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Thursday, 24 June 2004
Page: 31631

Mr ORGAN (11:04 AM) —I rise to speak against the Workplace Relations Amendment (Protecting Small Business Employment) Bill 2004, and I do so because this bill would enshrine inequity as a principle of Australian industrial law. The Minister for Employment and Workplace Relations told us that this bill is necessary because it is the only option available to rectify a flawed decision of the Australian Industrial Relations Commission. The minister maintains that the vast majority of small businesses covered by federal awards will eventually be subject to redundancy payments for their employees unless this bill is passed, and he told us:

The government strongly believes it is parliament's responsibility to use its legislative power and authority to shield small businesses from the AIRC decision.

The government proposes to do this by removing from the AIRC's jurisdiction redundancy pay for small businesses with fewer than 15 employees. Just why this magic number of 15 has been selected is not explained, and that is why I say the bill enshrines inequity in Australian industrial law. It is an inequity which my local South Coast Labour Council rightly labels a disgrace. This is how labour council secretary Arthur Rorris sees it:

It makes the ridiculous assumption that somehow workers in smaller enterprises have got different needs, bills to pay and other financial commitments than other workers that are fortunate to work in larger enterprises. We say that you if you employ someone you cannot negate your responsibilities to that worker simply as a result of the size of your business.

And you know what? He is right. Certainly the Industrial Relations Commission of South Australia came to that conclusion back in 1987, when they found that it would be:

... unjust to grant an employer an automatic exemption from the redundancy provisions simply because he employs less than fifteen employees.

But wait, there is more—this is what they went on to say:

It seems to us that the rationale behind such an exemption must assume, we think incorrectly, that an employer who employs less than 15 employees cannot afford to pay the redundancy benefits to his retrenched employees. It may well be that he has not the capacity to do so. But many employers who employ only a small number of employees have very lucrative businesses, whilst employers of a larger number of employees might make a relatively small profit . . . A provision of that kind is arbitrary and in our view is devoid of merit. All employees who are made redundant for whatever reason, are likely to suffer the same adverse effects no matter whether they were employed at a small enterprise or by a multi-national company. In our view all employees who are made redundant should prima facie be entitled to the same benefits.

That sounds remarkably similar to my local South Coast Labor Council secretary's view, doesn't it, Mr Deputy Speaker Causley? The South Australian decision was not a flash in the pan either. The Western Australian Industrial Relations Commission had expressed very similar views two years earlier in 1985. It said:

The claim to exclude from the redundancy provisions employers who employ less than 15 employees appears hard to rationalise and no real attempt was made by the applicants to do so. It is surely not the case that an enterprise that employs fewer than 15 people will generally not have the resources to meet redundancy payments and the like. Some enterprises forced to retrench 100 employees may find their resources taxed to a greater degree than an enterprise employing 14 people, and dismissing just one employee through redundancy. In the absence of argument to justify it this arbitrary exclusion appears to us to be unnecessarily and illogically discriminatory.

To this one can only say, `Hear, hear.' Isn't it interesting that the legislation now before us is similarly devoid of argument to justify it? All the Minister for Employment and Workplace Relations could tell us was:

Small businesses tend to be chronically undercapitalised and in general do not have the financial resources to cope with large, unpredicted commitments such as redundancy payments. Small businesses are twice as likely as larger businesses to go out of business in the earlier years of operation. Even after 15 years of operation they are still 1.7 times more likely to cease than larger businesses.

In the government's view, the AIRC's decision seriously underestimates the impact that redundancy pay would have on small businesses. For instance, a typical retail small business with seven employees, each with six years continuous employment, would now face a contingent liability for redundancy pay of nearly $30,000.

Never mind the internal inconsistency of the minister's statement in regards to `large, unpredicted commitments' and `contingent liability'—we will let that through to the keeper. Never mind the fact that somewhere around 70 per cent of new small businesses fail in the first two years of operation. Never mind the fact that the Minister for Small Business and Tourism told this House, on the same day that his workplace relations ministerial colleague introduced the legislation before us, that 70 per cent of Australia's 1.1 million small businesses operate from home and many of them have a turnover of less than $50,000. Why is the government more concerned with protecting 270,000 small businesses than the three-quarters of a million people, minimum, that they employ? The South Coast Labor Council secretary is spot-on in his assertion that:

... if you employ someone you cannot negate your responsibilities to that worker as a result of the size of your business.

This bill would entrench inequity in Australian industrial relations law and therefore I feel it must be rejected.