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Thursday, 24 June 2004
Page: 31643

Mr MOSSFIELD (12:00 PM) —I rise to support the amendment moved by the shadow minister for workplace relations and the public service. The purpose of the Workplace Relations Amendment (Protecting Small Business Employment) Bill 2004 is to exempt small business from having to pay redundancy pay. The bill is another example of the government trying to overturn the decision of the independent umpire in workplace relations matters, the Australian Industrial Relations Commission, the full bench of which in a test case decision awarded employees improved redundancy provisions.

The position that the Labor Party takes with this bill is to uphold the rule of law in this country. The decision of the AIRC is the law of the country, just as any other court decision is, and it should be abided by. There are forms by which people can challenge a decision of the AIRC, but such a decision should not be overturned by an act of parliament. It should also be recognised that a decision of the AIRC is not made lightly. It is not taken after a couple of hours of discussion. It is taken after probably weeks of submissions being put to the AIRC—and, in this case, being put to its full bench, comprising a president, a vice-president and two commissioners. There are four people, and they are eminent people who no doubt have some experience in industrial relations or some economic background. They are the people who have come up with this decision.

It is quite extraordinary that the government is trying to overturn this decision. It runs against the argument that the government has put up time and time again in this House that what people should do, particularly those in industry, is abide by the law. That is what they are doing on this occasion, yet the government is trying to change the law. This bill will exempt employers with fewer than 15 employees if they are covered by a federal award or are constitutional incorporations covered by state awards, overriding any future state industrial relations tribunals that may seek to flow on an AIRC decision. The government is also calling on state governments to legislate to maintain exemptions of small business from making redundancy payments. Once again this government believes that, if you work for a small business, you should have fewer rights than other workers—you should be discriminated against solely on the basis of the number of co-workers you have.

The background to this bill is that, in August 2002, the ACTU applied to the AIRC to vary redundancy provisions in awards which were previously set in the federal 1984 Termination, Change and Redundancy case. The ACTU application sought to increase redundancy entitlements for employees with more than four years service and to remove the exemption from redundancy for small business. On 22 March 2004, the AIRC decided: not to alter redundancy arrangements for employees with four or less years service—so that was a loss for the ACTU; to increase redundancy payment for employees with more than four years service, scaling up to a maximum of 16 weeks pay for an employee with nine years service; and to remove the exemption for small business but to limit the redundancy payment for small businesses to eight weeks, which is half the amount that would apply to large businesses.

In its decision the AIRC said:

While some small businesses lack financial resilience and have less ability to bear the costs of severance pay than larger businesses, the available evidence does not support the general proposition that small business does not have the capacity to pay severance pay.

It continues—and this is important:

For those businesses which are unable to meet their redundancy pay obligations the incapacity to pay provision, as amended by this decision, provides an avenue for relief.

We recognise that this is a complex issue, and it should be noted that the commissioners would have made their decision after very careful consideration of all the issues involved and of the submissions put by various parties, including those from representatives from small business. Indeed, the full decision, as handed down, runs to some 103 pages. It should also be noted that there is a need to balance the needs of small business with the rights of employees, regardless of where they work.

Responding to the Howard government's decision to override the independent umpire's decision, ACTU secretary, Sharan Burrows, has said that the overwhelming majority of small businesses, around 70 per cent, are profitable when they lay off workers. This is supported by submissions to the commission. This is another important aspect that we should not overlook: the evidence presented by the commission, based on submissions by all parties, shows that some 70 per cent of small businesses that retrench people are profitable at the time they do so. This is supported, as I have said, by submissions to the hearing.

In all over 200,000 Australian workers are retrenched each year, I think; possibly half of those, maybe 100,000, are those retrenched from small businesses. Redundant workers face an average of five months unemployment—that is 22 weeks. They must get some form of monetary compensation for being dismissed, because they have to exist for a period of time before getting another job. Large numbers of older workers drop out of the work force entirely after being retrenched. They are forced into early retirement.

The ACTU's concerns for older workers are supported by a report published by Mission Australia in conjunction with Macquarie Bank. It is entitled Unemployment among older workers. I will refer to a couple of statements in that report, which really shows how vulnerable older workers are when they are retrenched. It is an independent report, brought down, as I said, by Mission Australia and Macquarie Bank. The report says:

... older workers are now one of the most susceptible groups to both early exit (eg retrenchment) from the labour market and long term unemployment. The cascading impact of unemployment and underemployment on older workers and their families can be severe. Not only can unemployment result in acute financial difficulties, but social participation can be restricted ...

This is an issue that no doubt the Australian Industrial Relations Commission took into consideration.

Further, in that same report by Mission Australia, it says:

Retrenchment and downsizing have contributed heavily to high unemployment among older workers. An Australian study found downsizing decisions impacted most on workers aged between 40 and 60 years. Older workers have greater difficulties obtaining another job after retrenchment (than those aged under 45) and are more likely to become discouraged jobseekers and leave the labour force ... A third of retirees cite job loss as the main reason for ceasing their ... fulltime job ...

Once again, that shows quite clearly why a redundancy scheme is appropriate for workers in Australian industry, whether they work for large or small companies.

We continue to hear from the government that unions need to accept the umpire's decision and the law must be obeyed. The previous minister for workplace relations, the member for Warringah, was very fond of reminding this parliament of that. He was literally forcing down people's throats that the law is the law and, even if it is unfair, it has got to be abided by. Now we have a law that to some extent has come out in favour of the trade union movement and workers in industry, and the government is trying to overturn it. It is quite unfair, and I know the member opposite would not be supportive of an unfair practice, so I am hoping that we might get some commonsense.

So, as I have said, here we are, with the government trying to change the law. In its decision removing the exemption of small business from the legal requirement not to pay redundancy, the commission noted the inequities in the current scheme. I want to refer to those that have been spelt out in the AIRC's decision. The decision quotes evidence given by a Mr Albury, who said:

“9. On 20 November 2002, I was given notice that my employment would be terminated in five weeks time. I was not told prior to this time that the shop was being closed down.

10. Two of my colleagues were also made redundant.

11. We were told that the owner was closing the business down on 20 December 2002. The remaining business would be passed on to a Print Broker and the machinery would be sold.

12. A Webb & Sons is a profitable business and has been for a long time. I have been asked to work overtime in the weeks leading up to the closure of the business to meet the workload.

13. Around seven or eight years ago, there was a reduction in staff due to the introduction of new technology. At the time there were sixteen staff employed in the business. The person with the shortest length of service was made redundant and paid a severance payment. A short time later, a number of other staff were made redundant and ... did not receive severance payment—

because the employment figure had dropped below 15. He went on to say:

14. A Webb & Sons have said that, as they have less than fifteen employees, the Award does not require them to make a payment of severance benefits, regardless of our length of service.”

So I think the Industrial Relations Commission were quite right to draw attention to the unfairness of the current arrangements, and I think they were quite right to introduce the decision that they have.

In the redundancy decision, reference was also made to the decision made in 1982 by the full bench of the commission to remove the exemption of small business from its legal requirement to pay redundancy in the clothing industry award. The commission also heard considerable evidence concerning the impact that hav-ing to meet redundancy payment obligations would have on the financial position of small business. I will quote from section 222 of the commission's decision, which, let me remind the House, is a decision of the full bench of the Australian Industrial Relations Commission, which is staffed by qualified people—a president, a deputy president and two arbitration commissioners—with immense experience in industrial relations. In that section the commission said:

It seems to us that the available evidence does not support the general proposition that small business has a relative lack of financial resilience and has less ability to bear the costs of severance pay than larger businesses.

That was the evidence that came through.

We accept that this is true of some small businesses ...

To paraphrase, the commission accepted that some small businesses did not have the capacity, but did not uphold the general proposition that `small business does not have the capacity to pay severance pay.'

There were three considerations supporting the commission's conclusions:

The first is that small business is generally profitable.

As I have said, 70 per cent of them are profitable when they lay off workers.

The second is that some small businesses make severance payments—

in spite of the absence of legal obligations to do so, and they are to be congratulated for that—they are operat-ing very fairly.

A third consideration is the absence of evidence from those jurisdictions where the small business exemption does not exist, or in those industry sectors where it has been removed from the relevant federal award, that small business is less profitable or more likely to fail.

Quite clearly the evidence is there: it is a good decision of the arbitration commission. This parliament should uphold the good decisions of the arbitration commis-sion and not try to pull down the arbitration commission. For that reason the Labor Party is quite right to oppose the bill and support the amendment before the House, which states:

That all words after “That” be omitted with a view to substituting the following words:

“the House declines to give the Bill a second reading and:

(1) condemns the Government for undermining the independence of the industrial relations commission, and

(2) calls on the government instead to investigate measures to assist those small businesses that do not have the capacity to pay redundancy payments, to obtain individual exemptions from the AIRC”.