Doug Cameron (NSW, Australian Labor Party, Shadow Minister for Human Services) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table an explanatory memorandum relating to the bill.

Leave granted.

I table an explanatory memorandum, and I seek leave to have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The Fair Work Amendment (Protecting Take-Home Pay) Bill 2017 will prevent the penalty rates cut proposed by the Fair Work Commission's decision in matter AM2014/305 from taking effect.

It will protect workers take-home pay now and into the future.

The Bill ensures that modern awards cannot be varied to reduce the take-home pay of an employee. This includes any reduction in take-home pay as a result of a reduction in penalty rates or the hours to which penalty rates apply.

The Bill preserves the independence of the independent workplace umpire, the Fair Work Commission (the Commission), but appropriately guides the exercise of its discretion to ensure wages are not cut.

The purpose of the Fair Work Amendment (Protecting Take-Home Pay) Bill 2017 is to amend the Fair Work Act 2009 so that the Fair Work Commission, in exercising its powers to vary modern awards, cannot vary a modern award so that the effect of the variation would be likely to reduce, or reduce the take-home pay of any employee.

The Bill amends the definitions of reduction in take-home pay and take-home pay in the Fair Work Act 2009 by reference to new subsections 135A(4) and 135A(5).

Item 3 of the schedule inserts a new subsection 135A in Division 2 of Part 2-3 which requires that, in exercising its powers under this Part, the Fair Work Commission cannot vary a modern award such that an employee's, or prospective employee's, take-home pay is reduced.

It does not require individual employees to provide evidence to the Fair Work Commission of actual loss of take-home pay.

The Bill provides that any determination of the Fair Work Commission made on or after 22 February 2017 that would result, or would be likely to result in a cut to take-home pay under the Award, is of no effect.

At the date of the introduction of this Bill, no determination has been issued arising from decision AM2014/305 by the Fair Work Commission. The effect of this amendment is to invalidate any determination which may be issued by the Fair Work Commission, arising from decision AM2014/305 by the Commission, prior to the enactment of this Bill.

This amendment ensures that modern awards are a safety net for the take-home pay of employees currently under the award and of prospective employees under the award.

For the avoidance of doubt, the definition of take-home pay makes it clear that all employees under modern awards are to receive the full benefit in their take-home pay of any increase to the modern award minimum wage. For example, the Fair Work Commission may not vary a modern award so as to phase in a cut to penalty rates by offsetting that cut against any annual increases in the modern award minimum wage.

Australia's national workplace relations system can, in simple terms, be viewed in three parts.

Firstly, the National Minimum Wage and the National Employment Standards (NES); which are ten statutory minimum employment standards that all employees are entitled to.

Secondly, modern awards, which are legal documents that outline the minimum pay rates and conditions of employment. There are 122 industry or occupation awards that cover most people who work in Australia.

Thirdly, enterprise agreements and other registered agreements which set out minimum employment conditions. When a workplace has a registered agreement, the award does not apply. However, in order to have an approved, registered agreement it must leave workers better off overall than the relevant industry award.

At the time of their conception, the then Minister for Employment and Workplace Relations, Ms Gillard made it clear that modern awards were established to, "ensure that they maintain a relevant and fair minimum safety net and continue to be relevant to the needs and expectations of the community."

This provision was further supported and strengthened by an amendment to the Fair Work Act 2009 in 2013 which amended the modern awards objective to ensure that the Fair Work Commission, in carrying out its functions, must take into account the need to provide additional remuneration for employees working outside normal hours, such as employees working overtime or on weekends.

At the time, the Minister for Workplace Relations, Mr Shorten, said "Our Bill makes it clear that this Labor government believes in the value and utility of penalty rates…"

It is abundantly clear that it was not ever envisaged that modern awards would be cut in the manner the Fair Work Commission proposes in the penalty rates case. The fact that the Fair Work Commission has been able to propose cuts in the manner it has is contrary to the intention of the Parliament. To reduce the pay of already low and middle income earning Australians does not, in the Opposition's view, maintain a relevant and fair minimum safety net, nor is it relevant to community expectations.

It is paradoxical that modern award conditions such as penalty rates, which exist as a safety net, can be reduced by the Fair Work Commission but enterprise agreements, which are negotiated between employers and their workforces ensuring workers are better off overall than the award, cannot be altered to reduce pay or conditions of employment otherwise than in a manner which is consistent with the better-off-overall-test.

Inequality in Australia is at a 75-year high. Wages growth is at historic lows and underemployment is at record highs.

There could not be a worse time to cut workers' take-home pay; a fate workers will not have to suffer if this Bill is passed.

The decision of the Fair Work Commission, one that was campaigned for by the Prime Minister and Government, affects 700,000 Australians and will have particularly devastating effects on women, Culturally And Linguistically Diverse (CALD) communities, young people and regional communities. The McKell Institute's analysis states, "For many, the changes are dramatic: full time or part time retail workers who work a full 8-hour shift, for example, will lose at least $72.90 per week. Annually, this equates to a $3499 loss." Further, "55 per cent of those impacted by the proposed changes are female…".

In relation to regional communities, the McKell Institute estimated a partial abolition of penalty rates in the retail and hospitality sectors would result in, "workers in Rural Australia losing between $370.7 million per annum and $691.5 million per annum." and "A loss in disposable income of between $174.6 million per annum and $343.5 million per annum to local economies in Rural Australia."

In arriving at its conclusion, the Fair Work Commission noted the hardship which the proposed cuts to penalty rates will impose on employees who work on public holidays and Sundays. The Commission observed that, "…. the variation of a modern award which has the effect of reducing the earnings of low-paid employees will have a negative impact on their relative living standards and on their capacity to meet their needs". The Opposition agrees and believes the Commission has not given appropriate weight to the effects of reducing penalty rates in reaching its decision.

This decision has implications for workers beyond retail, hospitality and pharmacies. Workers such as nurses, teachers, community workers, disability workers, cleaners and construction workers are, as a result of this decision, at risk of seeing their penalty rates cut in the future.

Through this Bill, Labor is making it clear we don't share the Coalition Government's easy to hire, easy to fire, low road, race-to-the-bottom view of what the Australian labour market should look like.

The way to protect the take-home pay of workers under modern awards is for the decision of the Fair Work Commission not to take effect, and for the Parliament to amend the Fair Work Act 2009 in the way proposed by the Opposition to make it clear that the Commission may not vary a modern award in a way that would result, or would be likely to result in a cut to the take-home pay of an employee or prospective employee covered by a modern award.

I commend the Bill to the Senate.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.