Mr ANDREWS (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (9:08 AM) —I move:

This bill amends the Workplace Relations Act 1996 to protect small businesses with fewer than 20 employees from the costs and administrative burden of unfair dismissal claims. The government remains determined to effect this important change for small business and to free up the jobs that these laws are costing. This will have an enormous benefit for the Australian economy, particularly for those people who are looking for work or who are looking for better work. The wealth generated from these extra jobs will flow through to everyone in Australia.

The parliament and the Australian public know where the government stands on unfair dismissal reform. The proposal advanced in this bill has been a consistent objective for the government and was strongly reiterated in the coalition's October 2004 election policies. The bill reaffirms the government's position advanced in the Workplace Relations Amendment (Fair Dismissal) Bill 2004, which lapsed with the calling of the election.

The government has been returned with a fresh and unquestionable mandate to pursue the passage of this legislation. The people of Australia have the right to expect the passage of the bill. They have voted in favour of the jobs that it will create in the small business sector.

The opposition claims that it will be more business friendly than it has been. This is an ideal opportunity for it to match its actions and words. If it does not support this bill, the ALP's claims to economic credibility will be exposed as a sham.

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. All existing employees who have access to unfair dismissal remedies in their current jobs will continue to do so.

This 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 prohibited 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 sensible workplace relations reforms. Australian Bureau of Statistics figures show that over 1.4 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 5.3 per cent, which is as low as it has been for over a quarter of a century. An unemployment rate of below five per cent is now achievable.

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. Most small businesses do not have human resource specialists to deal with unfair dismissal claims. 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 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.

Many small businesses do not understand unfair dismissal laws. A survey by CPA Australia in March 2002 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 opportunities—the long-term unemployed, young people and the less well educated.

The August 2004 Sensis Business Index found that 28 per cent of small and medium businesses had decided not to take on additional employees because of fear of the possibility of unfair dismissal action. The survey also found that if these businesses had put on the additional employees, they would have put on, on average, between two and three additional employees each. This reinforces the finding that unfair dismissal laws are costing Australia very large numbers of jobs.

Workplace relations laws should encourage, not inhibit, job creation. The small business men and women of Australia deserve to be able to grow their businesses without undue worry about the risk of taking on new employees. This bill will remove the impediments produced by these misconceived laws and create thousands of new jobs for Australian workers.

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

Debate (on motion by Mr Bevis) adjourned.