of the alienation of personal services income test leave it open to potential manipulation, but it also requires a hirer to know details of each and every one of a worker’s income sources. This is knowledge that a hirer cannot reasonably be expected to have and demonstrates the impracticality of the use of this test in the context of this bill.

I would also like to respond to Senators Murray and Polley, who have asked why the proposed bill does not recognise so-called dependent contractors. This is, with respect, an academic rather than a legal concept, used to describe a person who provides a service to only one, or primarily one, entity and who should therefore be treated as an employee. However, the dependent contractor concept is fundamentally flawed because it fails to recognise the reality that some contractors are comfortable working for one principal or are engaged on a long-term contract. Furthermore, the concept of dependent contracting has no recognition at common law.

Secondly, let me address the exclusion of state and territory laws that deem independent contractors to be employees. The government opposes laws which deprive a person of the right to choose the manner in which they work. Deeming laws prevent a person from being an independent contractor, irrespective of the way in which they structure their business. They force people operating in prescribed industries to operate as employees. The Independent Contractors Bill will return freedom of choice to all working Australians, giving them the ability to select the working arrangements that best suit their individual needs. The Independent Contractors Bill includes transitional arrangements for workers affected by the state deeming laws at the time the proposed legislation takes effect. People covered by the transitional arrangements will continue to be deemed to be employees for up to three years. However, they may elect to switch off the state laws at any time within that period by executing a written agreement with their principal.

I should note that the Independent Contractors Bill will not override state laws that deem outworkers to be employees. The government recognises that outworkers are a particularly vulnerable section of the Australian labour market who deserve additional protections. On that note, I thank Senator Troeth and her committee for the work that they did. Whilst on the topic of outworkers, I will take a moment to set out the particular protections provided for them under the Independent Contractors Bill.

Kerry O'Brien (Tasmania, Australian Labor Party, Shadow Minister for Transport) Share this | Link to this | Hansard source

Senator O’Brien interjecting—

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

It is good to see that Senator O’Brien is awake. The government’s intention has always been to exempt outworkers from the effect of the provisions which override state laws. Currently the bill seeks to provide a guaranteed minimum rate of pay for outworkers who do not have such a rate of pay guaranteed by state or territory laws. These provisions are a recognition by the government of the particular vulnerabilities facing outworkers. As senators would be aware, the Senate Employment, Workplace Relations and Education Legislation Committee inquired into the provisions of the bills and unanimously recommended that some of the provisions in relation to outworkers be amended. I take this opportunity to foreshadow the government’s acceptance of the committee’s recommendations. The government’s proposed amendments will clarify the effect of the policy intention of the bill in relation to outworkers. These amendments were developed in consultation with the Textile, Clothing and Footwear Union of Australia, Fair Wear and the Senate committee. I would like to thank all those involved in ensuring that the provisions clearly and fully reflect the government’s intention to preserve existing protections for outworkers. This fact, with respect, seems to have been lost on senators from the other side of the chamber.

There has also been significant focus on owner-drivers in the road transport industry who are covered by existing New South Wales and Victorian owner-driver laws. The Independent Contractors Bill will maintain all existing state owner-driver protections for the time being. The proposed legislation only names those laws in New South Wales and Victoria because these are the only jurisdictions with specific owner-driver laws in operation. However, let me be clear about the extent of the preservation of these laws. It is the government’s intention to review all state and territory laws regulating owner-drivers in 2007, with a view to achieving national consistency where possible.

I will make some specific comments about amendment (4) to clause 7 of the Independent Contractors Bill, page 7, lines 22 and 23. This amendment would omit clause 7(2)(b)(iii) of the bill. That subparagraph currently provides that any instrument made under a provision of the law referred to in clauses 7(2)(b)(i) or 7(2)(b)(ii) is not affected by the general exclusion of certain state and territory laws in clause 7(1). As such, any instrument made under chapter 6 of the New South Wales Industrial Relations Act 1996 or the Victorian Owner Drivers and Forestry Contractors Act 2005 would not be excluded by this bill. This is the intention of the bill. However, clause 7(2)(b)(iii) is unnecessary because if a law is not excluded—that is, it continues to operate—then instruments made under that law are similarly not excluded, except where a law is excluded by regulations made under section 10 to the extent that the law authorises the making of an instrument. The omission of clause 7(2)(b)(iii) is therefore not intended to change the effect of the bill with respect to instruments made under a law listed in clauses 7(2)(b)(i) and 7(2)(b)(ii). Rather, the amendment would remove clause 7(2)(b)(iii) because it is a redundant provision.

I would like to take this opportunity to allay the concerns of Senator Hutchins, who took issue with proposed government amendment (4) to the Independent Contractors Bill. This amendment would omit a redundant subparagraph from the bill. It would not change the legal effect of the provision. The subparagraph currently provides that any instrument made under one of the saved owner-driver laws would continue to operate after the commencement of this bill. However, the provision is unnecessary, because if a law is not excluded then instruments made under that law are similarly not excluded and will continue to operate. Therefore, there is no need to spell this out in a separate provision. The supplementary explanatory memorandum provides more detail which makes this intention clear.

Senators Marshall and Hutchins have criticised the bill for not preventing children from being engaged as independent contractors. Interestingly enough, child labour regulation is a state and territory government responsibility. The proposed legislation expressly provides that the Independent Contractors Bill does not override state child labour laws.

Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

And they are Labor governments, aren’t they?

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

They are indeed, Senator Kemp. I now turn to the unfair contracts jurisdiction. The Independent Contractors Bill will override existing unfair contracts jurisdictions for independent contractors in those states where they exist—Queensland and New South Wales. Independent contracting is a commercial arrangement which should not be regulated by workplace relations laws that focus on employment considerations. The government considers that state unfair contracts jurisdictions have gone too far in attempting to rewrite commercial contracts which have been validly agreed between the parties. In both Queensland and New South Wales the relevant state industrial relations commissions can rewrite a contract applying to an independent contractor even where the terms of that agreement were fair when entered into. This is totally unacceptable and creates commercial uncertainty for both parties.

The new proposed jurisdiction will more appropriately focus on commercial considerations when determining whether a contract is unfair. Moreover, a single nationally consistent unfair contracts jurisdiction will minimise the confusion and inconsistency which arises from the duplication of multiple systems. To ensure that this new federal jurisdiction strikes the appropriate balance between the overly prescriptive New South Wales and Queensland jurisdictions and the absence of any contract review mechanism in other jurisdictions, I will shortly be moving a number of amendments to the unfair contracts provisions on behalf of the government.

A number of senators opposite have raised concerns about the expense of this jurisdiction. These concerns are as unfounded as they are misleading. The proposed provisions confer jurisdiction on the Federal Magistrates Court to review and vary harsh or unfair contracts. This jurisdiction will be significantly cheaper than the existing jurisdiction in New South Wales. To file a matter in the New South Wales jurisdiction and have it set down for a one-day hearing will cost a person $1,916. The same person will be charged only $769 to do the same thing in the Federal Magistrates Court—a saving of about $1,200. By conferring the federal unfair contracts jurisdiction on the Federal Magistrates Court, the government is making this jurisdiction more accessible to everyone.

Lastly, I would like to touch upon the sham penalty provisions that are proposed to be included in the Workplace Relations Act by the Workplace Relations Legislation Amendment (Independent Contractors) Bill. While the government fully supports the use of genuine independent contracting arrangements, it will not tolerate the actions of people who knowingly seek to disguise employment arrangements as independent contracting arrangements, thereby denying employees their lawful entitlements. To this end, the Workplace Relations Legislation Amendment (Independent Contractors) Bill includes four new civil penalty provisions to address sham arrangements.

Broadly speaking, these provisions would apply to persons who knowingly disguise employment relationships as independent contracting arrangements, persons who dismiss or threaten to dismiss an employee for the purpose of re-engaging that employee as an independent contractor and persons who seek to deceive or mislead others to persuade them to become independent contractors. These provisions provide substantial additional remedies where an employer seeks to avoid the payment of employment entitlements by wrongly classifying an employee as an independent contractor or coercing an employee to become an independent contractor. A corporation that is found to have breached any of these provisions will be able to be fined up to $33,000, and an individual will be fined $6,600.

Contrary to the claims of a number of senators opposite, these penalties would be able to be sought not only in the Federal Court but also in the Federal Magistrates Court. Further actions would be able to be commenced by an employee, a workplace inspector or, with the employee’s consent, an employee’s union. I would like to take this opportunity to foreshadow the government’s intention to move amendments to these provisions during the committee stage of the debate. These amendments will provide additional remedies for persons affected by a breach of any of these provisions. They will also clarify the government’s intention with respect to persons who knowingly seek to disguise employees as independent contractors.

During the debate yesterday, Senator Marshall made reference to the government’s fair pay and conditions standard in the Workplace Relations Act as the ‘low pay and conditions standard’. What a quite absurd remark. As Senator Marshall would be well aware, the Australian Fair Pay Commission recently handed down an increase of $27 per week to the minimum wage in Australia. Under this decision, Australian employees cannot be paid less than $511 per week. According to the latest OECD data, Australia has the highest minimum wage, as a proportion of median earnings, in the OECD—a very proud achievement.

The government will be opposing the Australian Democrats’ second reading amendment, for reasons that I think would be well known to everybody in this chamber—namely, that it was never the intention of either bill to dictate the way in which independent contractors should manage their affairs. One of the most fundamental advantages of being an independent contractor is the freedom and flexibility that comes from being able to make your own choices about how you work and how you structure your working arrangements. Just in case Senator Murray was not aware, we will not be supporting his amendments either. I commend the bills to the Senate.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I rise under standing order 191 to make an explanation. In his closing contribution, Senator Abetz just referred to a contribution I made in the second reading debate and sought to misrepresent what I had said. Clearly, the fair pay minimum standard, which is of course the lowest pay standard under Work Choices, only applies to employees who are covered by the Work Choices legislation. He tried to misrepresent what I said in my speech in the second reading debate which is that, in terms of the independent contractors legislation, minimum pay does not apply. In fact, under the independent contractors legislation, if you are deemed to be a contractor—

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

That is clearly not a point of order. I think he has learnt from Senator Brown to how to try to use air time. Could I simply suggest to you, Mr Acting Deputy President, that we get on with the vote.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

I certainly was not raising a point of order; I rose under standing order 191, and that is an appropriate course of action.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

Senator Marshall and Senator Abetz, I have again perused standing order 191 and want to draw Senator Marshall’s attention to the importance of focusing on the facts of the misquote or the misunderstanding. I again draw your attention to that and ask you to confine your remarks, as required by standing order 191.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Thank you. And, indeed, I was. I was clarifying the misunderstanding that Minister Abetz must have about the application of the fair pay minimum standard, in terms of the minimum wage. Clearly, under the Independent Contractors Bill 2006, the minimum wage set by Work Choices does not apply to independent contractors. Independent contractors can and will be paid less than the minimum wage under this legislation.

Eric Abetz (Tasmania, Liberal Party, Minister for Fisheries, Forestry and Conservation) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order. Clearly, the honourable senator is seeking to debate the issues. If he claims that he has been misrepresented, he needs to say exactly what he said. I would have thought that the Hansard will clearly indicate for the record what each of us have said.

The Acting Deputy President:

Minister, I take the point of order.

Penny Wong (SA, Australian Labor Party, Shadow Minister for Corporate Governance and Responsibility) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise with regard to the minister’s point of order. As I understand Senator Marshall’s contribution, it was the minister’s choice to misrepresent something that Senator Marshall indicated in his speech in the second reading debate. I would have thought that Senator Marshall is entitled to indicate what was actually said and respond to the minister’s misrepresentation of those facts.

Rod Kemp (Victoria, Liberal Party, Minister for the Arts and Sport) Share this | Link to this | Hansard source

Mr Acting Deputy President, I rise on a point of order. I have been listening to the debate very carefully. Senator Abetz is absolutely correct that Senator Marshall has to specify exactly where he believes he was misrepresented and then put his version. That is how he should be corrected. He is not doing that; he is debating the point.

The Acting Deputy President:

Senator Kemp, I am about to rule on the point of order. I will rule accordingly. Senator Marshall, you must confine your remarks to areas where you believe you have been misrepresented, make those points clear and conclude your remarks accordingly.

Gavin Marshall (Victoria, Australian Labor Party) Share this | Link to this | Hansard source

Thank you. Of course, the standing order that I rise to speak to is about being misquoted or misunderstood. I have in fact made that point and have finished my contribution.

Question put:

That the amendment (Senator Murray’s) be agreed to.