BARKLAMB, Mr Scott, Director, Workplace Relations, Australian Chamber of Commerce and Industry [by audio link]

FRASER, Ms Ingrid, Senior Adviser, Workplace Relations, Australian Chamber of Commerce and Industry [by audio link]

LAWRENCE, Ms Tamsin, Deputy Director, Workplace Relations, Australian Chamber of Commerce and Industry [by audio link]

[14:02]

CHAIR: I now welcome representatives from the Australian Chamber of Commerce and Industry, who are appearing via teleconference. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I now invite one of you to make a short opening statement, and at the conclusion of your remarks I'll invite members of the committee to ask questions.

Mr Barklamb : We thank the committee for the opportunity to appear today. We apologise for not being there in person. We are Melbourne based, and obviously there is a lot of uncertainty about travel this week.

As Australia's largest and most representative business organisation, ACCI's core message is for putting all aside the politics, noise, and misrepresentation. This is overwhelmingly a modest but merited, essential and practical set of changes that will help support jobs, support small businesses, and promote recovery. Our organisation backs the bill subject to our submission.

As I said, we're speaking to you from Melbourne. Victorians have been reminded just this last week how vulnerable jobs and small businesses are. Life is not back to normal. We are not back to business as usual and we will not be for some time. We cannot afford as a nation to try and muddle through the massive challenges we face with an industrial relations system that simply doesn't work for either employers or employees in key areas. My organisation was represented on each of the five working groups that led to the bill, but your decision on this bill is not about either unions or employer organisations; your decisions are about the unemployed, employees whose job security has been shredded by COVID, small business people facing ruin and young people facing decades of damage to their careers and earnings. As former telephone linesman turned Treasury secretary, Ted Evans, once observed, Australia chooses its rate of unemployment by the policy divisions it makes. It would be absolutely extraordinary given the ongoing struggles and threats to jobs and businesses and the productivity and competitiveness challenges in front of us for this parliament to deliver a nil industrial relations response to the pandemic.

I have a couple of brief key points on each schedule. Casual employment is a genuine and fulfilling option for millions of Australians, particularly those balancing work and other aspects of their lives, such as study and caring, and for lower paid households who rely on additional income from casual loading. ACCI supports the definition of 'casual employee' being included in the act to restore certainty and confidence to create jobs. While we seek minor amendments, we do not oppose the definition in the bill. We are not however in favour of changes which would see struggling small businesses lumped with additional complexity. The casual conversions in the bill should be amended to be more consistent with the existing provisions in modern awards, rather than simply creating greater complexity, confusion and risk for those who want to employ casuals. Employers of casuals are also immensely concerned about the risk of having to compensate casuals twice—once through loading and then again if the employee is found to have been mischaracterised for other things that the loading already covers, such as sick or annual leave. The bill quite fairly ensures that, if a casual loading has been paid to a misclassified employee, this can be offset against other entitlements.

On awards, the JobKeeper flexibilities have been a vital lifeline for businesses and employees during the crisis to date. Extending similar flexibilities, which are well thought out, continuing safeguards will help distressed businesses recover and retain employees. It must be part of Australia's COVID response. However, if businesses in key distressed industries, such as arts and recreation and tourism, and in locations such as Cairns and a variety of other tourist areas are to survive, flexibility must go beyond changes to duties and locations. Employers facing closing their doors and laying off staff must also have the capacity to, subject to suitable safeguards and protections, issue directions to reduce work hours where appropriately targeted. This was the critical flexibility that retained jobs during 2020. We've seen in Victoria in recent days how extraordinary rapidly exponential crises for jobs and small businesses can re-emerge.

On agreement making, most of the parts of the 13 elements to schedule 3 are modest but important changes that will start to restore confidence in using the system. This is critically important. More enterprises wanting to pursue agreements will support increased pay, more productive and competitive businesses, and more secure jobs and enterprises. We also remind senators that voting against this bill means voting to obtain the final vestiges of WorkChoices, including the last AWAs.

I'm going to truncate my next two. On greenfields I simply want to say that claims of employees being forced onto eight-year agreements without pay rises are malicious falsehoods. The CFMMEU this morning, we say, created quite an inaccurate impression about how those agreements would work. On compliance and enforcement, our organisation cannot support schedule 5, but we do however have constructive alternative suggestions to minimise potential risks to confidence to hire, were that schedule to proceed.

We urge the committee to look at what the bill actually does, not misleading claims. We need our IR system to play its role in supporting recovery—not a huge role; not an ambitious role, but fixing a known set of problems to create a more stable foundation for jobs and recovery and to promote the confidence employees and employers need. We urge senators to back the bill, subject to the amendments set out in our submission. With that, we're happy to take questions.

CHAIR: Thank you for that. I'll hand over to Senator Pratt.

Senator PRATT: May I commence by saying you've been very strong in your submission in saying that employees won't have their pay cut as a result of this bill. You've said, 'It can't happen and it won't happen.' Can you now give us a guarantee that this will be the case?

Mr Barklamb : There are no guarantees in COVID, as our nation and community have learned across the past 14 or 15 months or so. There are no guarantees in a big and complex labour market of 12½ million people. But I can give you this guarantee: employers will have a foundation, if you pass these changes, to bargain, which delivers higher pay. Employers will have more confidence to hire, to get back some of the jobs we've lost—and, I tell you what, you'd want to have a job and have pay rather than being jobless if this environment. I can give you the same guarantee that Julia Gillard would have given in 2009—that there'll be protections against being left worse off, and in fact a guarantee of being left better off. They're the guarantees that this bill would provide.

Senator PRATT: A job at lower pay, did I hear you say?

Mr Barklamb : No, you didn't hear that, Senator, and I'll correct the Hansard if you think you heard that. No, jobs will be provided, or jobs will be generated, because employers will be more confident to hire and more confident to use the agreement-making system, which is going to help us recover. That's the basis on which we say there are guarantees. I'll give you this further guarantee: if you reject this bill, more jobs will be lost and more small businesses will go to the wall.

Senator PRATT: The BOOT changes have been withdrawn by the government; nevertheless, the government still say it's their policy intent and they believe in them very strongly. Indeed, you've backed them very strongly as well. We already know that the Fair Work Commission is required to consider non-monetary benefits when assessing agreements. Why do you want less independent scrutiny of agreements?

Mr Barklamb : We don't understand the premise of your question. We don't see any change to the scrutiny of agreements by the commission. They'll be approved. They'll be subject to each of the pre-approval requirements. The commission will require a vote in support of the agreement and the commission will apply the better off overall test. But, if your question is about the non-monetary benefits, the key to those changes, as we understand it, is that what employers and employees negotiate and value should carry weight in agreement approvals.

Senator PRATT: But I have to say to you: it's all very well for business to complain about red tape and complexity, but this seeks to tie unions up in being unable to represent their members early on in assessing these agreements. I don't really understand how you can say it's the same playing field as it was before.

Mr Barklamb : Okay, well, let's look at this. Employee organisations, trade unions, will enjoy all of the rights to be the bargaining representatives for employees that Julia Gillard put in the act in 2009 and that have been there ever since. There's no change to those capacities to be appointed. Employees will be notified of their right to be represented by an organisation. I'm struggling to see the premise of your question.

Senator PRATT: There've been changes to the pre-approval process. You're only talking about the middle part of that process, not the initial bargaining. Unions aren't necessarily informed that that's about to happen. Clearly, an employer knows they're about to have these conversations with their workforce, yet as soon as you talk to the workforce there's no obligation to have a union or a representative of another kind there at all.

Mr Barklamb : The obligations to provide the notice of employee representational rights, which tells employees what their rights to be represented are and where to go for further information, are going to be improved and made more consistent by the bill. So our premise would be that more employees would be more accurately and consistently informed about their rights to representation in the bargaining process. We see absolutely no changes to the sorts of areas that your concerns are pointing to. Agreements are still going to be voted on, employees are going to be—

Senator PRATT: So you'd be happy for this bill to—

CHAIR: Senator Pratt, can you stop interrupting the witness, please.

Senator PRATT: What I don't understand is that, if you're saying there's no substantive change in this bill that changes the current agreements, why not do it as we currently do it?

Mr Barklamb : That's a really good question. What you've got in schedule 3 of the bill are a series of measures—about nine of 13 or so we agree with—which will create more reliability, transparency and consistency in agreement approval. So you won't see your agreement rejected if you get the notice of employee representative rights and if you put the wrong phone number on it or you put it on the wrong letterhead. You won't see, for example, employees—

Senator PRATT: The phone number could be pretty important.

Mr Barklamb : held up for not giving publicly available information to employees. All of the concepts, all of the architecture, stay, but they're made more practical, reliable and consistent in their application.

Senator PRATT: Might the wrong phone number be quite important in a bargaining environment?

Mr Barklamb : That will be completely removed as a risk because that documentation will come out consistently from the Fair Work Commission itself. I agree with you that somebody not having correct access to information could be a problem, but, if you want to eliminate that problem, you pass the bill.

Senator PRATT: I'll hand over to my colleagues, but I have to say that workers aren't told for one month that they have a right to double the current bargaining period.

Mr Barklamb : No, they need to be told as soon as possible that—

Senator PRATT: You think the double is better, but if you're not represented—

CHAIR: Senator Pratt, I think you put a question to the witness, and the witness is answering that question.

Senator PRATT: Yes.

Mr Barklamb : My understanding is that the requirement for an employer to act in relation to the NERR remains 'as soon as possible', but the outside date shifts to 28 days. They'll still have the opportunity to appoint bargaining agents for 21 days. That would be unchanged from the existing sequence of events.

Senator PRATT: I'll hand over to my colleagues.

Senator SHELDON: Thank you for joining us, Mr Barklamb. I want to go back to something to clarify non-monetary benefits. Someone could be being trained by their employer now in paid time, and yet a new industrial agreement could say, 'You'll now have to pay for that training by having a reduction in your penalty rates, a reduction in your hourly rate or a reduction in other monetary arrangements.' This act allows that to happen, doesn't it?

Mr Barklamb : I'm not aware of the example. We'd have to have a look at that. Our general principle as an organisation is that employers pay for workplace training in accordance with the law and in other areas in accordance with government subsidies, available schemes and the like. But, as a general principle, employers would pay for discretionary training. Something that's a point of optional career development for an employee might be a non-monetary benefit, but I don't accept that you would localise in, necessarily, on a penalty rate. That wouldn't be the way we understand the application of the better off overall test in that circumstance.

Senator SHELDON: The non-monetary explanatory notes go to training, which I gather you've read. They go to the question that McDonald's—that is, fast food—put forward. Someone getting fries could be seen as getting a non-monetary benefit, which could reduce payments. Isn't that correct?

Mr Barklamb : We are not supportive of people being paid in food.

Senator SHELDON: So you don't support the government's proposition that non-monetary benefits should be included?

Mr Barklamb : No, I didn't say that. I said that, as a general proposition, we would be sceptical of staff meals being a non-monetary to be taken into account in the BOOT.

Senator SHELDON: Even though there's a proposal from McDonald's that that's actually what it does?

Mr Barklamb : I don't want to differ from any particular employer. I'm just telling you where our organisation stands. We think that staff meals and the like are something other than something we'd seek to have taken into account in the BOOT test.

Senator SHELDON: Thanks for that. It just demonstrates the confusion that exists amongst the employers with regard to how the act works.

Mr Barklamb : No, I don't believe there's any confusion in that at all. We don't think meals are a non-monetary benefit to be taken into account for the test.

Senator SHELDON: I'm saying you're putting a clear position which is contrary to the position that's put by employers. So that, to me, says confusion.

Mr Barklamb : We are a broad church of organisations. I'm telling you what our denomination thinks.

Senator SMALL: We've discussed the rates of casualisation over a long period of time here today. From the chamber's perspective, have you seen a change in the rate of casualisation in the Australian workforce over the last three or four decades? How do you see this bill altering that going forward?

Mr Barklamb : I might make the first answer, and then I'll pass to my colleague, Ms Lawrence, or Ms Fraser, who will address this in more detail. Can I respectfully say that over three or four decades, yes, you'll see a change, but for two decades, from the time of the Keating government, you'll see dead-flat stability. So the use of the word 'casualisation' as an active-tense verb is absolutely inaccurate. We have a stable proportion of casual work in this country, and have had for two decades. I'll pass over to Ms Lawrence to add to that.

Ms Lawrence : Just following on from Mr Barklamb, yes, we are of the opinion, and we believe that all the facts and data support the proposition, that, but for the period of COVID, casual employment has been stable for the past 22 years. In actual fact, COVID has seen a reduction in casual employment, to 19.8 per cent, as opposed to its usually stable 20 per cent. We understand that there are a number of casual employees who still have not been picked back up by the market. The latest characterisation of employment data from the ABS shows that back in February, before COVID hit, there were 2.6 million employees, and the latest data out of shows there's currently only 2.3 million. We think the provisions in the bill will only seek to improve the position of hiring of casuals because of the provisions with respect to the offset provisions, which will give employers more confidence that they won't be having to pay twice for the same entitlement. They will be paying a 25 per cent loading and, if they happen to have misclassified someone, that will be offset against the entitlements that that person would have got as a permanent.

But I think it's also important to note the provisions with respect to part-time employment, which will, hopefully, see and encourage more employers to put on part-time workers for the additional hours that they might typically offer to casual employees, which we think is a real positive coming out of this bill.

Senator SMALL: Thanks very much. Just to clarify one point there, you mentioned a 25 per cent casual loading. Is it the chamber's view that it's standard and accepted across Australia that a casual who is employed in an award circumstance is paid a 25 per cent casual loading with respect to an employee that's employed permanently performing the same tasks.

Ms Lawrence : Yes, that is entirely our position, consistent with the other employers who have provided evidence here today. We believe under almost every modern award, with the exception of a couple which don't provide for casual employment, that all awards set out the minimum loading that must be provided to a casual employee at 25 per cent, and that is what workers are entitled to.

Senator SMALL: Thanks. With respect to agreement making, you've focused on that aspect a lot. Why is it important that we make agreement making more efficient and, in fact, easier? How do you see this proposed reform seeking to expedite and enhance that process?

Mr Barklamb : There are a couple of things. Agreement making is the pathway to higher incomes. It is the pathway to genuinely more secure jobs. We hear a whole lot about insecure work. Well, the best job security any Australian can have is to work in a secure enterprise that's efficient, productive, competitive and able to adjust to its circumstances.

The other thing we want to stress on agreement making is that, as we recover from COVID, Australia will be jockeying for its place in the world. We can't afford to stand still on productivity, efficiency, the take-up of new technologies or re-engineering our industries towards where we need to be. Our competitors will not be standing still. If we want to remain an OECD country and a G20 economy, we're going to have to do better. And fixing agreement making, having more confidence to use agreements, is absolutely critical to that.

Just to complete my answer: the key to understanding schedule 3 of this bill is that it's overwhelmingly a series of moderate, practical adjustments that, in combination, will let my members advise employers to give agreement making a go. At the moment, in good conscience and consistent with our duties, a lot of the time we have to say to employers, 'It's too hard, it's too unreliable and there's not enough on offer to return to you in terms of running your business.'

Agreement making won't be for everyone, but we want more employers and employees to give it a go across the business community, including smaller and medium-size businesses.

Senator SMALL: I have one more question, if I can. You mentioned increased earnings for employees under agreement making. Are you aware of what that is, on average?

Mr Barklamb : I knew there would be one piece of data I didn't have with me. If we may take that on notice, we'll give you a further answer on that.

Senator SMALL: Thanks.

Senator O'SULLIVAN: I have a quick question with regard to greenfields agreements. I note that you refuted the wild and spurious claim made by the CFMMEU this morning in regard to this. Can you just let us know what would be the consequences of not making any changes to the existing rules, and on what basis do you say that?

Mr Barklamb : Australia is in a big global market for megaprojects. I want to talk, in particular, about resources, and I know you're from Western Australia. The consequence of saying to international investors and markets that we are going to expose them to liquidated damages of potentially $1 million a day—and there are examples of that in the recent past—and to uncertainty and disputes, right at the point when construction is ramping up to completion, would be to discourage international investors from bringing their capital and their projects to this country. We've seen over in the west—and no-one is more aware of this than people from that state—the benefits and the jobs and the long-term royalty pay-off from these megaprojects.

To complete my answer, I'd probably just emphasise to you that Bill Shorten got this before the last election. One of the very few things that the Labor Party took to the last election that the employer community was positive about was this recognition that there are unique fields of employment in greenfields, that there are unique circumstances that need a different approach and that we had to deliver precisely what's in this bill. Frankly, I would have thought that Labor in government would do schedule 4—

Senator SHELDON: Was the suggestion from Bill Shorten that they were going to be eight-year agreements?

Senator O'SULLIVAN: I can't hear the answer.

CHAIR: Sorry, can you just repeat the answer? There was some talking in the room.

Mr Barklamb : I apologise My last point was perhaps a point of emphasis to say that we think that schedule 4 is a practical, measured set of changes. Employees will still continue to earn virtually the highest earnings in the country for their occupational groups. Overwhelmingly, greenfields bargaining will be approached with trade unions, and the duration of agreements will be commensurate with the actual project at hand.

My final point is that I plainly say to you that, had Labor been in government, I think the amendments they would have made would have looked very similar to schedule 4 of this bill, based on Bill Shorten's statements.

CHAIR: I might go to Senator O'Neill.

Senator O'NEILL: Firstly, I have a clarifying question and then, if I can, one that opens up a slightly different area. We've had evidence presented to the committee, based on ABS data and from the University of Melbourne, that disputes the much-repeated claim of 25 per cent being applied as a casual loading. In fact, they looked at a number of professions, including carers, cleaners, laundry workers, food preparation assistants and labourers; and also office clerks, packers, and sports and fitness workers. That last category were paid less than permanent workers. The findings were that, on average, there was a four to five per cent loading, not the 25 per cent that's often stated. Do you dispute that research, based on ABS stats and published by the very highly esteemed University of Melbourne?

Ms Lawrence : Reiterating our point from earlier, modern awards, with the exception of a small number that do not contain provisions for casual workers, require a 25 per cent loading to be paid with respect to casuals. But in relation to the point about—

Senator O'NEILL: Yes, we agree that—that that is the case—

CHAIR: Senator O'Neill, I wasn't able to hear the witness's answer to the question.

Senator O'NEILL: Yes—

CHAIR: The reality is that the chair would like to hear the answer that has been given by the witness. So, if we could just please let the witness answer the question and then do follow-up questions, please.

Ms Lawrence : Senator, I was going to say I'm not aware of the specifics of the research that you've referenced, from Melbourne university. So, if it's okay, I'd be keen to take that on notice and have a greater look at the data that they provide, because it's very hard to respond to something without knowing the data that you're referring to.

Senator O'NEILL: Thank you. As a Labor senator I concur with you that almost all of the modern awards of the Fair Work Commission do specify that casual employees should receive 25 per cent. The fact is that, on interrogation, the data reveals a very, very different profile for casual workers in their employment. Can I ask one other question. Why do you want employers to be able to veto the Fair Work Commission's power to arbitrate disputes about the proposed conversion process?

Ms Lawrence : Noting the time, I will just say that this might take a little bit of explaining. As you clearly indicated, the bill does contain an arbitration provision with respect to conversion, but that is by agreement. I think it's important to note, though, that industrial tribunals and courts in Australia have generated much jurisprudence relating to their willingness to interfere with the common-law right of an employer to manage its business. Implicit in this is the balancing of an employee's interests and the interests of the employer in being able to operate its business as effectively and productively as possible. The Australian industrial relations framework has, since its inception, operated on the fundamental principle that it is the employer who ultimately organises labour within their business.

There is no doubt that, over the past century, there has been a conditioning and moderation of managerial prerogative. However, despite this progression, no government—including the Gillard government, who installed the Fair Work Act—nor the independent Fair Work Commission, as well as all of its predecessors, has ever allowed an employee to stand in the shoes of their employer to dictate when and how they are going to work. No coherent understanding of a fair and relevant minimum safety net could confer on an employee a unilateral right to determine their status of employment regardless of the operational considerations of the employer. It is for this reason that a similar case that came up and dealt with flexible work arrangements, where the ACTU made a claim for this kind of method of forced arbitration, was rejected by the Fair Work Commission. If review of reasonable business grounds were allowed, it would alter the employment relationship—in effect, removing the ability of businesses to determine how to roster labour. The claim plainly has the potential to have a substantial adverse impact on business.

We are strongly of the view that it would be a step too far to allow such a decision to be contestable by the commission or any other body without the consent of an employer. It must also be stressed, however, that there are longstanding and powerful legislative protections applicable to employees requesting casual conversion arising under existing antidiscrimination laws. These protections will continue to apply in the absence of a legislative right to contest the decision of an employer to refuse a request for casual conversion on reasonable business grounds.

Senator WATT: Chair, we have very limited time, and the witness is clearly reading from a lengthy statement. We would be more than happy to receive that statement in writing so that we could ask any other questions.

CHAIR: I might suggest that how the witness, or any witness, answers a question is up to that witness in relation to responses to questions being put by senators. But I am looking at the time, and our next witnesses were due to start five minutes ago. If Labor do have any further questions—

Senator SHELDON: I have a brief supplementary question.

CHAIR: A brief supplementary—and then I think Senator O'Sullivan might have a follow-up question. I will then release these witnesses. Senator Sheldon has a follow-up question.

Senator SHELDON: I just want to thank you for giving us an outline of the master-servant relationship and that it has gone too far because servants have a bit more say! Do you oppose the fact that the Fair Work Commission can currently arbitrate the creation of greenfield agreements? You seem to have a problem with workers having a right to arbitration. Does that extend to greenfield agreements for employers?

Mr Barklamb : Obviously not—

Senator SHELDON: Thank you very much. We've run out of time. You've just given us the answer.

Mr Barklamb : We probably supported the changes in 2015.

CHAIR: Could you complete the answer you were giving before you were cut off by Senator Sheldon.

Senator SHELDON: I didn't cut him off. I highlighted the strength of his argument!

CHAIR: Senator Sheldon, could you please stop interrupting the witness. Could the witness please complete the answer.

Mr Barklamb : Thank you, Chair. From memory, our organisation strongly supported the changes in 2015 which added the greenfield arbitration. I might also point out that, in the bill, there are new arbitration capacities in relation to small underpayment claims. Of course that's one of the mechanisms used by the Fair Work Commission in a range of areas, but it never logically followed that it should be used by the Fair Work Commission in every area.

CHAIR: That concludes your evidence here today. Thank you very much. You are released and free to go. Senator O'NEILL: I hope the answer to my question on notice ends up as fulsome as the response we received from the read-out statement.

CHAIR: Senator O'Neill, you are not assisting the chair at the moment.