Industrial Law Reform (Enterprise And Economic Development-Labour Market Relations) Bill

08 Feb 2005 archivespeech
This speech indicates that the Hon. J.M.A. LENSINK is against the Industrial Law Reform (Enterprise And Economic Development-Labour Market Relations) Bill.

The Hon. J.M.A. LENSINK: I rise, as nobody will be surprised to hear, to speak against this bill. Since the 1980s, Australia has seen massive industrial change, including the dismantling of the accord and centralised wage fixation. Even state Labor is in conflict with its federal counterparts, as federal Labor has stated that it supports enterprise bargaining as a key plus `the flexibility of doing it workplace by workplace'. Those are the words of the recent leader, Mark Latham. Federal Labor has also acknowledged the importance of contractors and newer forms of employment. In light of its disastrous federal showing, it has even played footsy with AWAs.

Regarding the OECD report which was released last week, I note that shadow treasurer Wayne Swan blasted the federal government, saying that `economic reform has slackened off and needs to be reinvigorated'. He then referred to productivi¬ty as an issue and `a tax system that fails to reward hard work', which sounds to me like he believes in greater industrial flexibility. Under the title `Policies to lower unemployment and raise labour force participation', the OECD has this to say:

It is especially important to improve incentives to join the labour force in the first place and to remain in it when older which we argue would be harmed by this bill and to further encourage participation and favour employment, the industrial relations system also needs to be reformed so as to increase the flexibility of the labour market, reduce unemployment transaction costs and achieve a closer link between wages and productivity.

There is none of that in this bill, which is all about locking in traditional forms of employment. It goes on:

 Regulatory requirements for collective and for individual agreements should be eased so that they can replace awards. A major step in this direction would be another reduction of the number of available award matters, and the tightening of their definitions and specifications. `Safety Net' award wage increases should be guided by the productivity and thus employability of low-skilled workers.

There is no trade-off in this bill that points towards produc¬tivity. It continues:

Further unfinished business includes harmonisation of federal and state industrial relations and the streamlining of regulations which minimise the incidence of unlawful industrial action. Finally the cost of dismissal procedures, including for employees who have been in firms for only a short period, is often cited by small businesses as a disincentive to hiring. The government is now in a position to address these issues and should proceed as soon as practicable.

My prediction is that, if this bill gets through, we will see a shift over time towards federal award coverage. This parliament will then be responsible for sending another plank of the state's responsibilities to the feds and giving the Australian government another opportunity to try to make the states irrelevant.

The European Union Employment Task Force said in 2004 in favour of on-hire employment that `temporary agency work can be an effective stepping stone for new entrants into the labour market and hence contribute to employment.' It was also in favour of on-hire's ability to provide partici¬pants with a broad range of skills through the diversity of oppor¬tunities provided.

I will now refer to some of the specific clauses of this bill. Regarding clause 1 (the title), to me this is fiddling with semantics and reminds me of some of the nonsense changes in MBA programs that I have seen in both the business schools that I attended. The previous title was also unaccept¬able and tried to inject the sort of lowest common denomina¬tor silly emotion for which this government is becoming renowned.
With reference to clause 5 (the objects), while it states that it aims `to meet the needs of emerging labour markets and work patterns while advancing existing com¬munity standards' it will do the opposite. In 2005, those people who expect to stay in the same job and/or career path for their entire working life are in a minority. A large number of key vocations which will employ our youngsters in 15 years' time do not yet exist. Patterns of work have changed, yet Labor remains locked in the past.

The object `to promote and facilitate security and permanency' further demonstrates a fundamental misunder¬standing of the modern job market and the desire of many people, that is, workers, to take advantage of the choice and convenience that casual employment provides. The true intent of this bill is revealed in subparagraph (ka), `to encourage and facilitate membership of representative associations of employees and employers', which is inconsistent with existing subparagraph (k), which the Liberal Party would endorse, `to provide for absolute freedom of association and choice of industrial representation'.

 The proposed new subparagraph (o), which states `to facilitate the effective balancing of work and family responsi¬bilities', exposes the hypocrisy of this government, which through a climate survey of its own revealed that, apart from flexitime, less than 10 per cent of public sector employ¬ees were aware of voluntary flexible working arrangements available to them. It should clean up its own backyard before it attacks private sector employers.

 Clause 6, definitions, contains some of the details that will cause confusion regarding contracts, industrial matters and workplaces. There is no doubt that this significantly expands the gambit over our existing laws and will muddy the existing systems, as will the next clause, clause 7. One of the most alarming aspects of this provision is that it does not set out the consequences of the making of a declaratory judgment. Where previously the parties to such actions have been clear, this clause opens the way for unilateral and open-ended actions. This uncertainty will surely dampen employment.

Clauses 8 and 46 relate to outworkers, and this is an area in which a couple of years ago I did some of my own research. The case of outworkers, at least according to a number of the Asian community organisations that I have spoken to (the people who come to mind when this issue is raised), work in the TCF industry. The typical profile of people who are being exploited by receiving under award wages or being paid per garment are newer arrivals with poor English language skills. I was regularly told that this activity is hard to monitor, the workplaces can materialise and disappear faster than a mirage, and that the most effective measure would be to place greater resources in English language training and to advertise in the relevant multicultur¬al community papers in the languages that those people speak. I was told that they should be told that workers do have rights under Australian laws, that this is what they should be paid per hour, and so forth. The measures regarding outworkers in this bill are bizarre to say the least, starting with the exemption for TCF and the extension to cleaning and clerical workers who may be working under a legitimate contract.

Clause 34, best endeavours bargaining, represents another bizarre aspect of the bill. South Australia has had a good record on industrial disputes, which should indicate that we have an effective and stable system of resolution of wage and other disputes. This proposal undermines one of the key principles of our existing system, that agreements should be mutual and voluntary. It effectively holds a threat above the head of the parties: agree or else. I note that the Stevens report advised that this measure should only be used as a last resort, not as a key plank of our industrial system.

Clauses 46 and 51 to 53 create a liability for outworkers under the term `apparent responsible contractor' and liability for on-hire employers under the `host employer' concept. These measures give new meaning to the concept of buyer beware for those who subcontract. There is a very large risk that unpaid liabilities or unfair dismissal claims will lead to employer shopping by aggrieved parties. This will undermine our established and understood systems, turning them into a tangled web. It is also a cynical bid to place all liabilities with some/any employer regardless of whether they have behaved in good faith or had a good record of looking after their own employees. They may well be asked to pay for someone else's mistakes, and it is comparable to the insurance laws which led to massive blow-outs in public liability and which this parliament has in recent years sought to correct, that is, the issue of multiply liable parties leading to the chasing of the deepest pockets. Of significant concern is that some of these proposals will not be subject to parliamentary redress.

On-hire service providers, such as agencies, etc., which are commonly used in the health and aged care sectors, are bemused at what has been put to me as `using a sledge-hammer to crack a small walnut'. Independent research shows that, of all the casuals in Australia, only 10 per cent are employed through the on-hire industry. Of those people, 20 per cent are employed on a non-casual basis and 50 per cent receive continuous employment through contracts. So the case has not been made for why the Labor Party wants to attack the on-hire industry.

Clause 55 relates to sections 58B and 58C of the Workers Rehabilitation and Compensation Act. This is already a difficult area and I have received numerous examples of those difficulties. The provision of alternative duties and Work¬Cover's tertiary recovery actions are already issues which are causing grief for many employers. In many workplaces—the smaller they are the more difficult the problem—there is little diversity of tasks, making it difficult to provide alternative duties from those that the injured worker is unable to perform. A number of on-hire service providers now cannot obtain insurance to cover themselves against WorkCover's third party recoveries, which was recognised by the Stanley review and is yet to be acted upon some two years later by this government. Now the burden especially of unfair dismissals will be added to the equation and will blur industrial and workers compensation provi¬sions. The farming and mining sectors, two of South Australia's major export employers, have said that they will now minimise the use of on-hire staff, and I understand that WorkCover has not even been consulted on this aspect which, if true, is very poor management by this government.

Other issues which I have not talked about in depth, but which the motivation behind is quite transparent, are as follows:

 • replacement of the industrial relations and enterprise agreement sections with the new, so-called `best endeav¬ours bargaining'

 • broadening powers of inspectors

 • establishment of so-called minimum standards, which I might add is against the advice of the OECD

 • forced transmittal of business provisions

 • unnecessary scrutiny of business records

 • workplace surveillance

 • right of entry, which is open season (and widely recog¬nised as such) for the recruitment of new members to the union movement, and may see such disputes as that which occurred in the aged care sector for membership between the warring Miscellaneous Workers Union and the Australian Nurses Federation for coverage of care workers, so workplaces will, in effect, become union turf wars.

I note the diversity of the large number of organisations that have made strong representations about this bill either directly to me or in the public arena, including Business SA, the South Australian Road Transport Association, the Independent Contractors Association, the Printing Industries Association, Robern Menz, Mini Jumbuk, Mitre 10, Bio Gro, Bowden Printing, the Association of Independent Schools of SA and the Recruitment and Consulting Services Association. I, like many other members, have not received any represen¬tations in favour of this bill at all, but a number of very concerned South Australians have spoken to me.

In the minister's second reading explanation in this place on 6 December he made a number of statements, some of which are erroneous and others are revealing. He said `that part of our approach to delivering fairer outcomes is to bring forward proposals to change the legislation so that the law is better understood and adhered to'. In fact this bill will only confuse the system. He said, `As a government we believe that collective approaches to industrial relations through membership of trade unions and employer associations is preferable and should be encouraged', which is, one pres¬umes, why this government has provided open season on signing up members.

 `An area of concern' he said `to both employers and employees is the question of whether workers in a particular situation are contractors or employees'. I do not believe there is concern among employers and employees—it is just within the Labor caucus. He said:

This proposal will assist the stakeholders in understanding how the existing law applies to them [that is, regarding contracts], because it provides the opportunity for the court to make the position very clear as it relates to their particular circumstances.

 In fact, it will only lead to confusion and ambiguity. He said, `All South Australians deserve a safety net, and this proposal gives them one.' I say that they already have one through the award. Further increases can be negotiated through the enterprise bargaining system. He said:

Enterprise bargaining, whilst potentially very valuable, can be a resource intensive exercise. As such it is quite appropriate that when an agreement is reached it should be able to be for a three-year period as opposed to the current two-year period.

In my experience in the real world, enterprise bargaining agreements can last for three years. He said:

In the unfair dismissal provisions it is proposed to increase the emphasis on reinstatement by making clear that it is a preferred remedy. That is not to say that it is the only remedy, but it is to be regarded as the preferred remedy.

I would say that reinstate¬ment is already the preferred remedy under our current legislation.

The question has been put to me: is the govern¬ment reacting to anecdotal or real evidence of perceived threats to traditional forms of employ¬ment? In many cases no evidence, such as statistics or cases, have been provided to demonstrate where our existing system is so fundamentally flawed. Exploitation of workers, because they are in a relative position of less power, will always be a real problem that demands laws providing strong protection, but in 2005 we have a system that has been developed over decades to address these very issues.

For those employees who are exploited, there are rem¬edies. Some employers may slyly withhold the information that would assist employees access their legitimate rights. To members of the other political parties in this place who know of awful cases of exploitation of employees first-hand, so do we. On this side we also know of the unionists who already try to cause havoc in harmonious workplaces in the name of recruitment, of small operators who have been bullied by union reps or been subject to suspect WorkCover claims that they have chosen to pay out because they know it is cheaper (as does the claimant, often), of mums and dads trying to make a living in small business and struggling against the increasing on-costs of putting on additional staff.

I was very interested to read the Independent Contrac¬tors Association website, an article by Robert Gottliebsen who, in his usual way, has put things rather bluntly. In The Australian of 8 November 2004 he made the following comments:

Big organisations outsourcing IT and other service activities to small contractors in South Australia should seriously consider switching to contractors in other states if the South Australian parliament approves amazing legislation. Victoria has devised a way to make it more costly for small enterprises to employ people. Both actions are a result of union pressures that periodically make the Australian Labor Party do silly things. Mark Latham got caught the same way and John Howard was smart enough to respond by promising to insulate small enterprises from union attack. That played an important role in his historic Senate majority. The South Australian attack on its small enterprises uses two major canons. The first is to attack the widespread use of subcontracting.

 He goes on to explain that by way of an example. He continues:

 South Australia's second canon is to give their courts the power to declare a company or trust an employee. This mind blowing power will cause chaos in a wide range of small enterprise areas. The Independent Contractors of Australia Organisation is, of course, trying to fight the South Australian attack on its small business community by alleging the state is in breach of international labour organisation requirements and common law. The ICA also claims the state is taking actions that will hit hard its housing, construction, renovation, IT, home-based business, accounting and many other areas, but the South Australian government has a much bigger agenda. In Victoria and most other states a small enterprise with a labour bill of about $500 000 is exempt from payroll tax. Both Victoria and New South Wales currently have sensible legislation, meaning that when a small enterprise uses labour through a labour hire organisation the $500 000 limit still applies. But the Victorians think they can raise $200 million by applying the $500 000 limit to the labour hire firm and not the individual enterprise. Their secret agenda is to make the small enterprises employ people direct so they are more liable to union pressure, although John Howard's legislation will help.

New South Wales Premier Bob Carr is too smart to make that mistake. He has seen it in the states that tried that stunt. The staff in the major labour hire firms began starting their own businesses to establish myriad small labour hire companies to take advantage of the payroll tax limit. For example, Tasmania has the highest number of labour hire firms per head of any state. Naturally, the government's revenue suffers, labour conditions are harder to control and the cash economy booms. But the unions feel good.

Victoria will learn the lesson the hard way. These situations underline the problem facing all Labor governments.

The union supporters want to turn the clock back to the time when everyone worked for a big employer under a highly restrictive award. These days, those who work under contract represent an enormous part of the work force.

Howard recognised that the game had changed and was rewarded with enormous powers to alter the IR landscape.

I finish with a comment from one of the Labor brothers, John Button, who wrote an essay in 2002 called `Beyond Belief: What Future for Labor?' He made these comments in relation to the relationship between the Labor movement and the ALP. In 2002 he said:

In 2002 things have moved on. What the ALP and the union movement have most in common now is a membership steadily declining, and for similar reasons. Both have been slow to adapt to changing social circumstances; both share, in various degrees, an aversion to democratic member participation; both have hierarchies often seen as out of touch. The ALP and the unions are like two old mates waiting at a bus stop on shaky legs, leaning on each other for support, reminiscing about the past and hoping something will turn up; a bus, an ambulance, or someone like Bob Hawke.