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Fair Work (Transitional Provisions and Consequential Amendments) Bill 2009

CHAIR —I welcome representatives from the Australian Industry Group. We have received your submission. Do you have any alterations or additions?

Mr Smith —No, Senator.

CHAIR —I invite you to make some opening remarks to the committee, to be followed by questions.

Senator ABETZ —Could I suggest that, in the opening statement or as an addendum to it, you could give, at least from my point of view, a response to what the Australian Services Union said.

CHAIR —Rest assured it was going to be a question anyway.

Senator ABETZ —Yes, but it might be handy just to start off with that; incorporate it however you like.

CHAIR —And whether you were punching the air.

Senator ABETZ —Yes.

Mr Smith —No, we will not be punching the air, but we do have a completely different perspective and view on all of those issues that were raised, as you might expect, which we are happy to talk about.

Senator JACINTA COLLINS —Yes, we would expect that.

Mr Smith —We welcome the opportunity to express our views on this bill. In general we support the bill, but we have proposed a number of amendments which are set out in our written submission. I would like to refer to a few in our opening. One is the transfer of business provisions and in this respect we would like to make a few comments about the fair work act and then put that in the context of the bill. We regard the transfer of business provisions of the fair work act as particularly problematic. Every day, companies are expressing great concern to Ai Group about those provisions; they believe that they will have a major impact on their business. It is open to parliament to give business some relief in this area through the transitional and consequential legislation, because of course for the short-term every instrument that will be transferred will be a transitional instrument because there will not be any modern awards or new enterprise agreements until after 1 July.

CHAIR —So that is your segue into having another bite of the cherry, is it, Mr Smith?

Mr Smith —We argued vigorously against these provisions—

Senator ABETZ —You would not blame them if they tried.

Mr Smith —and we were hopeful of achieving an outcome that was different from the one that we all did achieve, if you like. But we now wish to focus, within the parameters of what is there, on what we can do to give relief to our companies in sectors like call centres, ICT and labour hire, which are very concerned about these provisions.

In our written submission we give the example of a company that employs a temp from a labour hire firm and then a few months down the track they wish to employ that temp. The way that we read the fair work act, because there is a transfer of employment from the labour hire agency to the client firm and because of all of the tests about a connection between the two firms—in particular there is an arrangement where the assets that the temp was using for the first employer are continuing to be used for the second employer; it might simply be a desk and a computer—the client becomes bound by the enterprise agreement of the labour hire firm. If that client has not got an enterprise agreement itself, new employees that they employ can become bound by that enterprise agreement, which we think is ridiculous and unworkable. As we have said in our submission, we think these provisions are not workable and that amendments will undoubtedly need to be made, but in the meantime we have proposed some amendments through the transitional and consequential bill which would give employers some relief. One important area would be that there is an opportunity to define some of the terms that are used in the fair work act and in the transitional and consequential bill—for example, what ‘outsource’ means, what ‘arrangement’ means and what the ‘beneficial use of some or all of the assets’ means. We put the position strongly that this is needed. Moving on to another area, one element of the—

CHAIR —You  have finished on transfer of business, though.

Mr Smith —Yes, in our opening statement.

CHAIR —The committee majority report also recommended to government some changes to those provisions which were not picked up by the government, so I might have a second crack at it as well. You are moving on to another subject.

Mr Smith —Well, Senator, we all have our views on them. But, as I say, every day we have companies contacting us, and they are well aware that we are here today representing their interests to seek some relief on their behalf.

Senator BACK —A consequence of your example may be that the person in fact is terminated as a temp and does not have the opportunity then to come into that company as an employee. That may be the decision of the employer in that circumstance.

Mr Smith —Yes, and that is the view that we strongly express. We believe these provisions are anti employment, because there is a massive incentive for the new employer to not employ the employees, because then nothing transfers—

Senator BACK —Which is counterproductive for everybody.

Mr Smith —Yes, and, as we have said in our submission, it is completely—

CHAIR —Let us move on. Really, this is a debate that has been done, so we should move on to the next subject.

Mr Smith —The next issue I wanted to mention briefly was the enterprise award modernisation process. This is one element of the bill that we are pleased about. We think it is a very balanced structure that had been set out in the bill. Some enterprise awards are very generous compared to industry awards, perhaps most; others give the relevant employer an important competitive advantage, and they base their cost structure and flexible arrangements on those provisions. So we believe it is completely impossible to have a one-sided set of criteria for enterprise awards. The criteria need to be balanced, and Fair Work Australia needs to look at the situation when an application is made and decide: should there be a modern enterprise award and, if so, what should the terms and conditions be? We believe that the provisions of the bill are balanced and largely just leave the issues to Fair Work Australia to deal with.

The four-year time frame is workable, but we do think one important amendment needs to be made, and that is, in exceptional circumstances, to allow applications to be made before 1 January next year, to give companies the ability to use a modern enterprise award in lieu of an industry award in circumstances where, say, they need to change the definition of the enterprise. During the inquiry, the SDA expressed some strong views about the enterprise award provisions; we submit that those views do not stand up to scrutiny and we totally oppose the views that were put.

With one notable exception, we believe the award modernisation provisions of the bill are balanced and fair. That exception is the provision in the industry award schedule and the enterprise award schedule dealing with reduction in take-home pay orders. The award modernisation request, as I am sure many other parties have pointed to, gives equal weight to the objectives of not disadvantaging employees and not increasing costs, and we believe that the provisions of the bill are lopsided and should be either removed or amended to enable the commission to increase orders about no increased costs. As you would be aware—

Senator JACINTA COLLINS —Mr Smith, do you have a detailed submission on that?

Mr Smith —We have quite a lot of detail in our submission about that point, yes.

Senator JACINTA COLLINS —No, about how such an assessment might be conducted by the commission.

Mr Smith —No, Senator—

Senator JACINTA COLLINS —No. Okay.

Mr Smith —but we do believe—I did listen to the exchange with Mr Platt—that this is an issue that the commission has looked at many, many times over the years in balancing the interests of different parties and looking at the no disadvantage test and the issues of public interest. We believe that, if that power is there, they will make sensible decisions about take-home pay orders as they will make sensible decisions about the issue of no reduction in pay. But we think the best thing is to not have either of those mechanisms in there, because the award modernisation process, we believe, is a process which is resulting in an outcome where employers are not getting everything they want and employees and unions are not getting everything they want. It is a balanced and fair outcome, and of course you would not expect anything different from the AIRC.

—I wish to be clear about that, because I made some comments earlier about that. We have got a lot of submissions from people who are generally a bit unhappy with the process, but you believe that the award modernisation process so far is meeting those objectives and it is balanced and fair.

Mr Smith —Ai Group has devoted massive resources to this exercise. You would only need to look at the commission’s website to see that we have put far more resources into this exercise than any other organisation of employers or employees—thousands of pages of submissions and draft award proposals in a large number of different industries. Even yesterday we filed another 50- or 60-page submission dealing with some supplementary matters. But we think that the commission are doing an amazing job with a time frame that, as you would recall, we expressed great concern about and we sought to extend. The job that they have done given the constraints that they have placed on them is a very admirable job and we think they have been prepared to listen to the views of unions and employers. Along the way they have put out exposure drafts. There has been a lot of consultation and we have been very heavily involved.

As for the issues that Linda White and Keith Harvey informed you about, we have a totally different perspective on those issues. Take the contract call centre issue and the broader call centre issue. I led the negotiations, over the three years from 2000 to 2003, on the creation of the Contract Call Centre Industry Award. It was negotiated with the ACTU and various unions and that was an outcome that was largely achieved after all of that by consent. As Keith Harvey pointed out, we went to the commission seeking a contract call centre award and the commission originally did not support a contract call centre award but ultimately we convinced them to do that. So the contract call centre companies like Teletech, Stellar and Salmat and so on have got an award that reflects what they are currently applying. What the commission did though, for good and fair reasons, was it decided this: why should contract call centre companies have flexibilities and cost structures that are different from companies that have call centres in house? So it put the same flexibilities and penalties in the clerical award so that in-house call centres and contract call centres were on a level playing field. It also recognised that some of the biggest call centres in Australia are in the finance industry so it put those same conditions in the banking and finance award. It listened to very extensive arguments and evidence from Ai Group, the ASU, the FSU and other parties and made that decision, so there is no lack of detail about it. There are thousands of pages of submissions and witness statements and days of hearings that we were heavily involved in that led to that outcome.

CHAIR —The logic you put as to why they made the decision is one element. Another element that I thought was put to us was that neither you nor the union asked for this to happen and therefore that was not subject to submissions and it came as a surprise. Is that correct?

Mr Smith —Not exactly. It went this way. We asked for the contract call centre award and we did not get it at the exposure draft stage. In the exposure draft the commission put these flexibilities in the general clerical award and said that award should apply to contract call centres and in-house call centres. In response to that, we got witness statements from the contract call centre companies and so on and argued vigorously for a contract call centre award. We did not oppose the commission’s structure of having a level playing field, so we did not go in there and argue vigorously to keep that but we argued vigorously to get what we had originally put. We do not oppose the idea of there being a level playing field. We did go into the proceedings relating to finance and banking and argue very vigorously that, if the commission were not to make a contract call centre award, to impose the banking and finance award on companies like Teletech and Stellar and so on would potentially destroy their businesses because the cost increases would be massive. In response to our arguments, the commission put those flexibilities into the banking and finance award as well. I do not think it is accurate to say we did not want any of this. We have no problem with the outcome, and we did go out after the outcome saying that we were pleased that our views about the call centre industry had been listened to.

Senator ABETZ —Which was interpreted as punching the air.

Mr Smith —Well—

Senator ABETZ —You do not need to comment on that.

CHAIR —Mr Smith says he is happy and I think we can take that for granted.

Senator JACINTA COLLINS —Mr Smith, I want to clarify one issue . AiG did not specifically seek the extension of the exemption to a new common level award. Is that correct?

Mr Smith —We did not seek it or expect it at the exposure draft stage but we supported it ultimately, once it was in it—

Senator JACINTA COLLINS —That was once the commission had offered it to you and you thought, great, we will accept that.

Mr Smith —Well, it was actually the commission’s response to our submission—

Senator JACINTA COLLINS —I understand.

Mr Smith —because they dealt with it in a different way to what we had asked for.

Senator JACINTA COLLINS —The other aspect of that was this. When you submitted to the commission about the additional costs associated with the proposal—and if I am correct you were talking about the finance sector arrangements—did you specifically address the additional costs associated with this exemption not being available?

Mr Smith —We did, yes. The banking and finance award is an award that has very generous terms and conditions in it so we even got evidence from a number of call centre companies saying that if they had to pay those penalties there would be huge cost increases that their business would not be able to bear. So in response to that evidence and those submissions the banking and finance award was varied. But the main thing we were seeking to achieve we did achieve, which was the agreed position that we had with the ACTU and many unions on a contract call centre industry award. That was achieved.

CHAIR —I know you have not finished your presentation but we have started dealing with the issues as you have come to them. Senator Bilyk also has a question. It is a clarification question.

Senator BILYK —Mr Smith, do you think it is fair and reasonable that people working in call centres under the new award and earning $44,000 a year will not have access to dispute resolution procedures for disputes arising under the award or to the NES?

Mr Smith —This is where the ASU’s evidence might have been a bit confusing because they were talking about the call centre issue, which is really an issue different from the exemption rate issue. It was all mixed up because it is all related to—

Senator BILYK —Do you think it is right that anybody earning $44,000 a year will not have access to dispute resolution procedures?

Mr Smith —If I can deal with that exemption—

Senator BILYK —Yes or no?

Mr Smith —We do not think that is the outcome.

Senator BILYK —Do you think it is fair?

Mr Smith —No.

Senator BILYK —Right; thank you.

Mr Smith —We think people should have dispute settling procedures available. But that is not an outcome of the clerical award. We disagree with the ASU’s evidence in that respect. If I could just make the point, I would like to deal at some stage with that exemption rate issue because it is an issue that was canvassed—

CHAIR —I think you should proceed with your formal comments to the committee. We will go back to the normal structure and then we will come back to questions. But you are happy to deal with that issue as part of your remarks to us?

Mr Smith —Yes, Chair. I have finished basically what I was going to put and now I am picking up on Senator Abetz’s point about responding to those issues.

CHAIR —Okay, so let us do that now.

Mr Smith —Thank you, Chair. The other significant issue that was raised was about the exemption rate. The most important thing here is that it is not a blanket exemption. It is an exemption rate that relates to certain provisions, mainly penalties and allowances and the prescriptive provisions that are there. In concept, it is not different to the exemption rates in many other awards, state and federal. The Business Equipment (Technical Services) Award is an ASU and Ai Group award that applies to IT technicians. It has an exemption rate. All the overtime penalties and allowances and so on do not apply; the award applies but there is flexibility with remuneration. The contract call centre award is exactly the same—for the top classifications all the penalties and so on do not apply—and there is the Telecommunications Services Industry Award too.

The picture was put that this is some dramatically different outcome; that is nonsense, in our view. The commission has decided that people at higher pay levels and at higher classifications should be able to have more flexible conditions. It was a provision that came out of the New South Wales NAPSA and it was totally inaccurate. Mr Harvey said that we could clarify our position that no-one sought it. We argued strongly in support of it. When we achieved that outcome, which we believe was a fair outcome, the ASU and the ACTU were very unhappy about it. They went back, in stage 2, into the commission in February—even though this was a stage 1 outcome—and argued vigorously against it. We argued vigorously to keep it, and the commission has kept that exemption rate, which we believe is appropriate and fair.

CHAIR —I thought the argument was twofold—one was the exemption rate—but the genesis of those exemption rates meant that there had to be a replacement bargain to deal with those issues. An exemption rate does not now provide for that; it simply provides for an exemption. The parties may bargain and get a replacement bargain, which may have all sorts of annualised salaries, flexible rates and that sort of stuff. But that was a requirement, as I understood the argument being put to us, and that requirement is not there anymore. Is that right?

Mr Smith —No, that is not right. I think Mr Harvey was saying that, if you look at the Fair Work Act, you will see it has that provision in it that allows people who are currently award covered, say, a highly paid professional engineer, to opt out of award coverage through entering into one of those guarantees of annual earnings. That is what Mr Harvey was saying: this is an element of the new system, which this does not reflect. We do not see that there is any need to link the two provisions. There are annualised salary provisions in many awards—for example, the metal industry award. The commission has decided that the new, modern manufacturing award should have an annualised salary arrangement in it for supervisors. But the awards that I mentioned—the clerical award, the call centre award, the telecommunications services award and the business equipment award—are all major industry awards and all have an exemption rate which is structured, which says, ‘If you earn more than that’ or ‘You’re in these classifications, all of the prescriptive remuneration arrangements don’t apply.’

CHAIR —What does apply, though?

Mr Smith —Things that apply are the general protections that are there. I have not looked specifically at this dispute settlement issue, but certainly the dispute settlement clause would apply in the business equipment award, the TSI award and the call centre award. I am sure there would be access to dispute settlement arrangements in the clerical award. I could take that matter on notice. But all of the things that do not go to remuneration—anything in clauses about sick leave, notice periods and so on.

CHAIR —Those things, such as flexibility about remuneration, can be done by having a certified agreement. The thing that concerns me is that the commission here seems to have said, effectively, that there does not have to be an agreement about those matters; just that at this particular rate you simply lose all those protections. We would hope that they are replaced by either an annualised salary or a different method of recompensing people. But at that level if you simply lose your right to penalty rates, loadings or allowances in the hope that there might be some agreement, I think, seems to be a bit of a problem.

Mr Smith —It needs to be recognised also that we will have a very comprehensive set of National Employment Standards that will provide entitlements to all people, whether award covered or award free, so that is one significant element.

CHAIR —Yes, but that is at the level of $100,000 plus, not at $44,000.

Senator BILYK —That is an exemption—

Mr Smith —But it is not exempt; the NES provisions will apply.

Senator BILYK —The right of access to a copy of the award and the NES is an exemption—so if people do not know about it—

CHAIR —Senator Bilyk, if you could just let the witness answer and then you can ask a question.

Senator BILYK —Sorry, Chair.

Mr Smith —The NES will apply. You cannot exempt out of the NES. So that will apply. The exemption rate is dealing with the remuneration elements within the award, such as overtime, penalties and so on. That is a significant issue. The ASU are putting a view that the outcome of award modernisation is unfair. That view is totally unsustainable. The ASU went into the award modernisation proceedings seeking a massive levelling up exercise. A lot of their draft awards cherry picked every condition in every award and took the highest level. Obviously, that was totally untenable and the commission had to look at what was fair. It took, say, salaries out of the Victorian award. In fact, in the case of the clerical award it took salaries out of the South Australian award. It took the exemption rate out of the New South Wales award. It listened to months of arguments and made what it believed was a fair outcome. The ASU are not happy with that. There are many issues and we would have preferred a different outcome for many industries. But we are putting the view very publicly that, so far, we think the commission has done an amazing job with award modernisation. There are still many issues that need to be dealt with—the transitional provisions and so on. But it is not the case that the commission has been taking one side or the other. Of course, it has not been doing that. It has a long history of being very fair with these things.

Senator BILYK —You made reference to the metal industry award. I would be very surprised if there were anyone in the modernised metal industry award on $44,000 who is treated as though they are earning $100,000, as in conditions lost through the exemption. One of those conditions is the right of access to a copy of the award and the NES. Once again, do you think that is fair? Do you think that people earning $44,000 will lose the right to access a copy of their award and, if so, why?

Mr Smith —It is not saying they cannot access the award or the NES. The specific clause that the commission has put in there says that the employer must provide a copy of the award and the NES to employees. I would have to check.

Senator BILYK —What is the benefit to the employer to not supply that? Why is there a benefit? Why not just leave it? Employees should be able to have access to it. Is it just to make life difficult for employees to access the award?

Mr Smith —There was nothing in the proceedings about that clause not applying that I am aware of. The commission has kept the New South Wales exemption provision for good reasons.

Senator BILYK —So do you think it right that these employees should not have access to the award then?

Mr Smith —We do not believe it follows that—

Senator BILYK —Yes or no?

Mr Smith —just because there is not a clause in the award that they will not have access to the award or the NES.

Senator BILYK —It is atrocious.

Mr Smith —We do not think that follows.

Senator BILYK —It is one of the exemptions that will be lost on 1 January.

Senator ABETZ —This exemption, which is now in the modern award, was transported from the New South Wales award.

Mr Smith —That is right.

Senator ABETZ —The ASU in New South Wales did not complain about this provision?

Mr Smith —Not to the best of our knowledge, but most awards do not have a provision in them, saying, for example, ‘You must provide access to the NES.’ Obviously, this is a new provision that the commission has decided should go in modern awards. There are many awards which state you have to give copies of an award to employees and there are many that do not. If an employee wanted a copy of their award, any reasonable employer, which is 99 per cent of them—

CHAIR —Can you name that one per cent for us?

Mr Smith —They would not be our members.

Senator ABETZ —The Labor Party, the ACTU!

CHAIR —Senator Bilyk, do you have any questions?

Senator BILYK —It is actually more a comment. I am a senator representing Tasmania and my concern is for all those Tasmanians who are employed under this award, and I would have thought, Senator Abetz, you might be a bit concerned for them, too.

Senator ABETZ —Do you know what? I am a representative of the Australian parliament and I am concerned—

Senator BILYK —You are representing Tasmania.

Senator ABETZ —about all workers all around Australia, and I am interested to learn how the multiplicity of workers under the New South Wales award, which had been in place for quite some time, were able to survive under these exemption clauses which were determined, as I understand it, by an industrial body and had been applied without any great consternation over many years.

Senator BILYK —We do not know for sure that there has been no consternation. We would have to check that.

Senator ABETZ —Anyway—

CHAIR —Order! The purpose of the committee is not for senators to be debating each other but to elicit answers to questions.

Senator ABETZ —I was a provoked chair!

CHAIR —I agree.

Senator BILYK —How do you think that the new award compares—for example, to the metals award—in general? It seems to me that the majority of people employed in call centres are young females. There seems to be a bit of a gender disparity going on here. As I said, in the metals award you would not get anyone earning $44,000 a year being treated as though they were earning $100,000 a year with regard to their rights and conditions. What are your comments in regard to that?

Mr Smith —They are very different awards, of course.

Senator BILYK —Yes, I understand that.

Mr Smith —The modern manufacturing award will replace about 100 other awards. There is a metal industry award, a rubber and plastics award and numerous others. Those awards have not contained exemptions generally. The modern manufacturing award does have an annualised salary provision in it but it does not have an exemption rate, whereas it is not uncommon for clerical awards and commercial travellers awards to have these exemption rates.

Senator BILYK —At what level does the annual salary award kick in under the metal workers award?

Mr Smith —It applies to certain classifications, particularly to supervisors.

Senator BILYK —And what salary level are we looking at there?

Mr Smith —It is based around the actual classification more than the salary level. I just cannot recall off the top of my head.

Senator BILYK —I do not reckon it would be $44,000.

Mr Smith —It may not actually be much more than that.

Senator BILYK —Maybe you could find out and get back to me on that.

Mr Smith —I will. The award rate for a supervisor is actually in the award. I just have not got it in front of me.

Senator JACINTA COLLINS —I will move on to another matter that you, Mr Smith, raised in your opening comments but did not elaborate on. I am intrigued by your suggestion that the SDA’s concerns regarding enterprise awards do not stand up to scrutiny without any elaboration on how, when, where or why you believe that to be the case. It is not in your submission, and I understand that was submitted before our hearings in Sydney. That bald assertion to an inquiry such as this astounds me.

Mr Smith —I am happy to expand on that, Senator. As I understand the comments that the SDA made publicly and no doubt made to the inquiry as well—

Senator JACINTA COLLINS —Where they made them—

Mr Smith —I did see some public statements that Mr de Bruyn made as well.

Senator JACINTA COLLINS —I think they were reported from our hearings in Sydney.

Mr Smith —Okay—sorry, Senator. The point that the SDA seem to be making is that some of the fast food companies—

Senator JACINTA COLLINS —Have you seen their submission?

Mr Smith —I have not read it in detail.

Senator JACINTA COLLINS —Let’s not continue then, if that is the case. If all you are commenting on is the public reporting of our submission in Sydney and you are not addressing what the SDA’s actual submission is, I think this dialogue really does not have—

Mr Smith —Senator, I really do know what the SDA have said. AI Group has studied that submission and—

Senator JACINTA COLLINS —Sorry, I thought you just said you had not.

Mr Smith —I have not read every word in that submission personally but I can give AI Group’s response to it and I am well aware of what is in the submission. The point is that the SDA were putting the point of view that some of the fast food companies have enterprise awards that, in their view, are below the level of industry awards. Those enterprise awards, as I understand it, in many cases were consent documents between the SDA and those fast food companies.

I thought I did actually address the issue in a different way. The point that I made was that the criteria need to be balanced. If it is the case in, for example, an industry like fast food, or any other industry, that there are awards that someone wants to argue below the industry level of conditions, then that should be open to a party to argue. But if there are other industries where there are awards that are clearly far more generous than the industry awards—and we can all think of numerous examples where that is the case—then it should be open to those parties to argue that those awards should be abolished and people should come back to the level of the industry awards. So we think the criteria are very balanced. They give the SDA the ability to run its argument, they give employers in those industries where the enterprise awards are way above the level of industry conditions to run their arguments, and Fair Work Australia will need to make a decision. That is why we say that the SDA’s comments are totally without merit, we believe, because they are trying to put—

Senator JACINTA COLLINS —Which element of their comments? One aspect of their submission was, for the criteria to be balanced, a suggested amendment for what the criteria should be. Have you seen those criteria?

Mr Smith —Yes, and we think the existing criteria are balanced.

Senator JACINTA COLLINS —But you cannot specifically address if what the SDA was proposing would add more balance to that equation, or can you?

Mr Smith —A very large number of submissions have been made to this inquiry. I cannot remember every word in all of them.

Senator JACINTA COLLINS —My impatience with this issue is that at the outset you said that the SDA’s comments or submissions in relation to enterprise awards do not stand up to scrutiny. That was your evidence to us this morning.

Mr Smith —Yes, and I stand by that absolutely.

Senator JACINTA COLLINS —Now I am asking you to comment upon some of the specifics of that evidence and you are not able to deal with one specific element of it.

Mr Smith —If you were able to put to me the specific—

Senator JACINTA COLLINS —I just said the SDA had put to this committee that we look at an amendment in relation to making the criteria more balanced. I do not have it immediately in front of me but I have not come before this committee and said that the SDA’s position does not stand up to scrutiny, and I am asking you now to comment on that and you are unable to.

CHAIR —Because of the time and other senators who wish to ask questions, I invite you, Mr Smith, to make some further remarks to the committee in writing if you wish.

Mr Smith —We will respond in writing over the next day or so to the criteria changes that the SDA has put.

CHAIR —I would appreciate that.

Senator ABETZ —I would have thought some of the workers in the clerical and other areas might not be all that upset if, after a certain threshold of salary, they are not entitled to get a copy of the NES or the award. Chances are they sufficiently internet savvy to get those things for themselves and that is why they command such a salary. But one thing that they might be concerned about is their actual take-home pay. The submission of the ASU was that some workers would actually be worse off—that their take-home pay would actually decrease. Is that your reading and assessment of some of the consequences of the private sector clerical award?

Mr Smith —Anyone can pick a classification and do certain calculations, but whether or not the take-home pay of an individual employee changes is entirely a matter of what the employer and the employee might experience or agree to in that workplace. Most clerical employees are paid well above the award. It was interesting that the ASU picked the classification of level 2, a very low classification that does not apply to most clerical employees, even those that are doing quite basic things, like word processing and that sort of thing. We could have picked another classification and done different calculations. The commission, as I said, took a classification structure that we did not support, which was the South Australian classification structure—rather than, say, the New South Wales one—and applied its wage rates.

Regarding the issues that the ASU raised about these take-home pay orders, we think in some areas a very sensible approach has been taken in the legislation, if we are going to have access to these orders. What it is saying is that like needs to be compared with like. The explanatory memorandum makes it clear that, if someone has a change in their work pattern or in hours or times of work, you have to compare like and like. Linda White or Keith Harvey made the comment that all you have to do is promote someone and then they would be disadvantaged, but of course a provision is there for that. You cannot say that someone has a reduction in take-home pay based on not comparing like to like. You have to consider: ‘That was the job they were doing; are they still doing the same job and are they still working the same hours?’ Otherwise it would open up a totally unworkable situation.

We think that, if you have to have take-home pay orders, then those important aspects like comparing like to like are important, as is the issue that new employees should not be subject to these orders, because a new employee is not suffering any reduction in take-home pay. The benefit of the take-home pay orders is that, as people’s pay increases, the order falls away, which is also important.

Senator ABETZ —Thank you for that. In relation to the New South Wales exemptions that you have told us have been imported into this new modern award, can you advise us who made the orders or who presided over the New South Wales award that had that exemption contained in it? Was that the AIRC equivalent in New South Wales?

Mr Smith —Yes, the Industrial Relations Commission of New South Wales made that award, and that award was completely reviewed in fairly recent years.

Senator JACINTA COLLINS —Are we talking about the NAPSA or are we talking about the original award?

Mr Smith —The original award has been deemed to be a NAPSA. I thought we were talking about the original award.

Senator JACINTA COLLINS —Do you know how old this provision was—when it was first introduced or how?

Mr Smith —It has been in there for decades, but that award was the subject of a major review within the last five years, and that provision has been retained.

Senator JACINTA COLLINS —The point I am trying to clarify is that—

Senator ABETZ —They were going to be my questions.

Senator JACINTA COLLINS —it may not be the result of a determination; it might have been an agreed element historically.

Mr Smith —It is possible because it goes back so far, but, as I have said, there was a major review of this clerical award that retained it.

Senator ABETZ —I thank Senator Collins for asking those questions because I wanted to get some of that background as well. Mr Smith, would it be possible for you to find out—or perhaps the secretary could find out through the Parliamentary Library—when those exemptions first came into play in New South Wales and whether they survived the review process, as you described it, in recent years to modernise? If that is the case, then it would seem that it was part of the industrial landscape in New South Wales for some period of time and without too much opposition. If it was deemed fair in New South Wales one would assume it might be deemed potentially fair to have that then translated into the modern award under the federal legislation. I would just be interested in the history of that, if you could find that for us.

Given time constraints, I have one quick last question. In the current workplace relations bill, there are certain conscientious objection clauses in relation to membership of organisations. Does the AiG have any difficulty with those clauses being translated into this new legislation?

Mr Smith —No. We agree with the ASU’s comments there. Over the years they have been the subject of very little focus, but we have no objection.

Senator ABETZ —Thank you very much.

CHAIR —I think you may have offered on a number of occasions to provide some further information. We are reporting on 7 May, so the sooner the committee receives that information the better.

Mr Smith —We will certainly respond to the fast food issue and the exemption rate issue very quickly—within a few days.

CHAIR —Thank you for submission and your evidence to the committee today.

Mr Smith —Thank you.

[11.39 am]