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Education and Employment References Committee
04/09/2018
Exploitation of cleaners working in retail chains

BOERSMA, Mr Martijn, Lecturer, Centre for Business and Social Innovation, University of Technology Sydney Business School

KAINE, Dr Sarah, Research Director, Centre for Business and Social Innovation, University of Technology Sydney Business School

[11:43]

Evidence was taken via teleconference—

ACTING CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses and evidence has been provided to you. I now invite you to make a short opening statement. At the conclusion of your remarks, I'll invite members of the committee to ask questions.

Dr Kaine : Thank you, Senator. Before we do that, can I just note that on the agenda for today it was noted that there was no submission from either Martijn or myself. We actually did make a submission. It was submission 3, from the Centre for Business and Social Innovation. I just wanted that to be noted as well before we proceed.

ACTING CHAIR: That's fine. I'm aware you put a submission in. I think that was just a typographical problem.

Dr Kaine : Thank you. We'll proceed with our opening statements.

Mr Boersma : There are two matters that we wish to emphasise in out opening statement today. First, we argue that a dearth in the conditions surrounding cleaning work requires regulatory innovation. Second, we contend there's a need for a supplementary non-traditional regulatory measures. An appropriate mix of both traditional and non-traditional measures can address working conditions in the cleaning sector as well as in other industries where extended supply chains inherently undermine labour standards.

In broad terms, strengthening the regulation and enforcement of labour standards in the supply chain is needed. The current industrial relations framework insufficiently regulates the complex relationship between workers at the bottom and commercial entities at the top of the supply chain, which has resulted in poor working conditions in the cleaning sector. As with many industries in Australia, the cleaning industry is fragmented and characterised by complicated contractual pyramids. There is now substantial evidence showing that this type of fragmentation in delivery of production and services by commercial entities is dictated at or near the top of the supply chain and has contributed to poor working conditions for workers employed by companies at the bottom of those supply chains.

Cleaning work is low paid as most workers rely on minimum award paying conditions. The workforce predominately comprises of international students, migrant workers and/or women with domestic duties. Each worker often faces significant barriers to employment, has poor English and literacy skills, has limited knowledge about their workplace rights and are not able to raise objections out of fear of reprisal. The enforcement of workers' rights and conditions is therefore of pivotal importance. Both the Fair Work Ombudsman and the Australian trade union movement have historically played a key role in inspecting and enforcing labour rights. However, both institutions face significant hurdles respectively by being under-resourced and by regulatory constraints.

Regulatory innovation should take the intricacy of the cleaning supply chain into account, better facilitate cleaners to collectively address and shape labour standards and include tougher penalties for noncompliance that includes underpayment of wages, the law around superannuation payments, sham contracting and phoenixing. Research has concluded that mandatory regulation of supply chains is necessary to address poor working conditions in some sectors; however, regulation is not sufficient on its own. For some time now, researchers have highlighted how supply chains have the potential to counter adverse outcomes by harnessing the influence of dominant businesses at or near the apex to address low pay and poor conditions further down the supply chain. The supply chain can therefore also be used to positively influence employment standards while leveraging external pressures from wider social, political and regulatory sources.

Dr Kaine : The second point that we want to highlight is, in considering those issues and problems with the cleaning supply chain, measures that can improve labour standards for cleaners beyond traditional regulatory mechanisms. The centre that we're involved with, the Centre for Business and Social Innovation, is engaged in a three-year research project funded by the Australian Research Council to examine how voluntary multi-stakeholder initiatives can supplement traditional regulation and enforcement and can contribute to an improvement in labour standards in the cleaning industry.

Our research partner is the Cleaning Accountability Framework, an independent not-for-profit multi-stakeholder entity with representatives across the cleaning supply chain, including property owners, investors, managers, cleaning companies, the union United Voice, the Fair Work Ombudsman and industry association. The Cleaning Accountability Framework harnesses that nature of supply chains we were just talking about. It harnesses it to counter adverse outcomes. With the cleaning sector being characterised by aggressive price competition putting downward pressure on wages, that race to the bottom—that I'm sure has been described as before and we've just intimated—means that low rates of pay refer the cut and also increase workloads and work related injuries. The Cleaning Accountability Framework leverages the influence of those dominant businesses to address the regime of contract pricing that leads to poor working conditions, which, combined with pressures from social, political and regulatory sources, should achieve sustainable contract rates.

A fundamental feature that distinguishes the Cleaning Accountability Framework from other voluntary multi-stakeholder frameworks is that it has a robust worker engagement component. What that does is it legitimises the audits that are undertaken for the Cleaning Accountability Framework of cleaning supply chains. Worker verification plays a pivotal role in preventing workplace violation, especially where smaller businesses down the supply chain typically act as a direct employer. Our research aims to create a generalisable model that could be applied to the various sectors in Australia that have extended supply chains. We're looking at where this model might be applied beyond cleaning as well.

In summary, we'd recommend that the committee considers regulatory innovation that takes the intricacies of the cleaning supply chain and of similar industries into account—specifically, providing encouragement to stakeholders along the supply chain to participate in the enforcement of labour standards and the encouragement of best practice. We therefore recommend that the committee requires all government departments and agencies to ensure that cleaning contracts for government buildings are compliant with the Cleaning Accountability Framework and to assist in promoting multi-stakeholder models similar to the Cleaning Accountability Framework to other sectors where worker exploitation is common. Thank you.

ACTING CHAIR: I note you are saying that the Cleaning Accountability Framework is one process to deal with the problems. The other areas would be to increase enforcement and to improve legislative requirements. Wouldn't that be another way to do it?

Dr Kaine : That would absolutely be another way to do it. We would by no means be suggesting that a multi-stakeholder framework such as the Cleaning Accountability Framework would replace tougher mandatory standards. In fact, we would think that they would work hand in hand. The only lingering concern about mandatory standards is that sometimes it gets lost in the enforcement and implementation of tougher standards. While we think tougher standards are appropriate, it's the enforcement side that we worry a bit about. Research shows that's it's often in the implementation of standards that you end up with workers not accessing the entitlements that they should. We would definitely agree that stronger mandatory standards are important but we also have to look at how those standards are enforced for workers.

ACTING CHAIR: In your submission, you basically say that government should lead by example and that the cleaning contracts for government should comply with the Cleaning Accountability Framework. Are you aware of any governments that have signed up to the Cleaning Accountability Framework?

Dr Kaine : As I understand it, there have been discussions with various state governments about signing up to the Cleaning Accountability Framework and discussions with the ACT government, particularly regarding the school cleaning sector. There have been discussions. Given that the Fair Work Ombudsman is a part of the Cleaning Accountability Framework, discussions have begun to implement CAF in the building in which they have their offices.

ACTING CHAIR: But the Fair Work Ombudsman is only a small agency in a huge government. The federal government has not engaged, has it?

Dr Kaine : The federal government has not engaged, and our recommendation would be that the federal government engages and commits to having all of their properties audited to the CAF standards. As you said, a key signal would be sent to the market if the federal government were to do that.

ACTING CHAIR: I also note that one of the first things the Commonwealth government did back in I think 2014 was remove government cleaners from the Clean Start Collective Agreement. Are you aware of that?

Dr Kaine : Yes, there were some provisions under the fair work principles that were abolished as well, to the detriment of the cleaning sector.

ACTING CHAIR: So the government itself hasn't provided leadership in this area.

Dr Kaine : No. I think what it reflects is a lack of understanding of government's role in supply chains and their economic footprint in supply chains not only across the board but also specifically when it comes to contract cleaning for their own properties.

ACTING CHAIR: The second recommendation is to extend the CAF model to other sectors. How realistic is that if we can't get the government to implement in areas where they can actually make a difference?

Mr Boersma : We have been in discussion with other industries as well that are characterised with very long and complicated supply chains that also experience a lot of downward pressure on wages and conditions. There are a number of them—for example, the security industry and the trolley-collection people as well. We had a large workshop discussing how the Cleaning Accountability Framework has features that essentially can be transferred to other sectors. One of the strong points of the Cleaning Accountability Framework is that it's a very broad initiative. It includes stakeholders from industry but also from the union, cleaning companies, the regulator et cetera. A lot of people realise that the point that Dr Kaine just made about having a stronger message in place doesn't necessarily mean they're enforced. A lot of the industry actors here also want to take responsibility themselves and play a role in enforcing those standards. Basically, all those stakeholders working together and ensuring that work conditions are not being undermined is one of the strong points. We've seen quite some enthusiasm in other industries as well that face similar problems to the cleaning industry.

ACTING CHAIR: Recommendation c. says:

Promote alternative business models (such as platform-based organisations and cooperatives) as a mechanism for reducing worker exploitation

What do you mean by 'platform-based organisations'?

Dr Kaine : What we've seen in other areas of the economy is the proliferation of the delivery of service through online platforms. We often talk about them as gig work. What we've seen, in common with contract cleaning, is the idea of independent contracting of these workers. What we've seen in response in some other industries is workers getting together and providing their services through their own digital platform—in other words, themselves becoming the organisation through which services are provided. We think there is some scope for this in any sector which is using independent contracting as its model. We think there is scope for that to be explored and perhaps initiatives to encourage that type of development amongst the cleaning workforce.

ACTING CHAIR: I'm not so sure about that because one of the problems is that many of the workers in this industry are students on visas or people here on holiday engaged in the industry. Why would a gig based approach make it better when all that we see in the gig economy is a pushing down of wages and conditions?

Dr Kaine : Let me clarify that. I don't mean a for-profit platform. We've seen in other countries cooperative platforms where the workers themselves are the owners of the platform. In Europe we've seen platforms which essentially consolidate the gig work and allow for those contractors or gig workers to effectively become permanent employees who are then contracted out through that platform, which again they have a say in. So I certainly would not be recommending the type of gig platform that has characterised disruption in some other sectors, but certainly one in which those workers have some kind of stake or where their work is consolidated so they don't have to be an independent contractor; the platform takes responsibility for their worker status and then brokers the work accordingly.

ACTING CHAIR: We certainly wouldn't want a nation of Uber drivers, would we?

Dr Kaine : Absolutely not. At my appearance at the last Senate inquiry on the future of work, I made that point exactly.

ACTING CHAIR: Yes, good. Have you seen the submission from the Australian Industry Group?

Dr Kaine : Yes, I have.

ACTING CHAIR: Do you have any comment about that submission? To summarise, it says, 'Everything's okay; nothing to see here. The laws are fine. Just don't interfere on contracts or the supply chain.'

Dr Kaine : There are a couple of comments to be made about that. I think one of the points made in the submission was that outsourcing allows for efficiencies that you can't get in other ways. We would like to challenge that assumption and say that efficiency based on pushing down the price of labour is not particularly efficient. It's just pushing down the price of labour. In fact, it can be disadvantageous with regard to worker performance, knowledge of workers, turnover—a whole range of factors that I don't think are being considered with this particular definition of efficiency. The other thing to be noted with submissions that suggest that things should be left to contracts and that the market is enough regulation, is that it hasn't been adequate. That's been quite clear, and we have seen that through Fair Work Ombudsman inquiries and through our own research. Not imposing extra regulations, be it through increased mandatory standards or through the type of multi-stakeholder regulations that we are looking into proposing and are researching, simply leaves that regulation up to the market. So the choice is not no regulation but which regulation we prioritise. It would seem that the AiG is wanting to prioritise market regulation. I think the problems and challenges associated with that kind of regulation of the labour market are very well known.

ACTING CHAIR: That's interesting. In the context of the accessorial liability provision, have you had a look at that, in section 550?

Dr Kaine : Yes. Just as it's related to what we've been looking at, yes.

ACTING CHAIR: The submissions we've had are that section 550 is deficient, because if you look at Woolworths, they basically contract out. Other groups, like Coles, have brought the work back in. Woolworths claim that they get increased efficiency and quality from contracting out but have never been able to explain that to the committee. They might have another opportunity if they're listening in now to explain that this afternoon when they appear. Have you got a view on this proposal of contracting out and then turning your back and saying that you were not knowingly involved in any of the rip-offs?

Dr Kaine : Yes, I do. I have noted with interest the Fair Work Ombudsman's use of vicarious liability provisions over the past couple of years, and I note that the submission of Dr Tess Hardy and Professor Andrew Stewart spoke to this provision and the idea of secondary liability, I understand. My view is that strengthening something along the lines of vicarious liability in the way that Dr Hardy and Professor Stewart mentioned would be useful with regard to what is happening in contract cleaning. I'm not a lawyer—they're much more across technicalities—but I will say that, in dealing with multi-stakeholders in this context that we have, the existence of vicarious liability provisions, and potentially strengthening those, provides quite a motivation for organisations in the supply chain to engage with what's happening down at the bottom of the supply chain. So I think that anything that would strengthen and extend those provisions is contextually extremely important if we are trying to get changes at the bottom of supply chains and to create a climate in which it's known to be unacceptable to allow noncompliance in your supply chain.

ACTING CHAIR: I've also had a look at some of the work done by Tess Hardy. It goes to some of the international developments to try to deal with the gig economy and with contractual problems like the ones we're facing here. Have you had a look at any of that stuff?

Dr Kaine : I have. I wouldn't necessarily feel confident to address it unless there were particular questions, but I have been following Tess's work.

ACTING CHAIR: Are you aware of where this has been dealt with overseas?

Dr Kaine : I don't have clear examples. What I have been looking at, and what has informed our work, is looking at the strategic enforcement model being pursued by agencies in the United States and at the idea of co-enforcement, which is also an idea that's being pursued by enforcement organisations and by the community and unions in the United States as a means to improve compliance.

ACTING CHAIR: Yes. That accessorial liability provision of the act requires a company to be involved in the contravention—having 'aided, abetted, counselled or procured the contravention'; having 'induced' the contravention; having 'been in any way, by act or omission, knowingly concerned'; or having 'conspired with others to effect the contravention'. The submissions we've had from lawyers and unions basically indicate that this is a deficient part of the act and that it's extremely difficult to effect a prosecution through accessorial liability. Have you looked at that?

Dr Kaine : As I said, I've looked at the submissions, and I understand that the submission from Dr Hardy and Professor Stewart spoke to that and suggested a concept more aligned, I think, with the amendments that have just gone through on the Fair Work Act with regard to vulnerable workers around secondary liability. At face value, that would seem a very sensible way of approaching it.

ACTING CHAIR: Have you had a look at the Fair Work Ombudsman enforceable—what's it called?

Dr Kaine : Enforceable undertaking?

ACTING CHAIR: Yes, the proactive compliance deed. Have you looked at that?

Dr Kaine : I have had a look at some of them. Yes, I have. I haven't got the details in front of me, but I have in the past looked at them.

ACTING CHAIR: Among the problems that we've had in trying to deal with this is that some of the subcontractors that Woolworths have used didn't have any records of payment and didn't provide payslips, and, when a worker is seeking to prove that they were underpaid, that lack of records makes it extremely difficult. Have you considered that as a problem?

Mr Boersma : Yes, we have, absolutely. This is one of the elements that are really crucial to include in accountability frameworks. One of the factors that CAF requires from its stakeholders and its members is adequate record keeping. We have independent auditors in the Cleaning Accountability Framework auditing process. They come in to do a record check to see whether appropriate payments are made, whether superannuation payments are made, whether records are being kept and whether documentation is provided to the workers. We are aware of that problem, and CAF is definitely across that and makes that one of its four pillars in combating the undermining of labour standards in the cleaning industry.

ACTING CHAIR: You mentioned the Black Economy Taskforce in your submission. What particular aspects of that do you think we should turn our minds to in our report?

Dr Kaine : From memory, the Black Economy Taskforce was looking at how we could educate workers and what the social context is with regards to the black economy. Having looked through other submissions, I can see that there is quite a theme with regard to educating the cleaning workforce and accessing information for the cleaning workforce. Again, we're not suggesting that the Cleaning Accountability Framework is, of itself, going to solve all the problems, but one of the key things it does do is make sure that workers are educated on their rights and conditions. We think that that's something that could be enhanced by, perhaps, federal government intervention and resources to ensure that there is a better understanding in cleaning and in those other sectors we've spoken about—for example, security.

Mr Boersma : I'll add to that briefly. With regard to the cleaning sector specifically, obviously it's known that many of the people working in the cleaning industry are international students, many of which are students of mine and Sarah's. Problematically, the working restrictions for international students—the 20-hour work restrictions—means limited amount of work and a limited amount of income. Anyone living in Sydney or any of the major Australian cities knows the cost-of-living standards. I think an element like the 20-hour work restriction basically forces them to go off the books and do something that is illegal. So they're put in that position where they have no choice but to do that. Otherwise they can't earn a living wage or a normal wage for Australian city standards.

ACTING CHAIR: So how much work rights should an international student have?

Mr Boersma : Effectively I don't think there's need to discriminate between an international student and an Australian permanent resident in the amount of hours that they are allowed to work. I believe that they pay taxes like anyone else. I believe that they need to pay rent and buy their groceries like anyone else. As I mentioned, there's a structural element there where, if they're only allowed to work for 20 hours a week, it's really hard for them to get enough money to pay their rent, to pay their tuition fees, to buy their books et cetera. It basically forces them to engage in illegal employment by being paid, say, cash in hand et cetera. Obviously those working conditions are then entirely determined by the employer. The student has very, very little leverage to determine those working conditions because they're doing something that they know is in fact illegal. So I think that causes more of the problems as well.

ACTING CHAIR: One of the recommendations from the Black Economy Taskforce is that government agencies should work more closely with other governments, business organisations, community groups and unions. I haven't seen any evidence that this government is interested in talking to the unions on social and industrial issues like this. Have you seen any evidence that that's been done?

Dr Kaine : What I would have to say to that is no, but I would say that government agencies—in particular, the Fair Work Ombudsman's office—have been ready to talk about this. The point that you raise about institutions working together is one that has been raised when we have gathered stakeholders together to try to think about how labour standards could be better applied in supply chains. Stakeholders have consistently cited the siloisation of government institutions. That makes it extremely difficult for workers, employers and others in the supply chains because they're disjointed responses. So I would have to say no at a government level, but I would have to acknowledge that the Fair Work Ombudsman has been involved with attempts, particularly with us. It's not just through CAF; they also commissioned us to hold a workshop with other vulnerable supply chains. So they were involved with that as well.

ACTING CHAIR: The other areas that are identified in the Black Economy Taskforce are sham contracting and phoenixing. Have you got any recommendations on that, in the context of this inquiry?

Dr Kaine : Probably more so in sham contracting, in that I think some of the provisions that we're looking at in the Cleaning Accountability Framework with regard to auditing—which, it should be said, need not be something that's undertaken in a framework such as CAF; that is something that could be undertaken and regulated and mandated through other means—are really necessary in identifying sham contracting. I think that all of those other topics we talked about, including who's liable up the supply chain for sham contracting, need to be revisited, as well as combining with that educative component of workers to understand what a sham contact is and when they are a contractor and when they should be an employee. I would say, in response to what could be levelled about the framework we're involved in, that it's voluntary, so only the better industry players might be involved. But there is nothing stopping some more formal and traditional type of regulatory mechanism from using the same kinds of procedures that we do, in a voluntary way, in CAF.

ACTING CHAIR: I just think CAF has come about because of deficiencies in the law. If the law operated effectively, you wouldn't need CAF. Do you have a view on that?

Mr Boersma : Like Dr Kaine said before, CAF and any form of multi-stakeholder regulation, we believe, is always in addition to a good functioning legislative framework. We always think that the multi-stakeholder regulation is in addition to that. What was said before is that you can have good standards and regulations set out, but enforcement is the second element to that, and a very important one. We all know that has been struggling to follow up on enforcement due to being under-resourced. We feel that an initiative like the Cleaning Accountability Framework, to do with the multi-stakeholder nature, also places some responsibility with the industries themselves, even to the degree that being recognised and being CAF-compliant can lead to a race to the top rather than a race to the bottom in the market and can add value to a portfolio of buildings in that they're being cleaned by cleaning companies that are CAF-compliant. We always feel that an initiative such as CAF needs to be supplemented and, if supplemented, builds on an existing legislative framework.

Dr Kaine : What I would add to that is that I think you're right, Senator. I think CAF is the child of the political opportunity structures of the day, meaning that stakeholders within the cleaning sector, across the supply chain, who have been concerned about contraventions of labour standards have been thinking to look at other ways of improving that. There are two aspects to that. I think recognising that political opportunity structures don't change quickly means that initiatives like CAF should be encouraged as supplements, certainly not as the basis of labour standard compliance enforcement, but also should be encouraged in terms of good governance along supply chains and good social sustainability practices along supply chains. If there was a situation in which there were mandatory regulations that meant enforcement was 100 per cent across the contract cleaning sector, then there could still be a role for CAF in determining and encouraging better practice for employees. I would agree with you in saying that the current context has meant 'what else can be done?'—and credit to the stakeholders for being prepared to initiate something that does look to improve conditions in the supply chain. In an ideal world, where that was not required, there is still the capacity for improvement.

ACTING CHAIR: I was just thinking when you were talking about the Four Corners report sometime ago now about Baiada and other companies in regional and rural Australia, where ethnic criminal gangs are involved. There have been some submissions to us that that is a problem in the cleaning sector as well, not to the extent of criminal gangs but workers being exploited by people of the same nationality.

Dr Kaine : I couldn't speak to that. I haven't come across any details. I am aware that there are groups of vulnerable workers often based on language abilities and cultural peculiarities but I am not aware of the organisation of it.

ACTING CHAIR: The other issue I have been raising this morning is that the cleaning industry seems to be based on the award wage. If the award wage is paid then companies want to be congratulated for paying the award wage. There is no capacity for cleaners to bargain. There is no capacity for cleaners to get a wage increase through improved productivity because the retail sector, Woolworths in particular, set the contract at such a level that the award is the outcome in the first tier of contractors and maybe the second tier, but not necessarily. There are no bargaining rights for these workers, are there?

Dr Kaine : I think you have hit on something very important with regards to the cleaning sector. You are right; the bar is set very low in what is seen as good practice, which goes to my point about potentially raising standards overall above awards. You are right in saying paying award wages is seen as something to be congratulated for.

I do think what you speak to though is a greater challenge with regards to enterprise bargaining in particular sectors, which I think, again, goes broader than contract cleaning. Certainly in the cleaning sector, those organisations and those areas where those workers are organised well enough to engage in enterprise bargaining to come up with an agreement effectively then see the pressures of the industry fall on their shoulders, and it becomes more and more difficult for those organisations with enterprise agreements to remain competitive in a sector in which undercutting on labour standards is standard. It speaks to a larger problem with a system based on enterprise bargaining as a means to improving conditions in the sector where you see vulnerable unorganised workers.

ACTING CHAIR: There is no bargaining, to my knowledge, of any effect in the cleaning sector. Woolworths are coming here with their contract cleaners this afternoon. I'm sure they will all be wanting a pat on the back because they pay the award wage and have entered into agreements with Fair Work Ombudsman that provide 19 bucks an hour for a cleaner. One of the submissions we have had is that the cleaners in these contract companies should be able to bargain with the company that is calling for the tender. It is quite a novel approach but I think it's a desperation approach because the company, like Woolworths, set the standards basically by the contract terms that they accept, and workers have got no capacity bargain, no capacity to improve their conditions.

Dr Kaine : We would agree that the power in commercial supply chains lies at the top of that supply chain and there is a logic to those entities being held responsible and being required to improve tender conditions to ensure better wages and conditions at the bottom, keeping in mind that while we would never condone noncompliance by cleaning contracting companies, they generally are price takers not price makers.

ACTING CHAIR: Sure.

Dr Kaine : It is the Woolworths and the Coles and the retail sector and the big property owners in the commercial cleaning sector who are the price makers. This applies across any industry where there's a supply chain. In our view, and in the view of much of the research that we have conducted in other sectors but also in other parts of the world, it should be the price makers, not the price takers, who are responsible for ensuring that there is enough money in that contract for not only the basics but better wages and conditions.

ACTING CHAIR: That's just not happening. That's the industrial and political reality that we're faced with. Have you had a look at the AiG submission?

Dr Kaine : Yes, we've had a look.

ACTING CHAIR: I've asked them extensive questions about that because AiG are just simply saying: 'Everything's okay. There's no need to change. You can't interfere in the contract.' So that allows Woolworths to just be the price maker then turn their back on the consequences. Is that your view?

Dr Kaine : As I said, I think at the moment the structure of our regulatory system, aside from those provisions we talked about in the Fair Work Act—the accessorial liability—does still allow for that decoupling of responsibility between the top and the bottom of the supply chain, so I would agree with that.

ACTING CHAIR: One of the submissions we've had is that the employment relationship is being stretched. It used to be an employer and an employee, and that's what the industrial relations system is based around, but that stretching and imposition of contracting between the company that benefits from the contracting and the employee makes it almost impossible to hold the price maker to account.

Mr Boersma : That is something that happens not just in the cleaning supply chain but in many other supply chains, not just in Australia but around the world. The more arms-length the relationship is between the company at the top of the supply chain and the worker at the bottom, the less oversight the company at the top has and the less bargaining power the worker at the bottom has. So, yes, this sort of stretching of the employment relationship is definitely something that undermines, basically, the current employment status—absolutely.

Dr Kaine : I will just add that we're talking in a supply chain context here about that arms-length relationship, but of course we have seen similar issues where again that relationship is stretched, including in the franchisor-franchisee situation. We also know in labour hire and we also know in the gig economy that there are these areas where that traditional employment relationship, that proximity between employer and employee, is getting longer and more extended. There are issues of, I guess, the durability of the existing system to effectively provide what is meant to be a safety net for all workers.

ACTING CHAIR: Yes. So the argument that we've got an IR system based on enterprise bargaining really falls down for these workers because they're getting no capacity to bargain?

Dr Kaine : That's right. What the enterprise is and where, and who you're bargaining with, as you mentioned before, are not clear.

ACTING CHAIR: I really appreciate you taking the time to submit and to appear today. It's been very helpful, and hopefully we can work our way through this morass that we find ourselves in to make it better for working people. Thank you.

Dr Kaine : Thank you for the opportunity, Senator.

Dr Kaine : Thank you so much.

ACTING CHAIR: Thank you.

Proceedings suspended from 12:29 to 13:30