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Wednesday, 24 September 2008
Page: 5566


Senator FEENEY (6:56 PM) —I rise this evening to discuss the defunct Howard government’s discredited industrial relations laws which the Australian people so resoundingly and so magnificently rejected last November. As the Deputy Prime Minister and Minister for Employment and Workplace Relations outlined so eloquently in her address to the National Press Club last week, the Rudd government has a clear program to carry out its mandate to scrap the Howard government’s extreme and unfair industrial relations laws. I welcome that renewed commitment to bringing back fairness and balance to our industrial relations system. In the meantime, however, many of the Howard government’s discredited laws remain in place and continue to have adverse effects on the lives of Australian working families. Tonight I wish to talk about one particular piece of Howard era legislation, if I can characterise it as such, and that is the Independent Contractors Act 2006.

Recently, a case before the Federal Magistrates Court highlighted the problems that this act continues to cause not only for Australian workers but also, I might say, for Australian business—the supposed beneficiaries of the Howard government’s draconian laws. In the case, Keldote Pty Ltd and Ors v Riteway Transport Pty Ltd, three owner-drivers were seeking relief from their contractual relationship with Riteway Transport, a New South Wales based haulage company. These drivers are, in theory, independent contractors in the sense that they own their own trucks and are not direct employees of Riteway Transport, but they do not have individually negotiated, written, commercial contracts with Riteway either. Instead, they operate under a collective contract negotiated on their behalf by the Transport Workers Union of Australia.

Last year, Riteway decided to require these drivers to buy new and much more expensive vehicles and told them that their contractual relationship would be terminated if they did not comply. The drivers in turn said that they were not required to buy vehicles of the type set out by the company and, if the company did indeed require them to operate such vehicles, they expected to be paid more. The company refused this request, and the drivers then took Riteway to court. The Federal Magistrates Court found that Riteway’s requirement that the drivers buy vehicles considerably different from the ones they had already provided under the original contract was indeed unfair and ordered that the terms of the contract be changed to remove this unfairness. Any replacement vehicles, the court said, would have to have, as the decision states, ‘specifications reasonably equivalent to the vehicle to be replaced’.

This was, of course, a good outcome for the drivers and I congratulate them and the TWU, which is an excellent union that I once had the honour to work for, as indeed did Senator Conroy. I congratulate them on this success. But the real issue here is the treatment of these drivers as though they were independent business operators when in fact they are far more in the position of employees insofar as they clearly rely upon the Transport Workers Union of Australia to negotiate on their behalf with the relevant haulage companies. For these drivers to receive relief from the court, the Independent Contractors Act required them to prove to that court that the contract with Riteway was defective in the sense that the section allowing the company to require that the drivers buy a more expensive vehicle was unfair as that term is used in commercial law, not as that term is used in industrial law. Had the drivers not been able to prove that, they would have had no form of redress or relief.

In its submission the Transport Workers Union of Australia quite rightly pointed out that, had this case arisen before the Howard government had enacted the Independent Contractors Act, the Industrial Relations Commission of New South Wales would have examined Riteway’s conduct and would have been in a position to order a quick resolution. The effect of this act—and I speak of the Independent Contractors Act—and the intent of the act is to remove the protection available to owner-drivers under New South Wales law. The Independent Contractors Act deliberately removed the ability of owner-drivers to seek redress under state unfair contract laws. The act treats all contractors on a purely commercial basis regardless of whether they are an outworker, a deemed employee or an independent contractor. This has resulted in a loss of entitlements and protections and has encouraged employers to hire workers as independent contractors rather than employees. In place of the state jurisdictions it created a federal unfair contracts jurisdiction requiring contractors to seek redress in the Federal Magistrates Court.

As we might expect, the new federal provisions are much more limited than those in the states, particularly in the states of New South Wales and Victoria. The New South Wales system included important protections for owner-drivers, including that they were able to recover their costs and including enterprise-specific arrangements for owner-drivers. All of that has now been removed.

The TWU has called for the provisions of the Independent Contractors Act to be replaced by a system under which an independent umpire can determine what is fair in cases of this kind and assist the parties to come to a resolution without either side having to resort to costly, slow and unwieldy litigation. I would have thought that this would be welcomed by business, particularly business in the transport industry, as well as by owner-drivers. The only people who benefit from that kind of costly and expensive litigation are lawyers. Since there are at least 800,000 independent contractors in the Australian workforce I am speaking of an issue which potentially affects a very large number of Australian citizens.

I might say that it is not as if no-one predicted that these problems would arise from the enacting of the Independent Contractors Act. When the bill for this act was introduced by the Howard government in 2006 Labor opposed it. The then shadow minister for industrial relations, Stephen Smith, now the Minister for Foreign Affairs, pointed out at the time that this act would remove the protections afforded to independent contractors such as owner-drivers by overriding state provisions in state based legislation which have employee-deeming provisions or which provide access at the state level to unfair contract provisions and unfair contract legislation. Mr Smith said of this act:

The effective message from this legislation either to a vulnerable employee or to an independent contractor is: you are on your own … In an unequal bargaining position with a superior contract partner, you will effectively now be on your own, with no access to state based protections, no access to unfair contract provisions, no access to employee deeming provisions.

That warning from Labor and Stephen Smith was not heeded and the bill was passed through the Senate. I note in passing that Senator Fielding provided the vital vote which allowed that bill to pass. I wonder how a party which claims to put families first now feels about the adverse effects which this act has clearly had on owner-drivers and their families, who no longer have the protections against unfair contracts that they had before 2006.

I am pleased to say that the Rudd Labor government has now set in train a process for reviewing the provisions of the Independent Contractors Act—those very provisions which have, as I have outlined, adversely affected owner-drivers and their families. In July this year federal, state and territory transport ministers asked the National Transport Commission to provide a report to the Australian Transport Council by November on this very issue. The NTC will be assisted in this process by two industry leading experts, the Hon. Lance Wright QC, a former president of the New South Wales Industrial Relations Commission, and Professor Michael Quinlan, an occupational health and safety expert from the University of New South Wales.

The review will report on, among other things, the current payment methods and rates of pay for both employee drivers and owner-drivers and the impact of driver remuneration and payment methods on safety risks and outcomes within the transport industry. I look forward to the report of the NTC and to the council of transport ministers later this year, and I look forward beyond that to a revision of the provisions of the Independent Contractors Act which have reduced the rights and protections for Australian owner-drivers and other independent contractors.