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Education and Employment References Committee - 05/02/2016 - Long service leave

CLARKE, Mr Trevor, Director, Industrial and Legal, Australian Council of Trade Unions

FLEMING, Mr James, Legal and Industrial Officer, Australian Council of Trade Unions

KEOGH, Ms Erin, Industrial Officer, United Voice Victoria

REDFORD, Mr Ben, Assistant Branch Secretary, United Voice Victoria

Committee met at 13:20

CHAIR ( Senator McKenzie ): The committee will now commence its inquiry into the feasibility of, and options for, creating a national long service leave standard and the portability of long service and other entitlements. I now welcome Mr James Fleming, Mr Trevor Clarke, Mr Ben Redford and Ms Erin Keogh for the Australian Council of Trade Unions. Information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I now invite you to make a short opening statement of no more than a few minutes and at the conclusion of your remarks I will invite members of the committee to put questions to you. I will just put on the record that I used to work with Mr Redford when I was an elected official at United Voice. ACTU, do you have a short opening statement?

Mr Fleming : I do, thank you Chair. Thank you for this opportunity to be heard in relation to these important issues. The ACTU is the peak body representing approximately 1.8 million Australian workers. We and our affiliated unions have a long and proud history of representing workers' industrial and legal rights and advocating for improvements to legislation to protect those rights. We welcome this inquiry and urge the committee to recommend that a national long service standard and a national portable long service leave scheme be pursued.

I would just like to highlight a few points from our submission. Long service leave is a basic workplace entitlement. It has existed in this country for over 150 years and in fact predates federation. However, despite long service leave being a well-established community standard, fundamental changes to the nature of work have created structural barriers that prevent equal access to it. In recent decades, we have seen an exponential growth in casual employment and insecure work as a result of employers' demands for greater flexibility. The number of casual jobs almost tripled between 1982 and 1999, rising from just below 700,000 to almost two million. Casual density rose from 15.8 per cent in 1984 to a peak of 27 per cent in 2002-03. It stands at 24.1 per cent today.

Casualisation has occurred across all industries but is particularly acute in accommodation and food services, where it stands at 65.4 per cent. Agriculture, forestry and fishing is at 39.9 per cent and retail and trade is at 39.3 per cent—I am quoting ABS statistics. Yet job tenure has increased in recent years. According to an ANU study, 41.3 per cent of workers had been with their current employer or business for five years or more in 2008 and 44.3 per cent in 2013. But we have seen a decline in permanent full-time employment and many permanent jobs have been replaced by casual jobs. Hence casual employment tenure stood at 4.09 years as at 2013-14, whereas the mean tenure for all permanent employees was two years longer, at 6.14. In 2013 about half of those who ceased their job in the last 12 months did so involuntarily—49.1 per cent, to be exact.

Job turnover and job security are unevenly distributed. There has been an increased segmentation of the labour market with those with the highest job tenure and security tending to be in particular occupations that have higher earnings levels. The Howe inquiry into insecure work of 2012 found that approximately 40 per cent of workers now find themselves in insecure jobs and that the workforce is now divided into a core of workers who have standard entitlements like long service leave and a periphery who do not. These peripheral workers are in casual employment labour hire—they are outworkers and in other insecure arrangements. As the Howe inquiry noted, the problem of insecure work is one that has happened under the regulatory radar. Governments have failed to act to protect against the consequences of reduced employment security. That is why one of our recommendations is that the committee recommend that the ABS investigate developing an insecure work indicator.

A national portable long service scheme would go some way to providing fairer access to long service leave. A number of sectors already have such schemes, and these ought to continue alongside a general scheme that provides entitlements at a national standards level. The McKell Institute's report The case for a national portable long service leave scheme describes some of the benefits of such a scheme. I will just go through a few of them.

The benefits of such a scheme for employees include providing them with a long period of rest after a long period of work in order to return to work refreshed and rejuvenated with improved mental and physical wellbeing and enabling them to promote a better work-life balance. It means greater employment security with less risk of being dismissed by employers seeking to avoid long service leave liability. It means greater equity: highly casualised or contract roles would otherwise not attract long service leave. And remember: half of workers are leaving their jobs involuntarily. The benefits for employers include maintaining a level playing field for employers that are competitively tendering, reducing freeloading problems and providing a practical and effective deterrent for non-compliant operators.

In the New South Wales and Queensland cleaning industry schemes, employers and employees both supported the scheme, but support was not universal at the beginning. Two years in, however, the ACT scheme has broad support from employers with very high rates of compliance. A portable scheme would spread the costs and outlays over the industry as a whole, and there are administrative benefits for employers. There would also be benefits for the tourism industry.

A portable scheme would also provide cost certainty and greater stability for a pay-as-you-go arrangement and reduce costs to the community. The ACT levy has recently gone down from two per cent at its inception to 1.6 per cent, and it is able to fund its own administration. A portable scheme would also be beneficial for productivity and the economy. If put aside, funds for long service leave could be invested and used to promote capital investment in things like public infrastructure, and research and development, much like superannuation. It would also provide protection against the social and individual costs of business insolvencies. In 2012-13, the federal Fair Entitlements Guarantee scheme paid out $31.9 million in long service leave entitlements from the public purse for this purpose.

Our written submission discusses three forms the national portable long service scheme could take: an approved deposit fund model, an industry based defined benefit model and an accumulation model. In time, we would like to see other entitlements like annual leave and sick leave made portable and made part of similar styled funds.

Turning briefly to the issue of national long service leave standards, the Fair Work Act 2009 both recognises long service leave as part of the National Employment Standards and anticipates that a uniform national long service leave scheme be developed. We say that, in a developed country like Australia, workers' conditions ought to progressively move forwards, not backwards. Any national long service leave standard ought not to displace any superior entitlements in existing state and territory schemes. Our preferred option is that a national standard be developed that incorporates the highest common denominator approach, drawing on the South Australian and Northern Territory schemes regarding the core entitlements and elements of other state and territory schemes regarding elements such as the level of pro rata access. This would entail a standard of 13 weeks' leave after 10 years' service, available after seven years pro rata and five years in some limited circumstances. In the alternative, we suggest a safety net provision based on the most common statutory long service leave entitlement but preserving the more beneficial state and territory entitlements. This is detailed in our written submission.

The focus of this leave should be on its primary purpose, which is the provision of extended leave after an extended period of work. Hence, it should not be able to be cashed out except on termination or in limited circumstances. It should not be allowed to be taken, as some employer groups are proposing, in any number of short periods of leave, including even one day at a time. We suggest that would undermine the objective of the leave and would open it to abuse.

If you will permit, Chair, Erin Keogh from United Voice would also like to make a short statement.

CHAIR: Yes, that is fine. Please keep it short.

Ms Keogh : We thank the committee for providing us with the opportunity to make submissions and present today about what we believe is a critical issue for our members. United Voice represents people working in a diverse range of industries, including contract cleaning, contract security, aged care, early childhood education and care, hospitality, health care, emergency services and manufacturing. It is generally accepted that access to long service leave is a critical entitlement that allows Australian workers who have dedicated themselves to their work to have vital financial relief, time with their families and time for their health. The entitlement benefits employers, too. Long-serving and valuable employees return from periods of long service leave refreshed and reinvigorated, and more productive and less likely to be susceptible to injury or fatigue. For best practice employers, long service leave is recognised as a key industrial instrument.

These are not just union views. Long service leave is broadly accepted by communities and is seen as a community standard. It is part of a national employment standard and generally thought, by most, to be an important part of a safety net of entitlements that should apply to all workers. If it is accepted that long service leave is an important basic industrial entitlement with benefits to both workers and business alike, it is not appropriate that it applies to some workers and not others.

The current long service leave system fails a large part of the work force that work in volatile, insecure work where labour mobility is at its highest. This growing section of the workforce is denied their long service leave entitlement. United Voice represents thousands of workers who work in what we call property services, or facility management. Most of these members work as cleaners or security officers, and most of these workers work for specialist cleaning or security firms who are contracted by principals to provide these services. Their employer is the security or cleaning contractor, not the principle. The contracts in these circumstances usually operate for a duration of three years. When these contracts end, the service is often retendered and the service provider may change. Often the workforce stays the same but the employer changes and under the current long service leave system that applies qualifying service for the purpose of long service leave is taken to have been broken.

For the cleaner or security officer who continues to do the same job at the same location and with the same people, time starts again for their accrual. As a result, contract cleaning and security guards are amongst the worst affected by the gap in our current long service leave system. These workers are extremely marginalised in all elements of their work. They work for poverty wages, as low as $700 per week; they operate in physically dangerous environments that see high rates of injury; and they also predominantly work at night, which makes them unable to spend time with family. To exacerbate these existing issues, they work in a contract environment where their job and their entitlements can be lost every three or four years at the time of a contract change.

In a survey of 450 union members in the cleaning and security industries it was found that security guards have an average of 11 years in their industry but, largely as a result of contract changes in this period, on average they change employer between five and six times. This change of employment is not a choice—it is a result of contracting. At the time their contract goes out to tender they are faced with a no-win situation. It is extremely rare for the outgoing contractor to offer a guard any employment at an alternative worksite, so the guard has two choices—become unemployed and lose their entitlements or take a new job with a new contractor and still lose their entitlements. As a result, long serving, dedicated guards will often stay at the same work site their whole career but because of a change of logo and a change of uniform they will never receive long service leave. In fact, our research shows that only 26 per cent of those with enough length of service to qualify for long service leave will ever receive their entitlements.

The survey found the situation for cleaners is much the same. The average service in cleaning is as high as 20 years; however, only 39 per cent of those with long enough service will ever receive a long service leave entitlement. While there has historically been some portability for cleaners in Victoria, the system was derived from an old preserved award and only applicable to a very small group of contractors within the industry. As a result, the majority of cleaners remain unable to access any long service leave throughout their career despite faithfully working at the same building for many years. The benefits of portability for workers are clear. The ability to take a break from work will improve family welfare and physical health, and the financial security of a payment of long service leave is often the difference between paying a mortgage and having a family home put at risk.

Portability is also beneficial to the contracting industries of security and cleaning. A centralised fund managing long service leave obligations would ensure greater security and stability for the industry. A portability scheme would also increase productivity in the industry. Transferable accruals would ensure that the expertise of cleaners and security workers are also retained in their industries while also ensuring that employees are more productive after being able to have time away from work. Additionally, the provisions of universal portability in cleaning will ensure that those currently bound by the old award system would no longer be disadvantaged and all contractors would be able to compete on a fair playing field.

The need for portability in particular industries has been recognised in all Australian states. Queensland, New South Wales, and the ACT have all recognised the need to establish portability for contract cleaning. The ACT has also recognised the need to establish a mechanism for security. The ACT portability scheme is a successful model for portability of long service leave. The scheme is self-funded, as its total income is yielded through contribution revenue and investment. In 2015 in its annual report, the scheme reported that it performed higher than targeted for the ratio of assets against liability.

The scheme is also successfully demonstrating a positive impact for employees. As the scheme has now reached maturity for cleaners on a pro rata entitlement, employees have successfully been paid $1.27 million in the 2014-15 financial year. As stated by the ACT Minister for Workplace Safety and Industrial Relations, the fund has also had significant benefits for the industry, as retention has improved and the administrative burden and red tape of long service leave is managed by the centralised fund.

Employees affected by insecure and high-mobility work are often the lowest paid and most vulnerable employees. It is vital that their disadvantage is not worsened by a long service leave system that ignores them and denies them their entitlement. It is on that basis that we recommend that in the first instance a state based portability scheme be established to cover cleaning and security. And to ensure parity and equity at a federal level, we also recommend that a national portability of long service leave system be established to cover industries, including but not limited to contract security, contract cleaning and community services.

Both the state and federal portability schemes should include the following central common features that many successful portability schemes such as the ACT model have included. It must be a legislated portability entitlement. It must have mandatory registration and participation of all industry employers. It must have an obligation for employers to pay a long service leave levy, which is quantified as a percentage of the ordinary rate of each employee for each hour worked—

CHAIR: Ms Keogh, do have much more? You can table this. Panel members are keen to ask some questions.

Ms Keogh : Sure, that is fine. You just caught me on my last sentence. The last feature of the centralised portability scheme is that it needs to be administered and managed by a central fund or body that includes equal representation from employer and employee groups. That completes our submission.

CHAIR: Thank you. Mr Fleming, I assume you are taking questions on a general nature, or is it Mr Clarke?

Mr Fleming : Mr Clarke and Mr Redford.

CHAIR: I have just been looking at your submission. I know the ACTU and affiliated unions use the term 'insecure work'. Do I take that to mean casual workers, independent contractors, fixed term or fixed task employees, labour hire workers and permanent workers with irregular hours?

Mr Clarke : That is a fair summation.

CHAIR: And outworkers?

Mr Clarke : Outworkers—yes, you could say they are contractors, yes.

CHAIR: That is your broad definition of insecure work?

Mr Clarke : Yes.

CHAIR: When the Department of Employment talk about a casual worker, are they talking about a traditional casual worker being paid a loading in lieu of annual leave and other benefits?

Mr Clarke : Generally, statistically, that is the way that casual workers are identified: the presence of the loading in the absence of the fixed entitlements. There are often questions associated with that too.

CHAIR: But there is no instrument that currently captures that broader definition of workers that you are talking about: fixed-term contractors and so on?

Mr Clarke : Not as a measure in itself, no.

Senator RICE: You are suggesting in your submission and today that an indicator for insecure work would be useful and that the ABS could investigate how it could develop an insecure-work indicator. Can you expand on what that might look like?

Mr Fleming : Thank you for the question. I am just turning to the page in our submission. We relied on the Howe inquiry's definition of insecure work and the aggregate that they used, noting the difficulties in estimating some forms of insecure work given that it is in the shadow economy and involves outworkers and so forth. I can just go through its components.

Mr Clarke : Maybe I can talk to that briefly. There are subcategories within definitions, really, that we need to have a better handle on what is going on with it. I alluded to some interesting issues about what is a casual and what is not a casual. To an extent, that is going to be played out elsewhere in the course of the year, but even within the definition of an independent contractor there is a lack of clarity there. There would be some people who would be described in the literature as dependent contractors or in fact in sham contracting relationships, in the sense that they are not truly entrepreneurs making entrepreneurial, independent decisions about what they are going to do when they get out of bed in the morning. They are in fact workers who perhaps do not retain anybody else to help them discharge their services. They are selling nothing else other than their labour and they are beholden to somebody who requires them practically to exclusively serve them rather than anybody else.

There are labour hire workers who are difficult to categorise within the existing statistical methodology between the different ABS surveys. Many of them are identified as casuals in, for example, the EEH survey, but it is not separately accounted for in the EEH survey how many of these casual workers are labour hire workers and so forth—and also dealing with this concept of fluctuating income and hours over particular periods. These are the sorts of things that we do not really have a handle on in terms of official statistics. Various people try and come up with proxies for trying to estimate these types of things, but it would be good to have some indicator that looks at all of these and enables us to get a picture, both a snapshot view and a detailed view, of what is the level of insecure work at any one point and have a time series about that and what are the types of working arrangements that are causing that to fluctuate or stay the same over a particular period.

Senator RICE: So we have not really got a good handle on it. In your submission you argue that the number of Australians in insecure work has risen dramatically in recent decades. What is that based on given the stats that we have got? The Department of Employment, in their submission, state that ABS data suggests that casual employment has remained steady for around a decade at approximately 24 per cent.

Mr Clarke : There certainly has been a large rise in casual employment. We are not saying that it happened yesterday. What we are saying—and this is the unenviable position we find ourselves in—is that we can jump up and down and talk about insecure work as much as we want but, unfortunately, not all of the policy levers required to address that problem are entirely within the hands of the Australian union movement, much as we have been advocating very strongly for particular solutions over a period of time.

The issue of casualisation does not become less relevant merely because the big bump of an increase took place several years ago. The question we really ask about that is: is it good enough for us to say that 24 or 25 per cent—a quarter—of the working people today have no long service leave? Can we all sit around the table and say it is fine that they have no sick leave? Is it fine that a quarter of the workforce are in these types of arrangements and are suffering the consequences associated with that type of working arrangement? We think the answer to that question is no, we are not fine with it. Schemes like this are one of the ways to address it. We think the fact that it has been a problem for some time does not take away from its cogency.

Senator RICE: So you are saying that it is unacceptable that it is steady at a high level. Have you got indicators other than the ABS casual data to support your assertion that the level of insecure work has gone up over time?

Mr Fleming : In addition to that, the Howe inquiry noted that, after casual employment stabilised, employers seemed to push the cost of flexibility onto workers in other ways, through an increase in the use of labour hire for example. They referred to the ABS statistics on the use of labour hire. The ABS, I think, estimates between two and four per cent, but the Howe inquiry referred to literature suggesting that not all of that is being captured, so that is an additional component and outworkers are on top of that.

Senator RICE: This is my last question. Going back to 24 per cent of the workforce being casual, what do you say to the argument that the casual loading is adequate compensation for long service leave and other types of leave?

Mr Fleming : There is extensive literature showing that the casual loading is not capable of fully compensating for the elements of permanent work lost.

Mr Clarke : I am not sure the extent to which one would say that the casual loading is a replacement for long service leave. If you look at Victoria, for example, they have a long service leave act that says that casual employees can get long service leave but, as we heard in the evidence from our affiliates at United Voice, they are not in working arrangements or work patterns that would enable them to accrue that entitlement. They are not being compensated for the loss of it in their weekly pay because of these pragmatic effects. These pragmatic effects are disentitling them to part of the industrial wage. These types of schemes are a way of redressing that.

Senator McKENZIE: Thank you, everybody. What quantitative evidence can you provide that a portable long service leave scheme would reduce mental illness claims, would improve productivity et cetera? What quantitative data do you have?

Mr Clarke : We would have to take that on notice. We are not able to take you through studies and so forth.

Senator McKENZIE: Please, I am not interested in qualitative studies. So, on notice, please provide quantitative analysis that has been done around a causal link between a portable long service leave scheme and reduced mental illness claims et cetera. Thank you; I would appreciate that.

Mr Clarke : I just want to clarify that. In your question, there is no interest about the relationship between those things but rather the numbers and a causal relationship? It is only a subset of the evidence base that is actually interesting to you? Have I understood the question correctly?

Senator McKENZIE: I want to ascertain if there is a strong relationship between a portable long service leave scheme and reduced costs relating to mental health and illness et cetera, as listed in your submission. Have you done any research into the additional costs to businesses that a portable long service leave scheme could incur, and what are those estimates?

Mr Clarke : We do not have the calculations. We have seen the calculations. We made an observation earlier about the social costs of unpaid long service leave, just using the fair work guarantee system as an example. Recently the taxpayer put up $31 million-odd for long service leave for companies that had gone bust. It is a difficult thing to quantify. The modelling and the experience in the ACT suggest that these schemes become less expensive as the accumulation of their earnings increases. But the costs are also different types of costs.

Senator McKENZIE: Have you done some research on the costs to business, or haven't you? I thought you said you had not.

Mr Clarke : I have not got any costs to business to present to you. I was just going to talk about the complexities of estimating that.

Senator McKENZIE: I appreciate it is a complex situation.

Mr Clarke : In fact we think the other material before you is wrong. But if you are not interested in addressing that—

Senator McKENZIE: Other senators may be interested in unpacking that, and I am sure they will be when other witnesses appear before them. I just wanted to understand what research your organisation had undertaken with respect to costs to business. An issue that has been raised with me in looking at this issue was the reality, I guess, that there may be concerns from employers in taking on an employee who was close to the 10-year mark, and that may actually make the employee more uncompetitive in the job market. Do you have any commentary around that assertion?

Mr Clarke : We are moving from numbers to incentives now. I recognise the issue that you are pointing at. If an employee takes leave at the moment, it is a cost to the business to pay the leave, and if there is a need to backfill the position there is a cost to pay the person who is backfilling the position. You lose part of that cost where the cost of the worker being absent is borne by the scheme. There are a variety of situations and incentives within the workplace relations framework that arguably create economic incentives for people not to employ other people including, for example, women of child-bearing age or women who have disclosed that they are pregnant as part of a job interview. Normatively, we build employment protections around those types of matters. Parental leave is important, and we think long service leave is important.

Senator McKENZIE: I think long service leave is important. I do not think anybody here thinks long service leave is not important. But potentially we are talking about a 28-year-old—it is not an old person—being seen as very uncompetitive in the job market when compared to 19- or 20-year-old, despite their increased skills and experience. Do you still think that risk is worth bearing?

Mr Clarke : I think it is a risk that is worth controlling, if the regulatory environment says that that type of discrimination on the basis of your entitlements is unacceptable. If you do away with that notion that people should not be discriminated against on the basis of their entitlements, that is a different thing. But traditionally we have not approached the workplace relations framework in that way.

Senator McKENZIE: We spoke earlier about the additional loading that casual workers receive. I am assuming that if a portable long service leave scheme were successful and brought in nationally it would be as part of a suite of measures, including getting rid of the loading for casual workers.

Mr Clarke : That is not our contention.

Senator McKENZIE: So we keep the loading and we add the additional costs of the long service leave scheme?

Mr Clarke : The long service leave would be delivered by the scheme and the workers would continue to be entitled to their casual loading. We made some observations earlier about the relationship between the loading and long service leave. They are, in fact, parallel entitlements.

Senator McKENZIE: Could you flesh out for the committee what role you see government would have in overseeing a scheme such as the one you have put forward?

Mr Redford : In the schemes that we are contemplating in industries such as security and cleaning the key role of government is to establish the scheme by way of legislation and assist with the set-up of the scheme. Once that happens, similar schemes that operate, for example, in New South Wales and the ACT become self managed by way of employer administration and also union administration. So the role of government is in the set-up.

CHAIR: Mr Redford or Ms Keogh, I am interested in what happens at contract change with security officers and/or cleaners or any other workers that are in a contractual environment. Can you take the committee through what happens then?

Ms Keogh : A very common situation in the security and cleaning industries is, let's say contractor A currently holds the contract: if contractor A loses that contract it is very rare for contractor A to have any available work for the staff at other worksites. They employ specifically for the servicing of a contract and do not maintain consistent pools of employees. That means that a cleaner employed at that site is not able to be retained by contractor A. They are told that have the option of becoming unemployed or accepting employment with the incoming contractor.

If the incoming contractor offers them work and they accept that work, for the purposes of the current long service leave entitlement that is a break in service and so the employee returns to zero years. They lose any long service leave accrued with contractor A and have to restart their entitlement. For example, one of our union delegates, Helen Christoudas, has worked for 35 years as a cleaner, and has worked for the last 24 years without ever having a long service leave entitlement. She has only worked at two NAB buildings. She has experienced seven contract changes, which meant that every three to four years in that period she has changed employer, not as a matter of choice but as a matter of contract changes. At this stage she is in her 60s and has no long service leave accrual.

CHAIR: Presumably at contract change she also lost her sick leave entitlement?

Ms Keogh : That is correct.

CHAIR: And she never accrued long service leave, despite the fact that the employer would have made some allowance for that accrual?

Ms Keogh : Yes. It is a common occurrence in security and cleaning that at the time of contract change, be it four years, the outgoing contractor is able to retain for themselves any long service leave obligation that they had to that employee and simply move on. The employee loses that entitlement entirely.

CHAIR: After four years that would be a couple of weeks entitlement that has been part of the wage the cleaner has foregone, because there has been a percentage of that wage that has gone to the long service leave accrual.

CHAIR: That is correct.

CHAIR: As you say, after four years that contract changes and the old contractor cannot offer the cleaner the job, so she goes to the new contractor and that two weeks, which is actually her accrual through the arrangements in the award et cetera, then stays with the employer.

Ms Keogh : That is correct, and that is in contrast to the ACT portability system where, throughout Helen's 24 years, with each employer, they would have paid into the central fund. Let us say she wanted to retire, which I know Helen wants to do. She would have been able to return to the fund and recoup the full 24-year period.

CHAIR: Yes. So, with a central scheme, as to that two weeks—if it is two weeks; I forget the calculation, but let us assume for the purposes of this that it is—if, at four years, that contractor loses the contract, they would pay out annual leave to the cleaner but the long service leave would then be paid into a central fund.

Ms Keogh : That is right. Throughout her employment, not necessarily at the time of the contract changing hands but periodically throughout her employment with that contractor, they would have been paying into the centralised fund to protect her entitlement at all times.

CHAIR: So, as an offset, if you like, the employer retains her sick leave, which is also her accrual but, at contract change, the employer gets to keep it; it does not get transferred across?

Ms Keogh : That is correct.

Senator O'NEILL: Could I just take you to the concept of a national long service standard. There are some advantages, I am sure, in the conception of such a model, but there are also some disadvantages. Could you speak to how a worker might actually be worse off under a nationalised standard and what your views about that are.

Mr Clarke : It depends on how you approach it. The view that we adopt about things is, and the way we approached that health and safety harmonisation process was, that you take the highest common denominator and flow it across, on the basis that safety nets, generally, in developed countries, ought to move forwards rather than backwards. So we are trying not to leave people behind in the development of a standard. How that actually plays out, through some sort of COAG process or whatever, I do not know. I do not know what discussions have been had. I do not know what the stumbling blocks have been or if there have been any discussions. But, right from the get go, when it was mooted that there would be a national standard, we have always suggested that that ought to be on the basis of the highest common denominator.

Senator O'NEILL: There is significant variation, isn't there?

Mr Clarke : It is not huge. Yes. You are looking at differences. The trigger points around 10 years' service are generally at around three months to 10 years—that is kind of a common element to the way things are done. But you have differences, in terms of early release, as to whether you need to be there for five years or seven years before you get it paid out on termination. What is the accrual rate after 10 years? Is it based on a nominal pay after 15 and the 10 is a pro rata and so forth. But those issues can be worked through. It is not as difficult as harmonising the health and safety system was, I suspect.

Senator O'NEILL: Harmonisation has been attempted in more complex situations than this. So you would see this as an achievable goal?

Mr Clarke : Yes. If the corporations law scheme was able to be achieved, then we should be able to deal with one industrial entitlement this way.

Senator O'NEILL: Excellent. Thank you very much, Ms Keogh, for your explanation in your opening remarks around the model and how it is operating in the ACT. Could I invite both groups to outline the preferred model for the portability of long service leave.

CHAIR: That was in the beginning?

Senator O'NEILL: Yes.

CHAIR: We will leave it there. Thank you to the ACTU. If you have any further information that you think we have not covered off on, we would appreciate you just putting it in writing to us. Thank you for your appearance by teleconference and for the work on your submission.