Mr REITH (Workplace Relations and Small Business) (9:31 AM) —I move:

That the bill be now read a second time.

This bill will amend the Workplace Relations Act 1996 and the Workplace Relations and Other Legislation Amendment Act 1996 to remove the uncertainty surrounding junior rates of pay by exempting junior rates, on a permanent basis, from the age discrimination provisions of those acts. The bill will also amend the principal object of the Workplace Relations Act to include within its scope the protection of young people's competitive position in the labour market, the promotion of youth employment and the reduction of youth unemployment, and these will also be objects to which the Australian Industrial Relations Commission must have regard in making and varying awards. In particular, the bill will require the commission to support youth employment by ensuring that, where appropriate, awards that apply to work that is or may be performed by young people include junior rates of pay.

Members of this parliament—particularly the Labor Party—who are concerned about the welfare of the young employed and of the young unemployed should match that concern with bipartisan support for this bill. Junior rates have been a feature of the wages system in Australia since early this century. Age based junior rates of pay are set as a percentage of the adult rate and usually increase annually until adult rates are payable. Over half of employees aged under 21 are covered by junior rates, with almost a third of these in retail trade, the single most important industry as far as youth employment is concerned.

Under current arrangements junior rates will not be able to continue after 22 June 2000. At present, junior rates are exempted from the provisions of the Workplace Relations Act and the Workplace Relations and Other Legislation Amendment Act designed to prevent and eliminate age discrimination in awards and agreements. The exemption expires on 22 June 2000—although, under the present legislation, the Australian Industrial Relations Commission can extend the exemption on a case-by-case basis in accordance with full bench principles. This means that, after 22 June 2000, if a suitable replacement for junior rates has not been found, young employees who are currently paid at junior rates will have to be paid at adult rates unless each and every award and agreement that contains junior rates is given a special exemption. One does not have to be an economist to reach the conclusion that such a move would price young people out of jobs.

Members should note that the current situation is an improvement on arrangements that prevailed prior to the coalition being elected in March 1996. Under the former Keating-Beazley Labor government, junior rates of pay would have ceased to be lawful on 22 June 1997, under legislation introduced by the Labor Party in 1993 and 1994. Without the coalition government's deferral of this law, thousands of young people would already have lost their jobs to Labor Party ideology.

This government's preferred position has always been that junior rates should be allowed to continue indefinitely—a position reflected in the Workplace Relations and Other Legislation Amendment Bill 1996 as originally introduced into this parliament. However, following discussions with the Australian Democrats when the bill was before the Senate, the government agreed as a temporary measure to limit the exemption to a further three years and to put in place a mechanism for the Australian Industrial Relations Commission to review the feasibility of abolishing junior rates of pay. This reflected a compromise position only agreed to by the government as a way of avoiding the legislated removal of junior wages. The coalition agreed to the review on the clear understanding that our policy would continue to be for the retention of junior rates and that we would seek a mandate for this legislation at the next election. We are now seeking to implement that mandate.

Mr Bevis interjecting—

Mr REITH —That is not right, as a matter of fact.

Mr Bevis interjecting—

Mr REITH —It is not right, and I have discussed it with them. You were not there. It is also the government's view that in order to provide support for youth employment junior rates should be more widely available. The government's support for the retention and extension of junior rates was articulated in a ministerial discussion paper which I issued in June this year entitled `Protecting Job Opportunities for Young People'. More importantly, it was a policy specified in black and white in the coalition's pre-election workplace relations policy, More Jobs Better Pay, and publicly debated during the recent election campaign. That policy has now been endorsed by the Australian electorate. This bill gives effect to that policy.

The Australian Industrial Relations Commission is currently conducting an inquiry into the feasibility of replacing junior rates with non-discriminatory alternatives, pursuant to section 120B of the Workplace Relations Act. The government has made a submission to that inquiry, together with the governments of Victoria, South Australia, Western Australia, the Northern Territory and the ACT. In that submission we demonstrate the critical role played by junior rates in maintaining the competitiveness of youth in the labour market and encouraging youth employment. We show that junior wages help young people by giving them a foot in the door into employment.

We also demonstrate that any move to abolish junior rates would lead to an increase in youth wages and would in turn have a detrimental effect on youth employment. This would be a highly irresponsible move, particularly given the delicate labour market situation that confronts young people. Quite frankly, this parliament should be dealing with policy issues designed to put more unemployed young people in jobs—such as the coalition's unfair dismissal reforms—rather than spend its time, as we now have to, completing the reversal of Labor legislation which would have wrecked existing jobs of young people.

The anti-discrimination provisions of the Workplace Relations Act are concerned with equality of opportunity just as much as with equality of treatment. In this context, junior wages are a special measure that operates beneficially to meet the particular needs of young people in the labour market who are generally recognised as needing special assistance. Lower wage costs relative to adults assist young people to gain employment by compensating for the disadvantage that young people experience due to their relatively lower skills, experience and maturity compared with adults.

In the government's view, any theoretical objections to junior rates are greatly outweighed by the inequities that would flow from their abolition. This point was made simply but eloquently recently in a letter to the Adelaide Advertiser from Paul Madden, Executive Director, Baptist Community Service, South Australia, when he stated:

It seems to me that a fundamental question must be asked: "Is it better for a young person to have a lower wage and the opportunity to develop valuable skills or to have an adult rate and no job at all?"

The uncertainty surrounding the current interim arrangements does not create a stable environment for the employment of young people. Young people and employers are entitled to know that their jobs and employing rights are secure. This bill will create that certainty.

The importance of this legislation was stressed in a recent media release from the Australian Retailers Association, which stated:

"The failure of the Commonwealth Parliament to pass such amendments will have a massive impact on youth unemployment in Australia" said ARA Chief Executive Officer, Phil Naylor.

A press release issued on 2 November 1998 stated:

"Our membership survey response which included the employers of about 80% of young people in the retail industry, indicates that about 200,000 jobs would be lost in the retail industry alone."

I turn now to the terms of the bill itself. The bill amends provisions in the Workplace Relations Act 1996 that relate to the principal object, awards and agreements, and provisions in the Workplace Relations and Other Legislation Amendment Act 1996 that relate to award simplification.

The bill will amend the principal object of the Workplace Relations Act. The principal object of the act is to provide a framework for cooperative workplace relations which promotes the economic prosperity and welfare of the people of Australia in a number of ways. The bill will include protecting the competitive position of young people in the labour market, promoting youth employment and reducing youth unemployment as ways in which the workplace relations framework can contribute to economic prosperity and welfare.

The bill will insert an additional object and requirements in the commission under Part VI—Dispute Prevention and Settlement—of the Workplace Relations Act. These will require that the commission's powers and functions in relation to making and varying awards be performed and exercised in a way that protects the competitive position of young people in the labour market, promotes youth employment and assists in reducing youth unemployment.

The commission will also be required to ensure that, where appropriate, awards provide support for youth employment through appropriate junior rates of pay. For example, where awards apply to work that is or may be performed by young people it is appropriate that they contain junior rates. By protecting existing junior rates, and making junior rates more widely available, these provisions will contribute towards enhanced job opportunities for young people and complement the changes to the principal object of the Workplace Relations Act. They recognise the links between junior wages and youth employment and unemployment. It is an important policy objective of the coalition that Australia's workplace relations system has as much to do with addressing the interests of the unemployed as the system claims to do for the interests of the employed.

An existing requirement to which the commission must have regard in performing its functions in relation to dispute prevention and settlement is the need to prevent and eliminate discrimination on a number of grounds, including age. A new provision will make it clear that junior wage provisions are not to be treated as constituting discrimination by reason of age.

The bill provides a permanent exemption for junior rates from provisions designed to prevent and eliminate age discrimination in certified agreements.

The bill amends items 51 and 54 of schedule 5 of the Workplace Relations and Other Legislation Amendment Act 1996, which deal with award simplification. In reviewing awards under item 51, the commission will be required to ensure that, if awards apply to work that is or may be performed by young people, they support youth employment by including junior rates of pay where appropriate. The bill amends item 54 by providing a permanent exemption for junior rates from award simplification provisions designed to prevent and eliminate age discrimination in awards. The government will also proceed to make consequential amendments to the workplace relations regulations to ensure the protection of junior rates in Australian workplace agreements.

This is very important legislation for the future job prospects of hundreds of thousands of young people. I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Bevis) adjourned.