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Thursday, 3 June 2004
Page: 30062


Mr ANDREWS (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (9:22 AM) —I move:

That this bill be now read a second time.

This bill amends the Workplace Relations Act 1996 to prevent unfair dismissal provisions from applying to businesses with fewer than 20 employees. In doing so, it will encourage the creation of jobs in the small business sector and improve employment prospects for people seeking work.

Many small businesses have serious concerns about the financial and administrative costs imposed by unfair dismissal laws. These concerns have prevented many small businesses from taking on additional employees. This bill will permit small business to create the jobs that are currently being lost because of these laws.

The government is introducing this bill because it recognises the substantial benefits that will come from the new jobs it creates. They will provide employment for many people who are currently out of work and they will open up opportunities for many people who are looking for different jobs. The wealth generated will flow through to everyone in Australia.

The government has made a commitment to the people of Australia to free up these jobs and it intends to follow through.

Members will be familiar with the content of this bill. It reaffirms the government's position as advanced in the Workplace Relations Amendment (Fair Dismissal) Bill 2002, which was laid aside for the second time on 25 March 2003 after members of this House again rejected Senate amendments that would have destroyed its employment creating potential.

This bill will require the Australian Industrial Relations Commission to order that an unfair dismissal application is not valid if it involves a small business employer. This provision will only apply to the new employees of a small business, not to existing employees.

The bill will not exclude employees of small businesses from the unlawful termination provisions of the Workplace Relations Act. It will remain unlawful for any business in Australia, regardless of its size, to dismiss any employee for a discriminatory reason, for example, because of their age, gender or religion. In addition, all businesses in Australia will continue to be required to give employees appropriate notice of termination.

This government has produced an environment of sustained jobs growth through sound economic policies, good fiscal management and workplace relations reforms. Australian Bureau of Statistics figures show that over 1.3 million jobs have been created since the government came to office in March 1996. The unemployment rate has fallen from 8.2 per cent to 5.6 per cent, which is as low as it has been for 23 years.

Over 96 per cent of Australian businesses are small businesses and around half of Australia's private sector work force is employed by small businesses. To ensure that the small business sector continues to contribute strongly, our workplace relations system must be responsive to its needs.

The current unfair dismissal laws place a disproportionate burden on small businesses. They do not have human resource specialists to deal with unfair dismissal regulation. Attending a commission hearing alone can require a small business owner to close for the day.

The time and cost of defending a claim, even one without merit, can be substantial. In evidence to the Senate committee inquiring into the Workplace Relations Amendment (Fair Dismissal) Bill 2002, the restaurant and catering industry indicated that it costs, on average, $3,600 and around 63 hours of management time to defend an unfair dismissal claim—money and time most small businesses can ill afford. In fact, according to a study by the Melbourne Institute of Applied Economic and Social Research, the cost to small and medium sized businesses of complying with unfair dismissal laws is at least $1.3 billion a year.

Research has found that many small businesses do not understand unfair dismissal laws. For instance, a survey by CPA Australia found that 27 per cent of small business owners thought that they were unable to dismiss an employee even if the employee was stealing from them, and 30 per cent of small business owners thought that employers always lost unfair dismissal cases.

A growing body of evidence shows that small businesses are reacting to the complexity and cost of these laws by not taking on additional employees. A report by the Centre for Independent Studies, for example, indicates that, if only five per cent of small businesses employed just one extra person, 50,000 jobs would be created, and concludes that `employment in small business would rise significantly in the absence of the unfair dismissal laws'.

Similarly, the Melbourne Institute study found that unfair dismissal laws had played a part in the loss of over 77,000 jobs. According to the report, unfair dismissal laws particularly disadvantage those most in need of protection—the long-term unemployed, young people and the less well educated.

It has even been reported that at least one opposition member has admitted that the existing unfair dismissal laws act as a disincentive for small businesses to employ more staff.

The burden of unfair dismissal regulation is unnecessarily impeding the entrepreneurship and dynamism of our small businesses. This bill will remove the impediments and help the small business sector create more jobs for Australian workers.

I commend the bill to the House and present the explanatory memorandum.

Debate (on motion by Mr Edwards) adjourned.