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Thursday, 21 February 2002
Page: 718


Mr ABBOTT (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (1:13 PM) —Firstly, I thank all members who have contributed to this debate. I would particularly like to thank members for agreeing to limit their contributions to about 10 minutes. I appreciate that that is not always easy to secure. I particularly thank the Chief Opposition Whip for her efforts in trying to get this matter properly debated and dealt with so we can get it into the Senate for the next sitting period.

The basic problem that this bill is designed to address is the fact that the laws do not really stop unfair dismissal so much as institute a de facto system of additional payments for people who are dismissed fairly or unfairly from their employment. This is inelegantly known as `piss-off money' in small business circles. This has been the practical impact of the unfair dismissal regime under which small business has had to operate for the last decade or so. The result of these laws—however well motivated and well intentioned they might originally have been and however sincerely members opposite and elsewhere believe that they are a protection for workers—is that many small businesses are frightened of putting on new staff, and that is a real problem in our economy and a real problem for our society.

I do not wish to go on at great length; I will just select from some of the correspondence which has come to me. In one case, a small Melbourne engineering company had to terminate two casual employees and one permanent employee because of a significant downturn in business arising from a three-month strike in Korea. The applicant for unfair dismissal requested a settlement of $5,500. The solicitor's advice was that to defend the claim it would cost up to $15,000. So the business handed over the $5,500 because that was the least expensive option. Another example that came onto my desk was of a very long-established leather goods business, employing up to 10 people, that got into difficulties a couple of years ago. The employer believed that if he was able to downsize by one employee he would have been able to survive. Unfortunately, his lawyers told him that it would cost him $20,000 to do so, given that he would have to pay off this employee under the way the unfair dismissal laws operate. Instead, this particular businessperson decided to close down the business.

Another example is that of a small motor industry company in New South Wales which faced an unfair dismissal claim from a former employee dismissed for poor work performance, despite repeated warnings and repeated training. The company eventually agreed to settle the matter in order to avoid further legal costs—and that cost $9,000. That is the basic problem. The problem is not just the 3,000 or so small business unfair dismissal claims that come to the Australian Industrial Relations Commission but also the hundreds of thousands of small businesses that now understand that, if they want to let someone go, it is going to cost them tens of thousands of dollars. As the government has pointed out again and again, if just one in 20 of the small businesses of this country took on one extra person it would produce a 50,000-plus increase in jobs.

The government has tried consistently over the last six years to try to improve the unfair dismissal regime. In 1996, the Workplace Relations Act was changed to institute the principle of a fair go all round. Late last year, just before the election, we were able to get the Senate to agree to further changes. Now all new employees, unless otherwise stipulated, have a standard three-month probationary period, during which the operation of the unfair dismissal laws will not apply. In addition, thanks to the changes late last year, there is the possibility of fines on ambulance chasing lawyers, and people who bring bodgie applications are potentially liable to costs orders. The government believes that it is important to go further. We think that the nature of small business means that small businesses should be entirely exempted from the operation of these laws.

I note that members opposite have repeatedly stated that there is no real concern about the unfair dismissal laws. I would simply cite an Australian Business Ltd survey released late last year which showed that 57 per cent of businesses believe that, as they stand, the unfair dismissal laws are an important issue. I certainly think that unfair dismissal laws remain an important issue out there in the community and they need to be tackled by this parliament. Of course there are other issues of concern to small business—I accept that—but this is one issue that we can address and fix comparatively simply. That is why we should fix it. We should not allow the fact that some things cannot be fixed, stop us from fixing the things that we can fix—and fixing them quickly.

I would like to thank the member for Barton, the shadow minister for workplace relations, who made what I think was quite a constructive speech. I particularly noted his gracious references to me—and I thank him for those. I also noted his implied praise of the late, great BA Santamaria, who I continue to believe was one of the greatest Australians of all time. Let me reciprocate: I think the member for Barton is a thoroughly honourable and decent man, but I think in some ways he is a good lawyer with a bad brief on this case. The basic point that the member for Barton made, which was repeated often by members opposite, was that if this bill is passed some workers might be exposed to harsh treatment. I certainly accept that, if small business is entirely exempted from the operation of the unfair dismissal laws, every so often something might happen that strikes reasonable people as being pretty tough.

But we can focus on a handful of hard cases or we can focus on the tens of thousands of new jobs which we reasonably think can be created if we pass this bill. We can focus on a handful of bad employers or we can focus on the tens of thousands of good employers who are currently intimidated out of employing people by their perceptions of the existing unfair dismissal regime. I think members opposite should consider this fundamental question: what is better for former employees? Is it better to give them access to unfair dismissal laws which might result in $3,000 or $4,000 in their pockets but no job, or is it better to give them access to an economy which is much better at creating jobs and makes it much easier for them to find jobs?

I should point out that, if this bill passes, the employees of small business will still have access to remedies for unlawful dismissal and any remedies they might have under common law. I am all in favour of protecting workers' rights, but you do not protect workers' rights by wrapping them up in cottonwool. Fundamentally, this government has confidence and faith in the decency of Australian managers and the commonsense of Australian workers. That is why we believe that workers and managers will get along pretty well, even if the unfair dismissal laws are taken off the back of small business.

I accept that members opposite will not support this particular bill. I do note from press reports that the opposition is considering some changes to the unfair dismissal laws. I note from the Financial Review of Wednesday—that is, yesterday:

Labor is still planning to move amendments to the Government's unfair dismissal bill dealing with the current procedural requirements on employers and also the cost of defending dismissal claims.

The Opposition is also considering whether to move amendments that would restrict employees' access to monetary compensation in dismissal cases ...

Plainly, sensible people in the opposition know that the existing law needs to change. I am a little concerned, however, by an earlier report that was in the Financial Review of Friday of last week. That said that a three-hour meeting of about 20 Labor MPs and senators debated Labor's position on the dismissals issue, with a group led by Senator Steve Hutchins and former New South Wales powerbroker Mr Leo McLeay arguing that Labor should not offer anything to the government.

I am sorry that there is still a hardline faction, a no-compromise faction, in the opposition. But I think that the member for Barton is a pretty good bloke. I think he will be extremely persuasive with his colleagues. I look forward to seeing not the pious amendment that the opposition has moved now but real proposals for improvement to this in another place. I commend the bill to the House.

Question put:

That the words proposed to be omitted (Mr McClelland's amendments) stand part of the question.