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Thursday, 10 February 2005
Page: 61


Mr STEPHEN SMITH (1:38 PM) —Labor oppose the Workplace Relations Amendment (Fair Dismissal Reform) Bill 2004. The substance and basis of our opposition is reflected in a second reading amendment which I will formally move at the conclusion of my remarks. That second reading amendment is as follows:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) confirms that the protection from being unfairly dismissed is a fundamental issue for Australian workers and their families irrespective of the size of the business in which they are employed; and

(2) calls on the Government to work with small business, employees and peak bodies to make unfair dismissal laws more effective by addressing procedural complexities and costs”.

This is a bill which has become something of a crusade for the government. The fact that it is central to their industrial relations agenda is reflected in the fact that it was the first bill that they started talking about when it became clear that they would gain control of the Senate come 1 July this year.

It is a bill that has been introduced into the House on six previous occasions. This is now the seventh time. The government has got itself into the habit of quoting a larger figure. It is true that, if you add up all the procedural and other votes over the years, you come up with a much bigger number. Because the methodology is imprecise, the figure for how many times the proposal has come before either the House or the Senate has a fair amount of rubber in it, but we are reassured constantly by the government that it is somewhere in the low 40s. So, if it is somewhere in the low 40s, let us start with this simple question: why has the Senate, comprising various senators from the Australian Labor Party, the Australian Democrats, the Australian Greens and, in some respects more importantly, numerous Independent senators, rejected the measures in this bill time and time again? I think it is because of one essential fact: what this bill proposes is essentially unfair.

Our starting point is that no-one deserves to be sacked unfairly, and that is the heart and soul of the bill—allowing some people to be sacked unfairly. No-one deserves to be sacked unfairly, and no-one deserves to be sacked arbitrarily. No-one deserves to be sacked on a false premise or without foundation. This bill is unfair because it withdraws the protection of the law from employees based purely on the size of the enterprise in which they work. It is something that Labor cannot and will not support. It should not matter whether someone is the 19th or the 21st employee in a business. That should not be the essential fact or reason which withdraws someone's rights. Everyone has a right to be treated fairly at work—and never more so than in decisions about the termination of that employment. For most Australians, with the exception of a small number of Australians who are extremely well off, a person's job is their livelihood. If you lose your job, you lose your livelihood. So it is a very important issue for those many hundreds of thousands of Australians who work in small businesses.

The bill provides that employees of small businesses may be dismissed in circumstances which a court would find to be unfair but leaves them with no remedy, no rights and no redress. The provisions relating to unfair dismissal in the Workplace Relations Act are founded on the principle that employees and employers deserve a `fair go all round'. So central is that principle that it has been written directly into the act itself. In the objects provisions of the division that deals with termination of employment, the act says that the unfair dismissal rules and procedures:

... are intended to ensure that, in the consideration of an application in respect of termination of employment, a `fair go all round' is accorded to both the employer and the employee concerned.

There cannot be even a pretence by this government that the bill that they have introduced provides employees of small businesses with a fair go all round. It simply removes any right that employees have not to be dismissed unfairly, and it removes that right simply on the basis of their being the 21st employee rather than the 19th. I am not alone in making such a criticism. Late last year the Catholic Bishop of Parramatta, Bishop Kevin Manning, said:

... governments are also considering calls for more lenient unfair dismissal regulations for small enterprises. I can't imagine Justice Higgins entertaining the idea that a worker's right not to be unfairly dismissed depends on the size of the enterprise for which they work.

I think Bishop Manning is absolutely right.

The simple fact is that this bill, whether as one element of a broader legislative package or introduced as a bill in its own right, has never enjoyed the support of the Senate at any point since the government was first elected in 1996. This is precisely the same bill that the government has previously introduced on a number of occasions. As I have said on a number of occasions since this parliament began, if it was the same bill, the government could expect the same outcome—same bill, same outcome. A lot of the government's rhetoric which pertains to this piece of legislation goes to the claims it makes in respect of employment generation that would occur as a result of the successful adoption of its measure. There has been considerable criticism about the lack of evidence that such an unfair exemption as the government proposes would lead to employment growth in small business.

The first figure to gain some currency in this debate was the figure of 50,000 new jobs which the former chair of the Council of Small Business Associations of Australia, Mr Rob Bastian, volunteered when he was asked by a journalist how many jobs the passage of the governments unfair dismissal exemption for small business might create. Ever since then the government has struggled to justify, defend or explain the basis for the assertion that the existence of unfair dismissal laws comes at a cost to jobs in the small business sector or that the passage of its bill would create 50,000, 60,000 or 70,000 jobs. When the minister introduced this bill on this occasion he referred to a study released by the Melbourne Institute in 2002 to support the claim that passage of the bill would create 77,000 jobs.

The Melbourne Institute report was commissioned by the government in an attempt to address weaknesses in its arguments for a small business exemption. In preparing its report, the Melbourne Institute surveyed 1,800 businesses with fewer than 200 employees—not businesses with fewer than 20 employees, which is how this bill defines a small business, unlike the government's definition of small business in taxation legislation for GST or capital gains purposes. So it was not a survey in respect of businesses with 20 employees but of businesses with fewer than 200 employees.

The Melbourne Institute asked employers about the extent to which unfair dismissal laws affected their employment practice and their costs. There was no distinction made in the survey between unfair dismissal—that is, dismissal which is harsh, unjust or unreasonable, and which the government seeks to exempt businesses from which employ 20 or fewer employees—and unlawful dismissal—that is, dismissal on the basis of sex, race, disability, pregnancy and so on, which the government does not propose to exempt small businesses from. Nor did the survey draw any distinction between federal unfair dismissal laws and state unfair dismissal laws.

Like many other surveys which the government has relied on to make its case that the repeal of unfair dismissal laws would lead to employment growth, the survey contained a number of leading questions which simply assumed the existence of unfair dismissal laws as a problem. The way in which the Melbourne Institute comes up with the figure of 77,000 is in itself quite remarkable. The figure was arrived at on the basis of qualitative ratings of the significance of the existence of unfair dismissal laws by businesses which previously had some employees but currently had none. In reaching its conclusion that unfair dismissal laws accounted for the loss of 77,000 jobs the Melbourne Institute said:

Firms that previously had employees, but currently do not have employees, were asked what was the maximum number of people they had employed.

Factoring this up to the population as a whole resulted in the conclusion that there were 77,482 job losses in which unfair dismissal laws played a part. Of these there were 34,812 job losses in which unfair dismissal laws played a major role, 17,100 job losses where unfair dismissal laws played a moderate role and 25,572 job losses where the laws played a minor role. It is a conclusion that is breathtaking in its lack of logic. That is the basis for the figure of 77,000 jobs that the government promotes as the inevitable consequence of the passage of this bill through the parliament. To say that that conclusion is tenuous would be to give it too much credit. So absurd is that proposition that few people would give it the time of day if the government had not repeated the claim on so many occasions.

There was, for example, no recognition by the Melbourne Institute in reaching its conclusion that other factors may have been determinative or of greater significance than the existence of unfair dismissal laws. Other factors such as the state of the business, the profitability of the business, taxation consideration and general economic conditions are often cited by small business operators as significant in the hiring and firing decisions that they make. It is not surprising that commentators who have turned their minds to the Melbourne Institute study, including Dr Paul Oslington of the University of New South Wales, have observed that the study—in the words of Dr Oslington—was `not taken terribly seriously' in academic circles. Professor Andrew Stewart has described the figure as `an estimate based on a series of estimates' and a `curious exercise providing a weak foundation' for the government's claim that passage of the bill would lead to employment growth in the small business sector.

It is partly for this analysis and this reason that Labor supported a motion by the Australian Democrats to refer the issue of unfair dismissal to the Senate Employment, Workplace Relations and Education References Committee for consideration and report in the first half of this year. It is worth referring to the terms of reference of that committee. They are:

(a) to examine:

(i) the international experience concerning:

(A) unfair dismissal laws, and

(B) the relationship between unfair dismissal laws and employment growth in the small business sector,

(ii) the provisions of federal and state unfair dismissal laws and the extent to which they adversely impact on small businesses, including:

(A) the number of applications against small businesses in each year since 1 July 1995 under federal and state unfair dismissal laws, and

(B) the total number of businesses, small businesses and employees that are subject to federal and state unfair dismissal laws,

(iii) evidence cited by the Government that exempting small business from federal unfair dismissal laws will create 77 000 jobs in Australia (or any other figure previously cited),

(iv) the relationship, if any, between previous changes to Australian unfair dismissal laws and employment growth in Australia,

(v) the extent to which previously reported small business concerns with unfair dismissal laws related to survey questions which were misleading, incomplete or inaccurate,

(vi) the extent to which small businesses rate concerns with unfair dismissal laws against concerns on other matters that impact negatively on successfully managing a small business, and

(vii) the extent to which small businesses are provided with current, reliable and easily accessible information and advice on federal and state unfair dismissal laws ...

The terms of reference then to go on to refer to the need:

(b) to recommend policies, procedures and mechanisms that could be established to reduce the perceived negative impacts that unfair dismissal laws may have on employers, without adversely affecting the rights of employees.

This is a separate subject that I will come to shortly. The terms of reference continue:

(2) That the committee be authorised, with the approval of the President, to commission independent research, as desirable or necessary, to investigate each of these terms of reference.

I would certainly hope that Dr Oslington and Professor Stewart turn up and give a serious academic analysis of the bodgie survey and the bodgie claims of the government in this particular area.

That proposed inquiry will, amongst other things, examine whether there is any relationship between unfair dismissal laws and employment growth in the small business sector and the extent to which the provisions of federal and state unfair dismissal laws adversely impact on small business. It is Labor's view and my view that any claims about the relationship between unfair dismissal laws and employment growth should be backed up by solid evidence. That Senate committee will bring some rigour and evidence, which has been sorely lacking in this debate so far as that matter is concerned.

I move to one of the important parts of Labor's second reading amendment, which is covered by the Senate committee's terms of reference that I referred to, which asks: what should the government really do in this area if it is serious about trying to assist small business? If the government were serious about seeking to assist small businesses, it would focus on the range of procedural improvements that could be made to simplify and improve the unfair dismissal process and reduce costs for small businesses.

There is a range of procedural improvements that could be considered. They include requiring the Australian Industrial Relations Commission to, firstly, conduct conciliation conferences at the convenience of small business—inconvenience is a constant complaint that is made in this area; secondly, encourage the use of telephone conferencing to assist small businesses who have difficulty attending hearings in person; thirdly, allow the commission to order costs against applicants who pursue speculative or vexatious claims; fourthly, legislate an indicative time frame within which the commission should deal with unfair dismissal applications; and, fifthly, make better information available to small businesses to assist them to understand their obligations about termination of employment. All of these things would be considered if you were serious about trying to effect sensible and better procedures to the benefit of small business, while at the same time treating people fairly. As I indicated earlier, that is covered by the Senate committee's terms of reference, which include:

(b) to recommend policies, procedures and mechanisms that could be established to reduce the perceived negative impacts that unfair dismissal laws may have on employers, without adversely affecting the rights of employees.

I have also seen the suggestion that in this area it would be helpful if lawyers were not allowed to charge contingency or success fees—that that would be another helpful contribution that could be made. That is something I would happily see the Senate committee take up.

The real thrust of this part of the opposition's second reading amendment and the real public policy desire here is to seek to constructively address concerns about the application of unfair dismissal laws on small businesses by pursuing sensible procedural reforms to reduce the cost and complexity of the unfair dismissal system. If the government were really serious about focusing its assistance to small business, it would focus on the range of procedural improvements that could be made to simplify and improve the unfair dismissal process and reduce costs for small businesses. As my colleague the shadow minister for small business has often stated in this place and in public, if there is a claim against a big business, they can send the human resources manager to the commission to deal with it; if there is a claim against a small business, then sending the owner to the commission can mean shutting down the business.

There is a range of simple procedural reforms here that can sensibly be made. That is reflected by our second reading amendment which confirms that protection from being unfairly dismissed is a fundamental issue for Australian workers and their families, irrespective of the size of the business in which they are employed, and calls on the government to work with small business, employees and peak bodies to make unfair dismissal laws more effective by addressing procedural complexities and costs.

This is probably the first of many proposed changes that the government will introduce in this parliament to seek to change the industrial relations landscape. Come 1 July, when the government assumes full control of the Senate, I fully expect that the government will not be able to help themselves. That is when we will see, with crystal clarity, the full spectrum of changes that the government has in mind in this area. But I am absolutely confident of one thing: just as this proposal is unfair, I am sure that we will see that many of the measures the government proposes to introduce will also be founded on a fundamental unfairness. Therefore, I move:

That all words after “That” be omitted with a view to substituting the following words:

“whilst not declining to give the bill a second reading, the House:

(1) confirms that the protection from being unfairly dismissed is a fundamental issue for Australian workers and their families irrespective of the size of the business in which they are employed; and

(2) calls on the Government to work with small business, employees and peak bodies to make unfair dismissal laws more effective by addressing procedural complexities and costs”.


The DEPUTY SPEAKER (Hon. I.R. Causley)—Is the amendment seconded?


Mr Tanner —I second the motion.