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Wednesday, 9 November 2005
Page: 111


Ms CORCORAN (4:55 PM) —This Workplace Relations Amendment (Work Choices) Bill 2005 sets out to do many things, and I will not be talking about all of them here today. The legislation goes on for something like 600 pages, and there are another 600 pages of explanatory memorandum. I want to talk about just a few of the features of this legislation but, before I address the substance of the bill, I would like to make a point about the odd name of this bill. We are getting used to this government calling things by misleading names, and this bill is no exception. To call this bill ‘Work Choices’ is really over the top. There will be no choice for most workers under this legislation. Employees will be asked to sign an Australian workplace agreement, which is another example of a tricky name but I will not go into that here. The reality is that most employees will be told to sign the ‘agreement’ or go away. The only person agreeing will be the employer—the employees will not get much choice; it will be a take-it-or-leave-it agreement.

Most people are not able to negotiate effectively with an employer or a potential employer. The power difference is one factor in this before any other matter is considered. I think that most employers are keen to be fair to their employees, but some are not. However, even the fair employers can be intimidating to a new employee, particularly young people or people moving into the work force after a time out of it for whatever reason. These people are not in a position to look after their own interests properly.

If we are dealing with an employer who is not constrained by notions of fairness, the situation is even worse. On Lateline recently, the Minister for Employment and Workplace Relations was asked about a situation where a worker was concerned about negotiating with his or her employer. The minister was good enough to acknowledge the point but then revealed his own remoteness from the real world by suggesting that employees were at liberty to bring their accountant along to negotiate on their behalf. I wonder just how far removed from reality are this minister and this government.

Recently in question time the Prime Minister was asked about the fairness of a situation where a young person is forced into signing an AWA that significantly reduces the conditions that normally apply to the job in question. In the example used, ‘Billy’ was offered an AWA which explicitly removed award conditions for public holidays, rest breaks, bonuses, annual leave loading, allowances, penalty rates and shift and overtime loadings. The Prime Minister’s response was an impatient flick of the hand and the comment that Billy was better off with any job under any conditions rather than having no job at all—in other words, the Prime Minister acknowledged that Billy was being offered a job with substandard conditions.

The Prime Minister is content with the prospect that Billy, who is unemployed and who wants a job, is more or less forced into accepting this job. I do not mean necessarily that someone is physically standing over Billy, although I do not altogether dismiss the possibility, but the pressure on Billy to accept this job will be overwhelming. This sort of response from the Prime Minister confuses a number of things and indicates his arrogance in the whole IR debate. He just wants the debate to go away and for the new regime to get started. He is not particularly concerned about what it means for employees on the ground. The Prime Minister is confusing issues of employment—or the lack thereof—for individuals with decent working conditions and living standards in Australia. If these new laws allow an employer to take on someone new on different, cheaper overall rates and/or conditions from others already on the job, the pressure to move everyone on to the new, less advantageous conditions will be huge. Eventually this will happen, of course, even in the best of workplaces.

Others refer to this phenomenon as ‘a race to the bottom’. It means that this government is happy to see the working conditions of Australians fall to those of some of our Third World neighbours. The Prime Minister says that this will not happen because labour is scarce at the moment and therefore employees are in a strong position to negotiate. This is clearly nonsense. There are always individuals who have unusual or unusually highly developed skills who can have a go at naming their price, but this is not so for the bulk of the working population. Australia, by and large, enjoys good and decent working conditions, but we did not get these by accident or through the good intentions of employers. These were fought for long and hard by workers and their representatives—the union movement—and we are not about to give them away. We are not a Third World country and we do not intend to move in that direction.

The Prime Minister correctly says that we need a good, strong economy in order to continue to thrive. What he is forgetting—or maybe just ignoring—is the fact that a good work force is critical to a strong economy. If the government does not understand that we should ensure that employees have decent working conditions and a fair say in how they work just because this is the right thing to do, then he should at least understand that a strong and committed work force is necessary to ensure that the economy thrives.

The editor of Australian Policy Online at the Swinburne Institute for Social Research, Peter Browne, wrote an interesting piece for the Canberra Times today. He argues that the link the Prime Minister is trying to make between labour market regulation and employment is not convincing. He writes:

Unemployment rates are a highly unreliable indicator of the comparative health of labour markets in different countries ... they can leave out a large group of potential employees: those individuals who have dropped out of the jobless statistics altogether, switching to disability payments, for example, or living off savings.

A much more reliable measure is the proportion of the working-age population in each country who have a job. The OECD provides these figures for each of its member countries, and they give a different picture of which countries are doing well for the working population.

The OECD has also developed an index of employment protection, designed to measure “the strictness of employment protection legislation” for each of these countries.

When we match up of the two sets of figures—employment rates and the job protection index—for Australia and 16 comparable OECD countries, an interesting pattern emerges, and it doesn’t offer much support to the Government. Australia is already in the bottom half of the job protection range ... and we’re doing moderately well on the employment scale.

He says further on:

... out of the six countries with the highest levels of employment, only one has less employment protection than Australia. Each of the other five—Switzerland, the Netherlands, Norway, Sweden and Denmark—has more protection, and sometimes significantly more, yet is performing better in terms of providing employment for its citizens.

This Work Choices bill will establish a national workplace relations system, or a unitary system. The government wants to do this because it says that the existing system is confusing and unwieldy. I agree with the principle behind this proposal—if we were setting up a brand new industrial relations system in this country, one national system would, indeed, be sensible. But the point is that we are not starting from the beginning; we are in a situation where we have a number of state and federal systems already in existence. If the government were serious about changing this aspect of our system it would be doing this in consultation with the various state governments. Instead we find ourselves in a situation where the government is issuing ultimatums to the states. The Prime Minister announced this policy proposal without letting the states know beforehand, and without any indication that he was interested in consulting with the state governments—hardly a cooperative approach to the matter. One can be forgiven for suspecting another agenda here.

It gets worse though. The government is relying on the corporations power to get a unitary system in place. This will leave out all those workplaces which are not incorporated. The government’s own estimate is that coverage will be between 75 per cent and 85 per cent. This is hardly a good way of removing complexities or confusion. It will simply add more.

The legislation will establish an independent body to be called the Fair Pay Commission. I have already talked about tricky naming habits, so I will let this example go through without comment, but there is ample material here for those who want to pick it up. This body—the Fair Pay Commission—is to be charged with the responsibility offsetting and adjusting minimum and award classification wages; minimum wages for juniors, trainees/apprentices and employees with disabilities; minimum wages for piece workers; and casual loadings.

Many members on this side of the House have been asking the government to guarantee that workers/employees will not be worse off under this new Fair Pay Commission. There are three points worth making here. The first point is: why do we bother asking this government to give any commitment? What is the value of any commitment that this government gives anyway? Accepting a commitment assumes a degree of trust, which I certainly do not feel towards this government. We remember the ‘kids overboard’, we remember the never, ever GST and we remember the ‘rock-solid, ironclad’ medical costs safety net guarantee and we do not feel very reassured. The second point is the arrogant way the Prime Minister shrugs off questions about minimum wage guarantees. The Prime Minister constantly answers with the arrogant line that his record is his guarantee. This is no comfort at all—I would argue, in fact, that it is just the opposite.

The third point is, indeed, the Prime Minister’s record—the one he asks us to rely on. The Prime Minister is very fond of saying that under his government wages have increased by 12 per cent in real terms. It is true to say that they have increased by 12 per cent since 1996. But it is not accurate for the Prime Minister to claim responsibility for this—these increases have occurred despite the Prime Minister and not because of the Prime Minister’s actions. In four of the past nine years, the Howard government has proposed a minimum wage increase less than its own inflation forecast, a result that would have delivered in effect a drop in the minimum wage in real terms on four separate occasions.

The Prime Minister is being less than honest in claiming wage rises since 1996 as his own. The first time this present government made a submission to the national safety net review was in 1997. If we look at wage increases since 1997, we see that they have increased not by 12 per cent but by 9.17 per cent in real terms. Had the Howard government’s submissions to the AIRC been accepted from 1997 through to 2005, there would have been a real reduction in the minimum wage of 1.55 per cent and not the 9.17 per cent real increase granted by the AIRC, which the Prime Minister in any event opposed.

It is with some trepidation that we rely on the government’s record as the guarantee that wages will be okay. This reliance has fallen over at the very first hurdle. The government has announced that the next minimum wage increase will be determined by the new Fair Pay Commission and that it will be done six months later than usual.


Mr Bevis —Without fairness.


Ms CORCORAN —Without fairness, I am reminded. This means that something like 1.7 million low-paid employees will have to wait at least 18 months until any pay increase from their current level will even be considered. That is an extra six months of waiting for 1.7 million working Australians and their families struggling enough to make ends meet. This is a very poor start to this new regime of industrial relations.

Another aspect of this legislation which is unacceptable is the removal of the right of an employee to apply for remedy if he or she is unfairly dismissed. A number of small business people I have spoken to tell me that they are worried about the current unfair dismissal laws. They tell me that it is impossible to dismiss an employee or that it is too hard to fight an unfair dismissal claim. We hear about paying ‘go away’ money being the inevitable result of trying to dismiss an employee regardless of the rights or wrongs of the situation.

I know that, when I was in the position of hiring and firing, the existence of these laws actually helped me and the organisations I was working for. On the few occasions when I was in a position of having to consider asking someone to leave, I went through careful procedures to make sure that I was being quite fair both to the organisation and to the employee. The provisions of the unfair dismissal laws were useful in developing these procedures. By going through the process of setting out what the problem was, why it was a problem and the various ways of addressing the problem, we found that either the problem was able to be fixed or, if not, the grounds for dismissal were solid and clear. I am not saying that this made dismissing anyone easy, but at least I knew that I was being objective and fair about it.

There are some problems with the current unfair dismissal arrangements, and Labor acknowledges these and has proposed changes to address them. The changes include: requiring the Australian Industrial Relations Commission to conduct conciliation conferences at the convenience of the small business; encouraging the use of telephone conferencing to assist small businesses that have difficulty attending hearings in person; allowing the commission to order costs against applicants who pursue speculative or vexatious claims; legislating an indicative time frame within which the commission should deal with unfair dismissal applications; making better information available to small businesses to assist them to understand their obligations about termination of unemployment; and removing contingency fees for lawyers, if not removing the lawyers altogether. The answer to the existing problems is not to remove unfair dismissal provisions. The answer is adjusting the rules to ensure the system works properly.

The government has talked about removing unfair dismissal laws for some time. Earlier legislation talked about organisations with fewer than 20 employees being exempt from unfair dismissal laws. This legislation here today moves the magic number to 100 but adds other factors which effectively means that all employees are now not covered in cases of unfair dismissal. I object to these changes, firstly, because they are inherently unfair and, secondly, because the extension of this to organisations with fewer than 100 employees was never talked about in any pre-election promise or commitment.

The Prime Minister was challenged on this point in question time recently. The member for Throsby asked the Prime Minister to point out where in the government’s 1996, 1998, 2001 or 2004 election commitments was the proposal to abolish unfair dismissal rights for employees in companies of up to 100 employees. The member for Throsby went on to suggest that this proposal emerged only after the government realised it had total control of the Senate. The Prime Minister’s answer was gleeful. He said:

Can I say to the member for Throsby, at my recollection of the last document, there was no reference made in either the 2004 policy or the 1996 policy to a particular number. In other words, both in 1996 and 2004 there was a reference to getting rid of them altogether.

That was a very tricky answer to a straightforward question. I would like to read out parts of a letter published in the Business Age on 27 October 2005. It was written by Gary Fallon of Noble Park. Gary said:

I operate a part-time business consultancy specialising in the small and medium enterprise sector. I would like to share the views of one company that approached me to consult to it, on the proposed changes to IR.

This company stands out as an example of the way in which workers can be abused by the proposed changes.

…     …         …

The company is highly profitable ... and is owned by a brother and sister ... and inherited the company on the death of their father two years ago.

Despite its profitability, the company is relatively dysfunctional, with low staff morale stemming from a constant comparison of the siblings’ management style with that of their late father, and a general “us and them” mentality growing between the proprietors and their staff.

The owners have signalled that when the new IR legislation is passed they will sack all 67 process workers.

…     …         …

The company then intends to replace the present workforce with the same number of casual employees on AWAs and pay the absolute minimum wage that they can get away with, plus the basic statutory employment conditions. The higher pay scales, permanency, penalty rates, shift loadings and other benefits now enjoyed by this company’s workforce will be converted into profit (not productivity improvements) for the owners. With a degree of glee, I was told that this increase in net profit—again, not productivity—will be more than $700,000 a year, or $350,000 for each of the owners.

…     …         …

The company would list the positions with a government Job Network Provider so they could get employees (free of any recruiting charge to the company), who would be compelled to take the positions at the minimum wage level offered under the threat of the removal of their welfare payments by Centrelink.

In addition, the brother, correctly, pointed out that in the area near the plant there is a large number of households containing single mothers who will be compelled to work under the changes to single-parent mutual obligation rules. Thus, to use his reasoning, the Government’s welfare reforms will deliver this company low-cost labour through compulsion.

I—

Gary—

made the observation that productivity would fall with the removal of experienced operators, only to be told that the siblings had factored this in and considered the productivity loss irrelevant because they would clear the $700,000 additional net profit from their new workforce.

The points made by Mr Fallon are that these new laws make it very easy for unscrupulous employers to remove employees without any risk of penalty and for these employers to then replace these people with others who are more or less forced to take up jobs at much less than the current going rate. This move has nothing to do with increasing productivity; in fact, the company has factored into its sums a fall in productivity.

This legislation, being sold to us as necessary for the good of our economy, will lead, in this case, to 67 people losing their jobs, others gaining substandard employment and a fall in productivity, with an immediate increase in take-home profits for the owners—a massive short-term advantage for two people at the expense of 67 employees and a disadvantage in terms of productivity. This legislation is clearly unfair to very many people. The arguments that it will be good for our economy are less than convincing, and it will lead to a fall in the living conditions of many people. This legislation is all about the government’s hatred of the union movement. It will create hardship without any offsetting benefits, and it needs to be consigned to the bin.