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Wednesday, 11 August 2004
Page: 2130


Dr EMERSON (6:42 PM) —It is like Groundhog Day. Here we are again debating the Workplace Relations Amendment (Fair Dismissal) Bill 2004, which has already been debated in this parliament, by the government's own reckoning, 43 times. This is the 44th time.


Mr Crean —That is a significant figure. There were 43 eminent people.


Dr EMERSON —That is right; there were 43 eminent people who this week produced a declaration that the government had been less than honest in discharging its obligations to the Australian people. They are right and this bill tonight is yet another example of the government's dishonesty, because this bill is already a double dissolution trigger. It may be the first time in Australian history that a triple dissolution trigger has been debated. There is no constitutional provision for this. The government is so keen to demonstrate its support for the small business community that it has brought this bill on, but what it in fact reveals is that the government treats the small business community with contempt. The small business community are well aware of the government's tactics and the facade that is the debate on this legislation.

The small business community will take no heart from the government reintroducing this bill, because the small business community actually want to see an agreement between the government and Labor on a streamlining of the unfair dismissal processes. The fact is that Labor has developed practical proposals for the streamlining of the unfair dismissal processes that would be of real and lasting benefit to the small business community, and the government have refused to even discuss the matter. The reason the government have refused to discuss Labor's amendments, as contained in the private member's bill, is that they have no intention whatsoever of assisting the small business community of Australia. Rather, they treat the small business community with contempt, by thinking they can go back to them and say, `We pursued this bill for the 44th time.'

Labor have made it clear—and we continue to hold the position—that we oppose this legislation. When will the government get the message? I made this clear in a speech to the parliament on 27 May, as my predecessors in this portfolio have made it absolutely clear. I made it clear the week before the minister reintroduced this bill on 3 June.

The government claims that small business needs to be totally exempt from unfair dismissal laws. It claims that unfair dismissal laws create a huge regulatory burden for small businesses and that they are a disincentive to small business employment. But the fact is that the government's assertions in these matters are false. The statistics are as follows. In his second reading speech, the minister said that more than 96 per cent of Australian businesses are small businesses. That is true, but more than half of these are one-person operations that do not employ anyone. Yes, there are 1.2 million small businesses, but only 540,000 of them are employers, and at least half of these are not covered by federal unfair dismissal laws at all; they are covered by state industrial relations laws.

Nevertheless, around one million Australians are employed by businesses that employ fewer than 20 employees and are under the federal system. Why should these one million Australians have no protection from unfair dismissal whatsoever? If this bill were passed, it would create a two-tier system. It would mean that if you were employed at a business with 21 employees you would have some sense of job security but if the business that employed you had fewer than 20 staff you would wake up each day knowing that you could legally be dismissed at the whim of your employer, even if you had done nothing wrong, with no recourse whatsoever through the unfair dismissal laws. That is bad and unfair policy, and for those reasons Labor will continue to reject this legislation.

The government claims that, because unfair dismissal laws are costly and complex, small business should never have to deal with them. Labor take a different approach. We say, `Let's streamline the unfair dismissal system.' This bill would mean that small business employees who felt that they had been unfairly dismissed would have to resort to even more costly proceedings—very costly proceedings—under antidiscrimination law or common law action. This is a point I make to small business whenever I speak to them.

It is not as if there would be no alternative remedies if the unfair dismissal laws were in fact to be abolished for small business. Before the introduction of the unfair dismissal laws there were alternative remedies, and they would be available after those laws were abolished. Those remedies are common law actions and antidiscrimination actions. The problem is that, if these laws were abolished, then small businesses could be confronted with the spectre of employees taking common law actions or antidiscrimination actions which would be much more protracted, much more costly and much more disruptive for small business. Small business understands this simple proposition. The government also knows it. But, such is the contempt with which it treats small business, it is batting on with this legislation nevertheless.

Unfair dismissal laws were originally introduced to avoid these formal, expensive and protracted court proceedings. The Industrial Relations Commission is a low-cost, informal tribunal, yet the Minister for Small Business and Tourism has claimed, as recently as in the last week, that small businesses would be subject in the commission to filing fees of $1,000. In fact, there are no filing fees for employers at all—none. The only filing fee in the Industrial Relations Commission is for employees; there is an amount of $51.20 to lodge an unfair dismissal application. So, while the government claims to be easing the regulatory burden on small business employers, this bill would increase that burden by shifting claims to more expensive, more protracted proceedings in more expensive courts.

I will speak now on the research on which the government has based its claims. Recall that the original claims were that if unfair dismissal laws for small businesses were abolished there would be 50,000 new jobs. I happen to know the source of that: it was Rob Bastian, who was then the head of the Council of Small Businesses of Australia, COSBOA. Rob Bastian told me that he made that calculation when he received a phone call. Someone from the media rang him up and said, `What do you think the impact of abolishing the unfair dismissal laws for small business would be?' and he said, `Oh, about 50,000 jobs.' So the government used that figure, and then it applied an indexation amount to it—so it got up to 55,000 and then 57,000 as this debate went on and on in the parliament.

The author of the original estimate readily admits that he made the number up, so the government has now moved to what it considers to be a slightly more authoritative source to support its claims. The government paid a favoured researcher $45,000 to come up with a report about how many jobs might be created if there were no unfair dismissal laws. That $45,000 research contract was awarded without going to tender, as ascertained by Labor senators during Senate estimates questioning. The resulting research paper is titled The effect of unfair dismissal laws on small and medium sized businesses, and it comes up with some very heroic results. Even though the report states that the cost `of unfair dismissal laws is a very difficult thing for businesses to quantify', it goes on and seeks to do exactly that.

The report about the potential job impact of unfair dismissal laws is based on responses from less than 10 per cent of the businesses surveyed. That has no statistical viability or credibility whatsoever. Of the 1,802 businesses surveyed, only 158 businesses answered the relevant question about the impact of unfair dismissal laws on hiring decisions. Of that tiny group of 158: 17 said that unfair dismissal laws had a major influence on a firm's decision to reduce employee numbers—that is 17 out of 1,802; 10 said that unfair dismissal laws had a moderate influence on a firm's decision to reduce employee numbers; and 14 said that unfair dismissal laws had a minor influence on a firm's decision to reduce employee numbers. In total, that is less than two per cent of the 1,802 businesses surveyed, and it is on that two per cent that the conclusions were drawn in this study.

The authors have aggregated these three responses and then extrapolated them to the rest of the small business population to get a completely shonky potential job creation figure of 77,000. I respect the fact that Rob Bastian at least had the honesty to admit that he made the figure up. So this is not much more than making the figure up. Based on two per cent of the respondents to this survey, this report has extrapolated to say, `We have proved that 77,000 jobs could be created if small businesses were exempt from the unfair dismissal laws.'

A very different report has been published researchers who are totally independent of both the government and the Labor Party. Dr Bill Robbins and Gerry Voll from Charles Sturt University undertook a study of regional small businesses—with no private sector funding; no private funding whatsoever. They presented their findings at a conference in February 2004. They found that, for 64 per cent of small businesses, the key reasons for hiring or not hiring staff were economic or work related issues. That seems to make sense. It is intuitively obvious. They also found that fewer than six per cent of the businesses said that their main concern was unfair dismissal laws. That is according to Dr Bill Robbins and Gerry Voll from Charles Sturt University.

Small business employers did not all think that they should be exempt from unfair dismissal laws. Some 37 per cent said that they should not be exempt. It is true that 38 per cent said that they should be exempt, but 22 per cent said that they did not know and three per cent had no response. Obviously, many small businesses are happy to do the right thing by their employees and are concerned that their competitors should also be required to do so.

The Charles Sturt study noted that, even if every single claim for federal unfair dismissal had been against a small business, this would mean that less than one per cent of all small businesses has been affected by a claim since January 1977. It also noted that more than 70 per cent of unfair dismissal claims—against this one per cent of employers—never proceed to full arbitration as they are settled before then. The Charles Sturt report made the following conclusions:

The number of unfair dismissal claims against small business is not alarming but is confined to a very small number, the processes of settlement are not costly or difficult and the outcomes are not unfair.

The only thing that this survey confirms for the government is that small businesses have been made to fear unfair dismissal claims (and indeed employees encouraged to make claims) by its campaign of reform, although a pragmatic and innate sense of fairness still prevails and small businesses have not yet embraced removing this right for their employees.

So there you have it: these respected researchers saying that this issue has been heightened in the small business community by the campaign of the Howard government—the Howard government's campaign of fear. And here we are yet again—on the 44th occasion—discussing the same legislation that has been debated 43 times before.

Labor have a proposal that is workable, sensible and fair. Labor accept that the misuse of unfair dismissal proceedings is not a good thing, and we support measures to ensure that abuse of the system is stamped out. We have introduced a private member's bill to this effect, but the government not only did not support that bill but also was not even interested in discussing it. Labor's bill would have streamlined and improved the operation of the unfair dismissal laws while still protecting employees from unjustly losing their jobs. Labor's bill was designed to reduce costs and the time spent on cases by employers. Unlike the government's bill, Labor's bill would not leave small business owners vulnerable to expensive and protracted common law action or antidiscrimination action.

We have put forward constructive proposals to lift the red tape burden from small businesses struggling with the GST—through the ratio method. Similarly, our private member's bill is designed to address the real issues of most concern to small business. Labor's plan would lower costs, simplify procedures and reduce uncertainty and confusion for small business. Our plan is targeted at the unethical ambulance chasing agents who sit outside the unfair dismissal jurisdiction, approach people who do not have a good case and say to those people that they will provide support and advice on a contingency basis—and a very lopsided basis, where the fee is anywhere between 60 per cent to 70 per cent of the amount that is extracted from the small business. That unethical agent then goes to the small business with threats to draw out the unfair dismissal process to make it as time consuming and as costly as possible. Under duress in those circumstances, small businesses are, from time to time, bullied by unethical agents into a situation where they have to pay some money just so the case will go away.

Labor does not support that sort of approach. Labor will create the circumstances whereby unethical ambulance-chasing agents who pursue cases that do not have any merit will not be allowed to operate in the system and will be deregistered from the system. That is Labor's commitment, as outlined in Labor's industrial relations policy that I released just a few days ago. It is a real, practical policy designed to address the issue at hand. But of course the government is completely uninterested. I urge the small business community to have a careful look at Labor's proposals and understand that Labor is genuine about streamlining the unfair dismissal processes for small businesses in the very small number of cases where problems do exist.

The dimension of this problem has been wildly exaggerated by the government for base political purposes—for no other reason than to instil fear into the small business community so that the government can say to the small business community that it is the party of small business and Labor opposes small business. That is completely inaccurate—it is wrong. Small business is right to treat the government with disdain for assuming that small business would be so naive as to respond to that very base political manoeuvre by this government.

I draw the attention of the House to an opinion piece written in the Daily Telegraph by Malcolm Farr, who says that he has direct experience of and an anecdotal interest in small business and unfair dismissal laws. This particular opinion piece was on 12 July 2004. It begins:

It must be confusing for some small business operators to be told, in violent bouts of Government fury, that their No. 1 problem is the inability to sack staff.

It goes on:

Small Business Minister Joe Hockey said another survey last month, by Australian Business Ltd, showed 75 per cent of its members saw dismissal laws as a major or moderate concern.

That was true, but as Labor frontbencher Craig Emerson pointed out, the survey found there was more concern about the Government's tax policies and red tape.

Whatever the surveys might say, anecdotal evidence, including some collected by this column, is that small business people can get by with current laws.

If existing laws (state and federal) deter job creation, why are we experiencing some of the lowest unemployment rates in a quarter of a century?

And perhaps more telling, figures show there is less and less use of the federal unfair dismissal system.

The column goes on to make what I believe is a very persuasive case that this government is engaged in a base political manoeuvre, and it is here, in its own version of Groundhog Day, yet again pursuing legislation that for very good reasons the Senate has rejected on something like 43 occasions.

There is a pretty good explanation for the reintroduction of this legislation and it comes from the words of the minister for small business—who is treated with complete derision by the small business community. The minister for small business in an interview of great candour and frankness on 22 June in the Australian Financial Reviewmade some startling statements. The front page story begins in this way:

It is no surprise that federal Small Business Minister Joe Hockey is struggling to win friends among what should be his core constituency. Hockey, who is keen to trumpet his background in small business, accuses the sector of having colourful accounting practices and poor corporate governance, and candidly admits he is unsure whether it would welcome his return to the portfolio after the federal election. `You would need to ask them,' he told the Australian Financial Review.

It goes on to say:

... many are frustrated by what they see as Hockey's failure to address their perennial concerns about red tape, training and ballooning compliance costs, despite his creation of the Small Business Council last year.

The small business community say the same thing to me. The small business community say the same thing in surveys that are conducted by Australian Business Ltd and other industry associations: that is, that their No. 1 problem is the red tape burden imposed upon them by this government. Their No. 2 problem is tax and the compliance burden associated with the GST and other tax obligations.

But the small business community tell me that they cannot get the minister for small business interested in these issues. I wonder why. I do not know that he is from the small end of town; it is pretty clear that he is from the big end of town. The minister says in this interview:

`Small business hasn't got the same corporate governance as larger businesses. Therefore poor corporate governance practices in small businesses are one of the biggest hurdles to transferability.' Warming to the theme, he declares that if he were not a politician, he would be a property developer—

I would have thought he would be a restaurant owner, but it says here that he would be a property developer. He says:

I've got real estate in the blood.

This is the minister for small business who is an embarrassment to the portfolio and an embarrassment to the Australian parliament. He wants to create any diversion that he possibly can from the real issues confronting small business—and they are the compliance burden of the GST and the regulatory burden that is imposed by this government.

Labor, through a private member's bill, has a greatly simplified process—it is an option—for lodging GST returns. It is called the ratio method. It is based on the historical experience of each small business and provides that the Australian Taxation Office, upon the request of a small business—if a small business wishes to exercise this option—provides that small business with a ratio based on the business's historical experience. That ratio would normally fall somewhere in the range of zero per cent to 10 per cent. A small business, having received that ratio—let us say it is 5.5. per cent—from the tax office, simply multiplies its GST sales for the relevant accounting period by the ratio—one calculation—and submits that amount to the tax office as GST paid. There is no annual reconciliation required.

It could not be simpler and the small business community tell me—I am sure they tell the shadow Treasurer and the shadow minister for small business too—that they think the ratio method is a very attractive option.


Mr Crean —It is so simple.


Dr EMERSON —They are bemused about why the Howard government would not embrace a simple GST calculation—a simple method. The answer is that the Howard government is long on rhetoric about simplifying the GST—this so-called streamlined new tax system for a new century—but has no real commitment to doing it. Is it any wonder that this streamlined new tax system for a new century has caused such compliance problems that an audit of the Australian Taxation Office's processes for the collection of GST has shown a very high level of small business concern and confusion? Here we are four years after the introduction of the GST.

The compliance burden of the tax system has mushroomed—exploded, in fact—under this government, and yet the government are not interested in simplifying it. Red tape has exploded under this government. There was supposed to be a streamlined new tax system for a new century, and yet the barometer of regulation in this country is the size of the income tax act. When the government came to office with the promise of reducing red tape by 50 per cent the income tax act ran to 3,000 pages. It now runs to well in excess of 9,000 pages. If you add in some of the other major taxes, it runs to well above 10,000 pages.

So the regulatory burden on small business has exploded under this government, the compliance costs for the GST have exploded under this government and the minister for small business is not interested in dealing with these matters. Not only that; he is not interested in dealing with the issues of competition policy and reform of the Trade Practices Act. There is only one explanation for that, and that is that the minister for small business is the minister for big business—against small business. He is not interested in any constructive proposals to reduce the compliance costs for small business.

There is another massive problem confronting small businesses, medium businesses and large businesses in this country, and that is the skill shortage. The skill shortage being faced by businesses is already acute and can only get worse, yet in its $52 billion pre-election spending splurge the government has found not one extra cent for vocational education and training in this country. The very surveys to which I have referred and other surveys by the Australian Industry Group and the Australian Chamber of Commerce and Industry have shown that the skill shortage has zoomed to the top of the priority list of concerns for business in this country, yet the government has no response to it whatsoever. In fact, in the industrial relations arena the government has in this parliament at this very moment a bill that would remove from awards any obligation on the part of employers to support the training of their staff. Again, there can only be one explanation for this, and that is that the government is firmly committed to taking vulnerable Australians down the low road to low skills and low wages. That is exactly the opposite direction to that needed to address the problem of skill shortages in this country.

Only Labor is committed to addressing skill shortages in Australia through its commitment to create 20,000 extra TAFE places and 20,000 extra university places a year. There is only one party in this parliament that is committed to easing the skill shortage and to looking at innovative solutions in relation to apprentices. What happened to the old apprenticeship system? Apprentices are not being put on at anything like the required rate, and reform of the apprenticeship system is needed in this country, but the government is deafeningly silent in terms of responding to the problem of apprenticeships and skill shortages in Australia. Instead, it continues to bring in stunts—time-wasting legislation such as this on Groundhog Day—when it should be addressing the No. 1 issue: skill shortages in Australia.

My colleague the shadow Treasurer delivered a speech a couple of weeks ago which addressed the whole area of new growth economics. He explained very clearly that it is vital that Australia engage in a new round of productivity growth, because the current round of productivity growth based on the economic reforms of previous Labor governments may be coming to an end. That is what the Productivity Commission is saying, and it is what the government's own Intergenerational Report forecasts—that is, from next year onwards, productivity growth will slump back to its mediocre 30year long-term average after a record-breaking decade. What are the new sources of productivity growth in the 21st century as identified by the shadow Treasurer, based on national and international literature? They are skills formation, innovation and infrastructure development. On all three counts, this government gets a massive fail. It gets an E, and the E does not even stand for effort. It has put no effort into this. It has simply coasted on productivity gains that have been harvested from the hard and comprehensive economic reform program of previous Labor governments.

The problem is that the Intergenerational Report, using these forecasts of faltering productivity growth and the ageing of the population, comes up with the deeply worrying forecast that, from the end of this decade onwards—which is now only six years away—Australia's growth in per capita gross domestic product, which is the conventional measure of living standards, will be the slowest since the decade of the Great Depression. The alarm bells are no doubt ringing in the Treasury, but they are not connected to the Treasurer's office or the Prime Minister's office. This government should have been acting on the problem of faltering productivity growth years ago—back in 2000. Here we are in 2004, and the government has no program for skills formation in Australia, no program to support skills development and no effective program to support innovation. Instead, it spends the parliament's time and its time in a completely wasteful exercise on Groundhog Day, bringing legislation like this into the parliament. It is a disgrace, and the Australian people—and, most particularly, the small business community—will come to understand that this government has completely run out of ideas and puff and that it is essential for Australia's future that this government be tossed out at the coming election and a forward visionary Latham Labor government be elected.