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Thursday, 24 June 2004
Page: 31680


Mr ANDREWS (Minister for Employment and Workplace Relations and Minister Assisting the Prime Minister for the Public Service) (2:40 PM) —The Workplace Relations Amendment (Protecting Small Business Employment) Bill 2004 will ensure that small businesses covered by federal awards are not burdened with redundancy pay obligations. The bill will amend the Workplace Relations Act 1996 to maintain the exemption for small business from redundancy pay by overturning the recent decision of the Australian Industrial Relations Commission.

In his comments on the bill in this House on Tuesday the member for Rankin again put forward the idea of an exemption for small business which could not pay. This would mean that these businesses would have to go through the process of running a case before the Industrial Relations Commission to convince it that the business should be exempt. In doing so, Labor has again conceded that the Industrial Relations Commission decision seriously disadvantages small businesses that cannot afford redundancy pay. It accepts that many small businesses need to be exempted.

The government's answer is very simple. It will exempt small business from the new redundancy pay obligations and will enable employers and their employees to negotiate redundancy pay through workplace bargaining where a small business can afford it. This is to maintain the status quo which has been in place in this country for 20 years. The type of incapacity to pay exemption mechanism proposed by Labor has been tried and tested and has proven to be a failure. An incapacity to pay mechanism has been available to larger businesses for 20 years and it does not appear to have produced even one exemption from redundancy pay. This is despite the fact that many thousands of larger businesses have failed since the exemption mechanism was first introduced in 1984 and demonstrably have not had the capacity to pay redundancy pay.

Incapacity to pay exemption processes have always failed because industrial tribunals are very loath to exempt employers from awards, because businesses are understandably unwilling to signal to their creditors and suppliers that they are experiencing financial difficulties and because they are unwilling to expose their financial affairs to third parties, including unions. Labor has finally conceded that small businesses need to be exempted from redundancy pay, but its proposed exemption mechanism will not work. Labor wants the 160,000 small businesses that are not profitable to, when reducing staff, go cap in hand to industrial tribunals and to unions to get the exemption they need.

Labor has suggested that employees of small business which cannot afford redundancies should be protected by GEERS, yet as the member for Ryan was pointing out this is the same GEERS—one which, I should add, has paid out nearly $170 million to some 30,000 employees who have been made redundant where there were not adequate redundancy provisions in place—which the Labor opposition has promised to abolish and replace with a payroll tax on businesses in Australia. The problem is clear. Labor acknowledges the problem, yet it now also wants to pass the buck to a Senate inquiry to find ways to fix the decision. The simplest and most appropriate way, we submit, is to pass this bill.

It is the prerogative of the parliament to set policy. It has always been the policy of the government to prevent small businesses from being hit with job-destroying expenses and regulation. Even the member for Burke in the House on Tuesday acknowledged that it is acceptable to override an Industrial Relations Commission decision in very exceptional circumstances. What, I ask, would be more exceptional and would more justify government intervention than a decision that threatens small businesses and their capacity to provide employment opportunities? The 1.1 million small businesses in Australia are the great engine room for the growth in jobs in this country. The member for Burke, therefore, is being disingenuous in suggesting that the decision would impact only on a small proportion of small businesses because only a small proportion are covered by federal awards.

A test case decision of the AIRC such as this would normally flow to state jurisdictions and would eventually cover most relevant employment. This flow-on process has already begun for the AIRC's redundancy decision. UnionsWA has applied to the Western Australian Industrial Relations Commission for a flow-on to businesses in that state. The Labour Council of New South Wales has lobbied the New South Wales state government to remove the small business exemption from their Employment Protection Act to enable redundancy pay to be applied to small businesses in New South Wales. It is therefore simply a nonsense to suggest that the impact of the Australian Industrial Relations Commission decision will be restricted to small businesses covered by federal awards. We are seeing the flow-on already commencing.

The member for Rankin has misrepresented the position of the Australian Chamber of Commerce and Industry. He said that ACCI indicated that if the AIRC agreed with their proposition that only future service should count in determining the redundancy entitlements of small business employees then the need for any legislation would be minimal or effectively removed. This, I submit, is blatantly inaccurate. ACCI's press release issued on 8 June confirms the need for legislation. It states:

Parliament must now pass the Workplace Relations Amendment (Protecting Small Business Employees) Bill 2004 which seeks to reinstate what, up until today, has been the total exemption of small business from compulsory award redundancy obligations.

This is something that ACCI has repeated to me in conversations. The government have been clear and consistent in their support for small businesses. These businesses should continue to have the exemption from redundancy pay that they have traditionally had in Australia. The government are about creating jobs. We have had some 1.3 million extra jobs in this country over the last seven to eight years. Not only have we got more Australians in employment but Australians are being paid higher wages. This is proof our policies are working. The opposition's proposal would fail to provide the protection that small businesses need. Instead of being confident that they will not have to bear this burden, small businesses would have to go through the bureaucratic process of proving incapacity to pay. This would add yet another needless layer of regulation and red tape at a time when small businesses can least afford it. The government are committed to this bill. I commend it to the House.

Question put:

That this bill be now read a second time.