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Tuesday, 19 June 2007
Page: 57


Senator ABETZ (Minister for Fisheries, Forestry and Conservation) (4:07 PM) —I thank honourable senators for their contributions to the Workplace Relations Amendment (A Stronger Safety Net) Bill 2007. I note especially the contributions of Senators Troeth, Barnett and Birmingham, who made very thoughtful presentations in this debate and whose contributions stand in unfortunate stark contrast to the ACTU sausage machine that we were exposed to from those on the other side. This bill provides a stronger safety net for Australian workers and their families—a safety net which effectively balances fairness with flexibility.

In summary, this bill establishes a fairness test to strengthen the existing bargaining safety net, even greater employee protections to ensure the legitimacy of the fairness test, and the Workplace Authority and the Workplace Ombudsman as independent statutory agencies. More than $370 million in additional funding will be provided to support these protections for Australian workers and to ensure that they are appropriately applied. Balancing fairness and flexibility is something that this government has done effectively for the past decade. It is a mix that has helped to deliver an unemployment level of 4.2 per cent, the lowest level since November 1974, and to get over 10.4 million Australian workers into work—more than at any other time in our history. Since the election of the Howard government, real wages have increased by 20.8 per cent and industrial disputes in 2007 are at their lowest levels since 1913, when records were first kept. Those statistics are the best measure of any concept of fairness.

The debate has shown there to be a number of misconceptions about the intent and effect of this bill. This bill sets out to strengthen the agreement making safety net for around 7.5 million of our fellow Australians. To ensure there is some clarity in this debate, let me take this opportunity to address the grossest misrepresentations that have been made. Accusations have been made—not surprisingly by Senator Marshall, our brother from the ETU—that the new fairness test is compromised by subjectivity. In addition, Senator Wong, the CFMEU delegate, argued—albeit wrongly—that the capacity to take into account the personal circumstances of employees will erode job security for those with caring responsibilities.

Firstly, the government rejects the insinuation that there is no objective basis for making decisions about fair compensation. Rather, the bill is clear. The first consideration will be the value of the monetary and non-monetary compensation provided under the agreement. Moreover, the bill is very clear about assessing non-monetary compensation. It must have a monetary value equivalent as well as significant value to the employee. As the standing committee heard in evidence, the capacity that the Workplace Authority has to consider the particular circumstances and preferences of employees is, in fact, a major strength and not a weakness of this bill. In other words, the preferences of the affected employees themselves are absolutely relevant to this exercise. If workers prefer particular arrangements and value these more highly than certain award entitlements, they should not be prevented from striking bargains that reflect their individual preferences. Importantly, such arrangements must meet the fairness test. This is a very important protection. For example, compensation in the form of a car space for a worker who does not have a car would not be deemed fair, despite unfortunate claims made in this place last night by Senator Brown—and she is the more sensible of the two senators who carry the name Senator Brown.

To claim such an arrangement would satisfy the fairness test disingenuously ignores the very clear wording of the legislation, which requires that non-monetary compensation have a significant value to the employee. Moreover, it is simply wrong to argue that the capacity to consider an employee’s individual circumstances will remove job security for carers. This bill recognises that workers with family responsibilities may want to negotiate flexible arrangements that allow them to combine employment with caring responsibilities—and the absence of such flexibility, if not otherwise available, would compromise their ability to remain in the workplace. This framework is not about one-size-fits-all arrangements, which are continually advocated by the union representatives opposite. One-size-fits-all arrangements threaten the job security of those who require their individual needs to be taken into account and reflected in their employment conditions.

It was also claimed that an employee’s personal circumstances will be subject to undue scrutiny by the Workplace Authority. An employee’s personal circumstances may be taken into account by the Workplace Authority in deciding whether fair compensation is being provided—and for no other reason. The test is deliberately drafted so that it is the value of the entitlements to the employee that counts. The Workplace Authority has no power to demand information. It is up to the employee, as they wish, to provide such information to satisfy the authority. This bill leaves it to employers and employees to reach agreement on working arrangements but subject to a fairness assessment by an independent authority. If an agreement fails the fairness test, it ceases to operate and the employer must make up any shortfall.

I can confirm that the government will move amendments to clarify that the employee is entitled to recover both the entitlements under the instrument that would have otherwise applied and any entitlements arising under any other applicable law, agreement or arrangement, including the Australian Fair Pay and Conditions Standard and the contract of employment. While these amounts would have been recoverable in any case, the amendments will put this issue beyond doubt.

There have been suggestions that the provision in the legislation for the Workplace Authority to consider matters such as the industry or economic situation of an employer will lead to a wave of substandard agreements. This is also wrong. The Workplace Authority will only consider matters such as the industry or economic situation of an employer where there are exceptional circumstances and where it is not contrary to the public interest to do so. This is not only similar to the old no disadvantage test but is actually a higher threshold to satisfy.

It has been suggested that the fairness test does not go far enough and that the salary cap for AWAs should be removed and the test should be applied to all agreements, including agreements made before the Prime Minister’s announcement in early May.


Senator Sterle —Yep!


Senator ABETZ —I understand that amendments will be moved to this effect. I note Senator Sterle’s interjection of ‘Yep’ in support of that assertion; I think he might be a bit embarrassed later on. I can advise that these amendments will be opposed by the government. The government has already indicated that it does not consider it appropriate to apply the fairness test to agreements that were made in good faith under the law in force at the time not to interfere with accrued rights under such agreements. This would cause parties a great deal of confusion. In some cases the agreements would no longer be operative; employees may have changed jobs; the employer may not even exist anymore. While Senator Wong argued that hundreds of thousands of employees who made agreements before 7 May 2007 would get nothing from this bill, during the House of Representatives debate on this bill the Deputy Leader of the Opposition actually agreed with the government—Senator Sterle might like to listen to this—and stated that Labor:

... do not believe it is appropriate to try and retrospectively apply this test ...

No interjections, I am pleased to say; so hopefully that has registered. The government recognises that thousands of workers and their bosses are able to agree amongst themselves about the terms and conditions of employment that suit them best. The Labor Party cannot accept that workers and their bosses can make agreements without union involvement. The fairness test will apply to workplace agreements made before 7 May 2007 if they are varied after this date and the variation modifies or excludes one or more protected award condition.

In relation to the salary cap, the government considers that the $75,000 cap strikes an appropriate balance between ensuring fairness on the one hand and sensible administration on the other. I can inform the Senate that the $75,000 cap was chosen for a number of reasons. Firstly, nearly 90 per cent of adult non-managerial employees earn less than $75,000. The fairness test will therefore cover most Australian workers. Secondly, $75,000 is approximately 1½ times average annual ordinary earnings of $55,057. Finally, those earning $75,000 or more are generally not reliant on awards.

Additionally, while on the issue of coverage of the fairness test, I note that the government intends to move an amendment to the bill that would confirm that a workplace agreement covering an employee who is employed in an industry or occupation that was, immediately before commencement of the workplace relations reforms on 27 March 2006, usually regulated by a state award is subject to the fairness test. This addresses a concern raised in submissions to the Senate committee inquiring into the bill that such employees would be inadvertently excluded. This was never the intention, and the proposed amendment will put this beyond doubt.

Much of the debate has focused on the fact that the fairness test assesses agreements against protected award conditions rather than the award as a whole. Others have suggested that other award conditions such as redundancy pay and notice of roster changes should be singled out under the test and that the bill should prevent employees from trading one award entitlement for another. Firstly, these arguments are narrowly focused and neglect the overall intended effect of the bill, which is that Australian workers be able to access fair arrangements in a way that does not destroy the flexibility required for continued economic prosperity and further jobs growth. This bill finds the correct balance by protecting those award conditions that have the greatest impact on take-home pay, such as allowances and penalty rates, while retaining necessary flexibility for employers and employees to reach agreements that meet their needs. As I have already outlined, the bill clearly states that whatever the trade-off is it must be fair and, in determining what is fair, the primary consideration be the monetary value of that compensation.

Both Senators Wong and Marshall also claimed that decisions of the Workplace Authority will be secretive and non-reviewable. The Workplace Authority is not a tribunal. It will not have legalistic judicial processes with endless hearings and appeals; rather, it will have a simple administrative arrangement. Prior to the 2006 changes, the former Office of the Employment Advocate had a policy that allowed for internal review of decisions where errors of law or fact were drawn to its attention. I am advised that the authority intends to put in place a similar policy in the context of the fairness test. Additionally, both parties to agreements will have access to plenty of information about how their agreements stack up against the fairness test. For example, the Workplace Authority will publish guidance material on the operation of the test. Advice and pre-lodgement assessments will also be available. This will enable parties to have their agreements checked in advance and will help them to develop fair agreements and to have more certainty once they have lodged. Once lodged, both parties will be notified at various stages of the process. This is explicitly set out in the bill.

There have been other claims that employees and employers will not get a chance to provide, verify or refute information provided to the Workplace Authority. In fact, in assessing an agreement, the Workplace Authority may contact both parties to discuss aspects of that agreement or obtain further information. If an agreement does not pass the fairness test, parties are notified and given advice about how to make it fair.

Parties will know exactly what the problem will be, without the time and expense of presenting their case to a tribunal. Moreover, the government rejects the assertion that employees and employers will be left in the wilderness because the Workplace Authority will conduct the fairness test in its own time and without any limits. It will administer the fairness test efficiently and will make decisions as soon as reasonably practicable—anticipated to be within seven to 10 days. Also, pre-lodgement assessments are available so that parties can have agreements checked in advance. This gives them more certainty once they have lodged, and approval will be fast-tracked.

The ACTU criticism, as parroted continually by Labor senators opposite, loses sight of the fact that the fairness test is a beneficial scheme that operates after parties have reached an agreement between themselves and is capable of providing additional employee benefits over and above those contained in the agreement itself. The fairness test is not a return to the one-size-fits-all arrangements. While it is mostly expected that a higher rate of pay would be provided, if an employee wants family-friendly working hours instead then they can do that. Trading award entitlements occurred under the old no disadvantage test. Employers did it, employees did it and unions did it. The sky did not fall in then, it has not fallen in since, and it will not fall in in the future. This government is about ensuring that choice and flexibility remain the fundamental building blocks of workplace agreement making.

In the past, we have had outrageous assertions made by those opposite as to what would happen with this government’s reforms. Indeed, I remember the quite bizarre comments made by the now Leader of the Opposition on 30 June—I think it was—1999 in relation to the new tax system: that that would go down in Australian history as the worst day, the greatest injustice, in Australian history this century. Well, hello! Does anybody believe that anymore? Absolutely not.

They made the same claims about waterfront reform. They made those claims about our first tranche of industrial reform. They made those claims about our social welfare reform. Every single reform has been opposed by those opposite, and we have continued to put in reforms, including those of March 2006, when people such as Senator Marshall used to come into this place before they were implemented trying to humour me with the suggestion that if the unfair dismissal law provision were removed we might get a growth of 75,000 in the number of those in employment. Very interesting, isn’t it? In the few months that have passed since March 2006, those gibes across the chamber have evaporated, because today we celebrate over 350,000 new jobs since that change was made to the legislation—another gross and stark example of the ACTU and the Labor Party misrepresenting our reforms. What I say to our fellow Australians is simply this: look at the evidence, not at what the ACTU says. With that I commend the bill to the Senate.


The ACTING DEPUTY PRESIDENT (Senator Watson)—The question is that the amendment moved by Senator Wong be agreed to.

Question negatived.

Original question agreed to.

Bill read a second time.