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Thursday, 1 November 2012
Page: 12934

Ms LEY (Farrer) (10:10): I am pleased today to speak on the Fair Work Amendment (Transfer of Business) Bill 2012. I will just capture the outline of the bill to begin with. This bill will amend the Fair Work Act 2009 to protect employee entitlements in circumstances where there is a transfer of business from an old state employer to a national system employer. The bill will, as far as possible, reflect the existing transfer-of-business provisions in part 2-8 of the Fair Work Act. In general, part 2-8 provides that, where there is a transfer of business, an enterprise agreement, a workplace determination or a named employer award that covered employees of an old employer continues to cover these employees if they commence employment with a new employer within three months of their employment terminating with the old employer. This bill will ensure that, where there is a transfer of business from an old employer to a national system employer, transferring employees will retain the benefit of existing terms and conditions of employment in state awards and agreements as well as their accrued entitlements.

We saw the minister bring a Fair Work Amendment Bill into the House yesterday. I talked then about 53 recommendations. The minister picked up about 17 of the easy, around-the-edges ones. There was actually one about the transfer-of-business provisions. That recommendation pointed to the difficulty that existing businesses have with the transfer-of-business provisions in the Fair Work Act and the lingering inequity of those provisions. This measure today further builds on what is clearly, from the government's point of view, a political wedge.

The Minister for Employment and Workplace Relations flew to Queensland to try and interrupt the important job that Campbell Newman has to get the state finances back in the black to announce that the transfer-of-business provisions would now extend to Queensland state government employees. It is clearly just a political trick, because, if you think about the effect of this legislation should it pass this House and the other place—and I foreshadow that we will be opposing it—it is actually not going to hurt the Queensland economy; it is going to hurt the workforce. It is going to hurt the worker who, in seeking to become the workforce of a contracted-out employer and move from employment with the state government, now has to have all of the terms and conditions of that state government employment transferred with them to their new contractor. If you were that new contractor, would you, in today's environment, want to take on the Queensland government's terms and conditions? Those terms and conditions are extremely generous, and that is part of the reason why the Queensland government has to address a looming state debt of more than $85 billion.

The irony of this is that the new Premier of Queensland, Campbell Newman, is fixing up the years of financial mismanagement of the Labor government in Queensland and has no choice but to have this number of public sector redundancies—most of them, by the way, voluntary. It is not an easy situation for those who are affected, and I am not pretending that it is, but it is not something that the government does just because it can; it is something that the government does because it has to.

Again, this minister misses the point because in the transition or the potential transition of the employee this leaves that employee completely out in the cold. Premier Newman was elected by an absolutely overwhelming majority of the people of Queensland because they knew he was the person to take the tough decisions to deal with the massive deficit left by years of Labor economic mismanagement—and that includes previous Labor Party policies.

There are further issues which I need to point out in connection with the proposed transfer-of-business provisions in the Fair Work Act. I mentioned yesterday that the minister brought an amendment bill to the table but ignored the important recommendations made by his supposedly independent panel. They were not independent in our view but the minister was mugged by reality because they were still forced to come up with some clear inconsistencies and some absolutely incontrovertible evidence that the Fair Work Act is not working the way it should. I want to pick up on the issues that exist now with the transfer-of-business provisions which will highlight why it is even more ridiculous for the minister to bring in the extensions to the Queensland public servants which he is attempting to do in this bill.

In the submission to the Fair Work Act review by the Australian Industry Group—a group which the government takes seriously and appoints to various advisory panels and reference groups, and recognises is the voice of industry—the AiG say that the transfer-of-business laws in the Fair Work Act:

… have reinstated the concepts which caused so many difficulties for industry in the late 1990s, prior to a number of High Court and Full Federal Court decisions—

and lists a number of those decisions. The submission continues:

As currently enacted, the transfer of business laws are operating against the interests of both employers and employees. The laws result in a lose-lose-lose scenario where operations are outsourced. Client companies lose because they need to make employees redundant when outsourcing occurs. Companies who take on outsourced work lose because they cannot access the valuable skills possessed by their clients’ employees. Employees lose because their jobs disappear along with their continuity of service for long service leave and other entitlements.

In outsourcing arrangements, the transfer of skilled employees who have knowledge of client systems and infrastructure is often strongly supported by both clients and service providers to facilitate a successful delivery of the outsourced services. Indeed many companies have built their businesses on the engagement of their clients’ employees. However, the transfer of business laws now provide a major deterrent to the employment by the service provider of any of the client’s employees.

Consider the case of a software consultancy firm providing outsourced IT services to a Government, a mining company, an airline and a steel manufacturing company, amongst other clients. The software company no doubt has very different employment conditions to those which apply to these four client companies. Most software companies employ staff on common law contracts, in contrast with other industries where enterprise agreements are common. The transfer of business laws expose companies involved in outsourcing to transferable instruments becoming binding upon their operations for both transferring employees and non-transferring employees.

This applies not just to outsourcing but to insourcing. AiG continue:

Accordingly, the laws ensure that companies will make every effort to avoid employing any employees of their clients.

This further underlines that this is a measure which does not look after the employee, the worker or the workforce. I would say in so many of the businesses we have dealings with that the business is the workforce; it is the employee who has the relationship with the client. So when the client hears about a change of business ownership or structure, the first thing they often ask is, 'Will you still be involved with me as the client? Will I still be able to talk to you because you understand my circumstances?' What we have seen with the transfer-of-business provisions is the government, extremely heavy-handedly, absolutely working to stop that arrangement happening, working to make sure that in the case where the business transfers, the new employer does everything to push the existing employee away. There is absolutely no excuse for that to be the result of this.

So those are the existing transfer-of-business provisions. Had the government had a real problem with them as they apply to Queensland state sector employees, they could have done all this before 2007. They did not tell the Australian people or the IR community, by the way, that they were reinstating old law in the transfer-of-business provisions. They did not talk about it leading up to the 2007 election. They then implemented the provisions in the Fair Work Act but they did not do anything about Queensland state employees because they stuck to the principle that, unless a jurisdiction has referred its rights in this regard, it is appropriate for that state jurisdiction to manage its state public service, and by extension its state administration, itself. There is no role for the Commonwealth in that but if they had had a problem, that is what they should have done.

In reviewing the Fair Work Act, the 'independent' panel recommended that something be done to distinguish voluntary from involuntary redundancies. The irony again of this legislation is that, if you choose to take a generous voluntary redundancy from your employer in the current Queensland situation—there are many voluntary redundancies and I do not decry the difficulties for people losing their jobs in complicated circumstances—these laws apply to you. You are then prevented for three months from moving to the workforce of the new employer—rather, you are not prevented but the employer has to pick up all the conditions you had as a state government employee. In moving to a new world, that is simply going to be impossible for most employers.

So the Fair Work Act review picked up on this huge discrepancy, which is, if you are taking a voluntary redundancy, why should this apply to you?

Anyway, the minister ran a million miles from this recommendation and many of the other important ones we talked about yesterday. Just consider the situation that Premier Newman has to face. Yesterday, we saw a story that said that the individual in Queensland's top bureaucratic job in the final months of the Bligh government pocketed more than a million dollars in less than a year—getting a total remuneration package of $1 million between July 2011 and May 2012; earning $187,000 between 26 March and 30 June. I am not suggesting that this individual would be in trouble in terms of finding another job, because they probably have plenty of savings. But I am pointing this out as the sort of profligacy that Premier Newman now has to address. Premier Bligh was throwing money around in the Public Service like you would not believe. And Premier Newman has no choice but to try and address this. This minister, by the way, is standing in the way.

Let us look at some of the third-party comment following the release of this. I just want to quote from a couple of articles because I think they are worth noting. Following the announcement, as I mentioned, the minister flew to Queensland for a no doubt dramatic doorstop and a Commonwealth rescue package. It is, of course, all meaningless because, if you are affected by this as an employer, you are not going to employ the people involved, and the Queensland government is actually not penalised by it at all. They would just shrug their shoulders and go, 'Ho hum.' Well, you are making it difficult for the people of Queensland, but it is your choice, Minister, and maybe you should think about that.

I will quote from an article by Sophie Morris and Mark Ludlow from the Australian Financial Review:

The move is part of a political strategy by the federal government to stoke voter backlash against big job cuts by the Coalition governments of Campbell Newman in Queensland and Barry O'Farrell in NSW, which are cutting spending because of weaker tax revenue.

…   …   …

The Queensland LNP government said last week it would shift about $500 million worth of government contracts and services from the public to the private sector as part of its attempts to return the budget to surplus in 2013-14.

…   …   …

It would force private companies taking on retrenched hospital cleaners, canteen operators and other staff in the same role to match their public sector conditions—

that is what this legislation would do—

hindering state governments' ability to reduce the cost of such services.

…   …   …

A person fired from their job after it was outsourced would receive the same payout as a government employee.

The federal coalition, obviously, have our own views on this.

Just think about the next step in the process. If an employee was picked up by the new, outsourced employer, and something happens to that employer—because, let us face it, under this government the small business environment is very uncertain—and then, a few months later, the employer loses that employee or has to let them go, there is the long arm of the law coming down to get that employer, saying to them, 'When you do let them go, you actually have to pay out the conditions that they would have had, had they remained as a state public sector employee.' No business is going to take that risk:

It’s unrealistic for any government to expect a private sector employer to continue the often highly restrictive and inflexible workplace arrangements that have been negotiated under state government enterprise bargaining agreements when they take over state government contracts or services.

That is a quote from the NSW Business Chamber chief executive, Stephen Cartwright.

I have not mentioned New South Wales, although the legislation actually does apply to New South Wales, but the minister, or his office or his department, did not really do their homework, because New South Wales Treasurer Mike Baird said that the minister's comments demonstrated an extraordinary level of ignorance towards the New South Wales public sector. Why? Because New South Wales already makes appropriate provision for employee rights in transfer-of-business situations. They are probably not as ridiculous as these ones—

Mr Garrett interjecting

Ms LEY: But it is a fact, Minister at the table, that the New South Wales government has made those provisions for employee rights in transfer-of-business situations. So they have, sensibly, looked after the transferring employees—but not in a way that disadvantages them to the extent that will happen under this minister's bill.

In my quoting of third parties that I think have something to say on this, I would like to quote Gary Johns, who was, I believe, an assistant minister for industrial relations in the Keating government, and he says:

It's as if Shorten wants to pretend that Australia is emerging from a war and that protection of privileged union-controlled public-sector employment is the way to prosperity.

…   …   …

The minister's claim:

… to "respect the rights of state and territory governments to conduct their own administrations" is patently insincere. His intention is to foil the need to properly administer their workforce to the satisfaction of taxpayers.

And Mr Johns goes on to say:

Employer evidence suggests the changes to the former transmission provisions make it less, not more, likely that a purchaser would keep existing employees. This is because the changes make it difficult for a purchaser to restructure the business, including altering inefficient work practices.

These complexities reflect in Queensland—and obviously, from the action that has had to be taken there, in New South Wales—a public sector workforce that is crying out for restructuring. Whenever you see a gap between the same task performed by the Public Service compared to the private service, and you see the additional cost loaded onto the Public Service, alarm bells should ring, because that is not going to lead to efficient operation, either of the sector that we might be talking about or of the state economy as a whole.

I will reflect on just one example from my own electorate of Farrer. I do not really want to mention water in the context of this bill—there is a lot of discussion about water in the House at the moment—but the water bailiffs that are employed by private irrigation companies do pretty much the same job as the water bailiffs employed by the New South Wales government. I am going back to before the current Premier, because I know that moves have been made to address these issues, but if I go back, say, three years, the differential in pay was moving rapidly past almost 20 per cent, and that was not because the private sector was screwing down the wages of its employees; it is because that is what the market could bear. If you create this artificial market in the Public Service, because there is always going to be a public sector salary, then obviously you are going to have claims and work conditions that move that particular job and task and its efficient functioning absolutely out of reach in terms of any financial sense.

So this bill is pretty nonsensical. It is an attempt by the minister to look as if he is acting against the Campbell Newman government. That is not going to work. It does not make sense in a public policy sense. Everyone in this place should care about our workforce and about individual workers who are in the difficult situation of losing their jobs. We would never dismiss the difficulties that employees face. But what we would like to see is governments that make it easier for those employees to pick up another job and make it easier for employees to keep the job they have with a new employer. Give those employees the right to choose—to say, 'I might stay in my same occupation. My terms and conditions might be different, because the previous terms and conditions were unsustainable. But it is my choice.' This takes away employee and worker choice.

I will now sum up some key facts left out by the minister. Queensland and New South Wales public sector employees are not covered by the Fair Work Act because successive state Labor governments decided not to refer their powers to the Commonwealth. How about respecting that decision? Labor's transfer-of-business regime leaves workers and employers worse off, something that has been admitted to and addressed in Labor's own Fair Work Act review. Another fact is that Labor's own modelling projects 4,200 full-time jobs to be shed from the federal Public Service, with further modelling showing federal Labor will cut more than 12,000 employees by the end of 2014-15. So it is okay if the federal government cuts its Public Service but not if a Liberal National Party state government does it? Similarly, in Tasmania the Greens-ALP alliance is shedding jobs—big time, when you consider the size of the Tasmanian economy. We know that that is because of their grave mismanagement of their economy.

So, if you listened to the minister on this subject, you would think that only the coalition cuts jobs in the public sector. I think the minister needs to remove those rose-coloured glasses and get up to speed with what his counterparts in the Labor states—when they were Labor states—were up to, even in the state of Tasmania.

Up close, this legislation is alarming. All employees, should they meet the criteria, will be eligible to transfer their existing terms and conditions of employment regardless of whether or not the redundancies were voluntary and regardless of the generosity of the package. Furthermore, the government has confirmed that the transfer of business from a state government to a private sector employer, for the purposes of this act, is for changes from a whole-of-government perspective, not at an individual departmental level, making it, if possible, even more far reaching.

Let us say that, for example, a state education department decide to outsource some of their duties. They make a number of staff redundant. However, if any of these people were to work for the new contractor for this service, under this legislation the contractor would be required to meet all existing employment entitlements. In essence, this is the government imposing their own employment framework onto the private sector, taking away the private sector's ability to choose what terms and conditions of employment they offer their own employees—and, obviously, all within the confines of the Fair Work system and under current modern awards.

This is a push from a government that completely misunderstands the landscape. I am thinking of examples where contracted-out jobs might apply. What if a state government does valuable counselling work in a public service context? And I know many do, such as my own state government in New South Wales. The logical group to take on that work probably is the charities sector. We know that the charities sector does a great deal with very little. But I do not know that the charities sector could take on the wages, terms and conditions of public sector employees. The fact that the non-profit sector has other things they can offer an employee—such as fringe benefits tax exemptions that flow on to salary sacrifice opportunities, because of their charitable status—just does not count. It does not get offset anywhere. So again you might find that, in the move from state government to private provider, the employee is not that much worse off because they end up with a set of terms that are different but are still not that bad. This is all ignored in this legislation. It simply says that for the three-month period after the employee leaves the government job the new employer has to pick up the whole world of state government employee conditions. That is just not going to happen.

I said that the coalition will be opposing this bill. That will not come as any surprise. Such poor legislation really should be rejected by everybody in this place. We look forward to something more sensible coming through from the government when, in the other place, it has an opportunity to reconsider its own legislation.

The Australian economy is now a lifetime and light-years away from the protectionist era that this minister wishes to hark back to. Campbell Newman has real work to do on the Queensland public sector, whose performance, when compared with the private sector, lags by up to 30 per cent, with the workforce being bound more by tradition than productivity. Campbell Newman has real work to do, and the minister in this place is standing in his way.