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Thursday, 24 June 2004
Page: 31633


Mr SCHULTZ (11:10 AM) —I thank you for the opportunity to speak today on the Workplace Relations Amendment (Protecting Small Business Employment) Bill 2004. Before I get into the general thrust of the bill, I was interested to hear the views of the member for Cunningham, as a Greens representative in this place, because I did read the attitude of the Greens through their policies, which I extracted from their web site. I would like to make the point that I was also interested in what he had to say as a person who worked as an employee in large and small businesses and then as a manager in large and small businesses over my lifetime. I was also interested to hear from him because I thought back on my times when I attended the Australian Industrial Relations Commission as a witness on many occasions on both sides of the fence. It is true to say, from my experience, that some of the decisions that came out of the Australian Industrial Relations Commission were at best deplorable and at worst influenced by personal political views—rather than their making an impartial decision.

As an example of what I am talking about—and I do this to illustrate the difficulties that employees have in dealing with some of these issues—in my capacity as a supervisor on a slaughterhouse floor at one stage, I sacked about 11 people for failing over a four- or five-day period to take a direct instruction from me as a supervisor. That went to the Australian Industrial Relations Commission. After days and days of hearing, at considerable cost to the company, the industrial relations commissioner of the time made the astounding statement that the company was absolutely proper in the way in which it went about warning those employees and was absolutely proper in the way in which it went about dismissing them. In other words, the company was absolutely right in the way in which it went about exercising its right to operate as an employer. But the industrial relations commissioner of that time then went on to say, `However, given the long-term employment record of these particular people, I strongly recommend to the company that they reinstate them.' That is just one illustration of the sort of thing that I have experienced as a person working in the system both as an employee and as an employer.

Before I get back to the base of the bill, I would just like to quote from the policies of the Australian Greens in relation to their principles on work, which this bill does affect. They say:

The Australian Greens distinguish between work, defined as any purposeful activity, and employment, defined as paid work. We support the principle of full employment, meaning the availability of safe, socially useful, environmentally benign, adequately paid work for all those who wish to engage in it.

I will just finish with some more words to illustrate the approach that the Australian Greens have to work and small employers. About three paragraphs further down, it reads:

The Australian Greens realise that the logical consequence of the present conditions is that less formal work is needed and more free time becomes available for everyone's chosen pursuits. Thus the Australian Greens will work towards shorter standard working hours and a reversal of current trends towards increased unpaid work.

A radically new perspective needs to be taken. The green vision is one where work, leisure and income are all shared equitably. In a green society, everybody is the master of her/his own time. People must have time for leisure as well as for shouldering the responsibility of the family, society and the environment. People must also have time to keep better informed and to participate in politics.

Some of those ideals are well intentioned but are not conducive to the economy of a free and open society such as ours. I conclude my comments in that respect by saying that it is unfortunate that the great Prime Minister of this country, Bob Menzies, who did all the work to ensure that the Communist movement was removed from this country, has failed to the extent that we see a re-emergence of it through the ideals of the Australian Greens.

I have to congratulate the workplace relations minister on taking such swift action on this issue of redundancy payments. I say that in the context of the misguided decision by the Australian Industrial Relations Commission in March to impose redundancy pay obligations which have had a crippling effect on small businesses—and will continue to have a crippling effect on Australian small businesses if left unaddressed. It is this government's responsibility to protect small business from this decision, because these businesses have nowhere else to go due to the potential impact it would have on their future.

If this bill is not passed, the vast majority of small businesses covered by federal awards will eventually be required to provide redundancy payments for employees in accordance with the AIRC's decision. If this bill is not passed, small businesses that are constitutional corporations and that are covered by state awards will become subject to redundancy payments if the AIRC decision flows on to state jurisdictions. Many small businesses operate on an overdraft or without the luxury of idle cash reserves. This is an additional cost and operational pressure they can do without. I illustrate that point by saying this: small businesses are normally made up of families that pool their money, go into business and employ as many as 15 and as few as one or two workers. In the current environment, they are subjected to unfair dismissal laws, superannuation impositions, holiday loadings and occupational health and safety issues.

All those things are commendable, but they have to be affordable for small businesses to be able to operate profitably and continue to employ people. They are also subjected to pressures from local government, which many people forget about. As an example, they are required to have certain pieces of equipment or facilities within their small business, under the umbrella of local government requirements—as you, Mr Deputy Speaker Causley, would know as a former minister of the Crown. They are subjected to significant financial impositions—for example, they are required to provide disabled toilets whether or not they are ever going to employ disabled workers. There is nothing wrong with that, but I am just stressing the issue of the cost of putting such facilities in these businesses. It is significant.

As a further example, they are subjected to significant pressures with relation to `Exit' signs—and they are not just ordinary signs; they cost a significant amount of money and they are required to have five, six or seven of them at particular doors for obvious safety reasons, such as in the case of fire. The point I am making is that there are those sorts of pressures on small businesses that could be covered by businesses with larger profits, but small businesses find it extremely difficult. That is one of the reasons that I say many small businesses operate on an overdraft or without the luxury of idle cash reserves.

By supporting this bill, members of the House will be removing redundancy pay for small businesses with fewer than 15 employees from the jurisdiction of the AIRC. They will be cancelling the effect of any variations that were made by the AIRC to awards from the time of the decision until the legislation commences and they will be protecting small businesses covered by state awards from the expected flow-on effect of this AIRC decision.

We have more than 1.2 million small businesses in this country and we have a responsibility to support and protect them because they are making a significant contribution to the economy of this great nation of ours. Small businesses do not have the financial resources to cope with large commitments such as redundancy payments. Small businesses are twice as likely as larger businesses to go out of business in the early years of operation. The member for Cunningham commented on the point made by the minister that, after 15 years of operation, they are still 1.7 times more likely to go out of business than larger businesses.

For the three million or so people employed in small businesses, this move by the government might seem harsh. However, small businesses can still reach a one-on-one agreement with their employees in the event that they can afford to do so. That, as far as I am aware with my continual contact with small business, is a very relevant issue and it is working extremely well. The last thing they want to do is have people putting more and more pressure on them. In addition to the points that I made earlier, they have significant pressure put on them by trade union officials, who have access to all sorts of things that impose on businesses.

Recently, as somebody who has been down that track over the years, I gave some advice to small and medium-sized businesses in my electorate: get yourself one of those nice little tape recorders that you can hold on your person and, when a union official comes and threatens you like they have done, turn it on. You do not have to put up with that sort of nonsense. Turn it on and tape them, and use it against them legally. That is the sort of pressure that small businesses have been subjected to and I, for one, will not tolerate it. I, for one, will share with small businesses any experience that I have had over my years in dealing with that sort of activity to help them stay viable.

This bill has been supported by key businesses and farmers' groups, who agree that the burden of redundancy payments would break small businesses. The National Farmers Federation called the AIRC decision ludicrous and short-sighted. As they rightly point out, the commission ignored evidence presented by state governments and employers that supported the exemption of small businesses from redundancy payments. No-one other than trade unions supported its removal. The Australian Chamber of Commerce and Industry estimated that, if the exemption was not reinstated, Australia's small businesses would be required to find about $190 million more each year for redundancy payments—on top of termination pay and unfair dismissal requirements which I have already mentioned.

Let us talk about Labor's proposed streamlining of incapacity to pay provisions. Labor has conceded that many small businesses should be exempted from redundancy pay, but the exemption mechanism proposed by Labor will not work. The Labor mechanism has been tried and tested and has proven to be a failure. It would not protect small businesses from redundancy pay, and small businesses that even Labor concedes should be protected would be pushed to insolvency. Labor is willing to sacrifice the 30 per cent of Australian small businesses that it says cannot afford redundancy pay because they are not profitable at the time they make retrenchments.

We know that the Labor exemption mechanism is a failure because it has been available to larger businesses for 20 years and it does not appear to have produced even one exemption. A search of electronic databases of federal and state decisions by the Department of Employment and Workplace Relations did not reveal any cases in which an employer had been exempted from redundancy pay decisions. This is despite the fact that many thousands of larger businesses have failed since the exemption mechanism was first established in 1984 and demonstrably have not had a capacity to pay redundancy pay.

Simplifying and streamlining the exemption process as proposed by Labor will be equally ineffective at saving small businesses. Again we know this because streamlined `incapacity to pay' mechanisms have been tried very recently and have failed. In 2003 the AIRC established a streamlined process for farmers to seek a delay in the imposition of safety net review wage increases if they were in an exceptional circumstances declared area and in receipt of exceptional circumstances relief payment benefits. This mechanism has failed to exempt even one farmer from the wage increases. This is an extraordinary failure given that the AIRC had accepted that, where a farmer met the defined criteria, the farmer would be prima facie entitled to relief on the grounds of economic incapacity.

The National Farmers Federation outlined the reasons why farmers rejected the process in its submission to the 2004 safety net review case. The NFF pointed to the requirement to provide detailed financial records that could be considered by the union even if none of the employees were union members, and the capacity for a hearing to be held which may require the farmers to be cross-examined by the union. The reasons given by the NFF for the failure of the process are not rectified by the Labor proposal. Allowing electronic lodgment of applications and similar changes to the `incapacity to pay' process does not address the elements of the process that were unacceptable to farmers and will be unacceptable to small businesses. In fact, electronic lodgment has been available for applications to the AIRC since March 2003. Electronic lodgment was available for the farmers who wished to make an application for delay in the imposition of the 2003 safety net review wage increases. Electronic lodgment has been tested, and it has failed to overcome the notorious ineffectiveness of `incapacity to pay' processes.

Labor has finally conceded that small businesses need to be exempted from redundancy pay, but its proposed exemption mechanism will not work. Even with Labor's gross underestimate of the numbers of small businesses that cannot afford redundancy pay, Labor's proposal would have 161,000 small businesses, or 30 per cent of small businesses, having to go cap in hand to industrial tribunals and to unions to get the exemption they need and deserve. This is a ridiculous proposition. Worse still, Labor's proposed exemption mechanism will not protect small businesses that cannot afford redundancy pay.

Let us now address the issue of the government allegedly riding roughshod over the AIRC. This legislation is necessary because it is the only option available to rectify a flawed decision of the AIRC. Members have a clear choice here of whether they support small business or support a flawed decision. The government has decided that it will continue to support small businesses, the vital ingredient to our economic and employment prosperity. Opposition members have attacked this legislation for dealing with small businesses that are constitutional corporations and that are covered by state workplace relations jurisdictions. Yes, it does, and the government makes no apologies for this. To protect small business employment, as intended by the bill, it is essential that the AIRC's decision be prevented from flowing to state workplace relations systems. This bill is about protecting employees working in small businesses and those small businesses that are currently excluded from the cost burden of redundancy payments. Employees of small businesses will not benefit if the AIRC's decision costs them their jobs.

The AIRC's decision concedes that some small businesses cannot afford redundancy pay. But it grossly underestimates the impact that the decision will have on small businesses. More importantly, I do not think they care about it. There can be an impact even on those that are profitable. Even profitable small businesses tend to be undercapitalised and generally do not have the financial resilience to cope with large, unpredicted commitments such as redundancy payments. They do not have unencumbered assets. Often, as I said earlier, the family home has already been mortgaged to finance the business. They are family businesses run by families, and in some cases they have got to the point where they will no longer employ people and are taking on family members and encouraging family members to work in the business because that is the only way they can survive. Is that the sort of society we want in this great country of ours? I think not.

In closing, I strongly support this legislation and I sincerely hope the minor parties will ensure its passage through the parliament. The consequences of ignoring this AIRC ruling would be disastrous. Small business is too important to our economy for us to simply sit back and allow this decision to run small businesses into the ground. Again, I congratulate workplace relations minister Kevin Andrews on this bill and, on behalf of the small businesses in Hume, I thank him for his efforts. I thank the House for the opportunity of making those pertinent points in the chamber today.