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Wednesday, 29 November 2006
Page: 6

Senator HOGG (9:47 AM) —It is good to follow Senator Barnett, because I think that Senator Barnett epitomises the lack of intellectual rigour that is applied to this debate by some senators on the other side. Certainly the Labor Party is not against people who are genuine independent contractors. That should be clearly and firmly on the record, if it has not been said a thousand times already. Clearly, we support those people who are genuine independent contractors. However, when the government stoops, as it has, to trying to bring down sham provisions which will take away basic and fundamental working rights of those who are genuine employees in the workforce, and tries to dress them up as independent contractors, then we are rightfully opposed.

I am someone who has had 30 years ongoing experience in the trade union movement—for which I make no apology whatsoever—and I am still a serving official in an honorary capacity in my union. I make no apologies for the stance that I take on this legislation. The first thing that I will refer to is the second reading speech of the Minister for Employment and Workplace Relations. If you have got to start somewhere to see where the devil in this lies, look at the second reading speech. I did not have to go too far. As a matter of fact, I did not even go beyond the first paragraph, where I read:

I remind the House that everyone’s life opportunities are diminished by restrictions on the freedom to work.

Over the past 25 years Australia has been witnessing one of the most important, yet least remarked upon, shifts in the history of our labour market—the rise of the independent contractor.

What an absolute pack of nonsense that is. To start off with, from my experience in the trade union movement over a long period of time, as a full-time official and honorary official, I have seen the push over a long period of time for people to be shifted from a genuine employee status into an independent contract status. Of course, it has not been a genuine shift that has taken place; it has been forced upon the workforce, in some instances by the employers and in some instances by governments, where governments have had that opportunity. However, it should be quite clear that it has not been the option, for people who genuinely believe in a fair go, that being an independent contractor gives them the necessary freedom to work and freedom from restrictions that this government claim.

There has clearly been an orchestrated campaign over at least the 25 years—and even longer in my living memory as an official of a trade union—that the minister referred to in his second reading speech. Why was that so? It was basically to avoid basic award provisions. It was one way of trying to circumvent the basic rights of individuals in the workplace. The award provisions that were fought for and hard won over the last 100 years emerged not only because of the view of the trade union movement or the view of the employers but also as a result of the industrial relations system that was in place. But people wanted to destroy the industrial relations system and get around the reasonable conditions and reasonable awards that had formed over that long period of time—things that had been won, such as a minimum guaranteed wage, minimum and maximum hours of employment, overtime, meal breaks, rest pauses, paid annual leave, sick leave and the like.

I have vivid memories of my days as a full-time union official, seeing employers trying to convince people that they should no longer be employees and they should go out and work independently, call themselves contractors, and thereby overcome the obligations that the employer had to those employees. It was really about getting the work done at a cut-price rate, in spite of what Senator Barnett and others from the other side have said. It was about the lowering of standards and conditions for the working class of Australia. It was not about better or greater reward for effort, as was implied in the minister’s second reading speech. That is just the jargon that one would expect to see this government dish up—and which it has dished up in not only this second reading speech but also others that I have seen accompanying similar bills before this parliament.

The movement to independent contracting certainly was not about removing restrictions on the freedom to work; it was really cheating by another name. That is the best I can call it and is the best I have ever called it. It was not about security of employment; it was about insecurity of employment. It was about shifting the responsibility from the employer to the employee. But it was also not just about shifting responsibility but also about cost shifting from the employer to the employee in areas such as superannuation, workers compensation and the like.

It was done under the guise of appealing to the egos of some workers in the community by falsely convincing them that, by being so-called independent contractors, they would be in a class above the rest. In other words: when all else fails, appeal to people’s egos. That happened in many instances. I am not talking about those people who are the genuine contractors—let us get that quite clear. I am talking about people who were being exploited and were being used as a means of shifting the cost and shifting the responsibility from the employer to the employee. As I said, I have first-hand knowledge of it.

It was really about appealing to the vanity of a class of people who really were nothing more or nothing less than employees and who deserved to be treated in no way other than that. It was about appealing to their vanity—saying that they would in some way be different by calling themselves independent contractors—so these people might see themselves as being in a class above the rest of the working class. It did not involve a different form of work. It did not involve a different class of work. It was not about, as the minister referred to in his second reading speech, choice and flexibility. Neither of those things came into it. The only flexibility that was obtained out of this was the flexibility of the employees themselves.

This is about the nature of the work being performed and the relationship the entity offering the work has with the worker. That is what this bill really is about, and that is what industrial relations really is about. It is not about flexibility; it is not about choice. It is about the relationship. That is the one thing that is glossed over—or, if not glossed over, totally missed—by this piece of legislation. The nonsense that people will be more productive and more flexible and will offer a greater productivity output is not sustained by the arguments from the other side. Work is an exchange of one’s own possession of skill and effort in exchange for monetary reward. It is not about providing some with the opportunity to opt out of the award system or simply the basic protection that is offered by the award system.

The second reading speech, in my view, shows the ideological fixation of the government in trying to destabilise the working conditions established over the last 100 years and to debase unions—unions that are unions of employees and unions of employers—who so diligently over a long period of time established the framework that was there and which has now been destroyed by Work Choices, with a second attempt through the piece of legislation before us today. What had been established over that last 100 years sought only to improve the lifestyle of people. That was something that a number of employers could not stomach. Of course, there were those on the employer side who were very good indeed and saw the merits of what had been achieved during that period of time.

It is worthwhile to look at the views that were expressed by my colleague Senator Marshall in the opposition senators’ report in the former Senate Employment, Workplace Relations and Education Legislation Committee’s report of August 2006. Senator Marshall, in that report, debunked some of the criticisms that have been raised by the other side of Labor’s view on this particular piece of legislation. I want to refer to a couple of brief snippets from that report. At page 12, the report, under the heading ‘Swelling the ranks of contractors’, states:

The basic policy aim of the Independent Contractors Bill is to turn as many employees as possible into contractors.

I have no doubt about that at all. Whilst it is not specifically stated in the legislation, that is the undercurrent of the legislation, and that is why I addressed the opening part of the minister’s second reading speech.

This is not just an emerging trend, or a trend that has gone unnoticed and not commented on by either the trade union movement or others over the last 25 years; it has been a deliberate plan to get people out of the award system. The report went on further, at page 12, to state:

The committee grappled with the problems of turning employees into contractors in questions to a number of witnesses at its hearings. Both Labor and ACTU policy recognise the importance of contract employment as a necessary component of the workforce and enterprise arrangements.

That is clearly out there in the marketplace for everyone to see. It is clearly on the Hansard record and on the record of this report that Labor accept the importance of contract employment as a necessary component of the workforce and enterprise agreements. The report goes on:

Contractors work across all sectors of the economy. They are a diverse category of workers. The concern of Opposition senators on the committee has been for that segment of the contractor workforce which is made up of de facto employees, and designated as contractors for the convenience and financial advantage of employers.

That is a genuine concern. The government’s claim to get around the sham arrangements that can be put in place under this legislation does not hold true. The report goes on, at page 13, under ‘Common law protection of sub-contractors’:

A high proportion of sub-contractors are employees for all intents and purposes. They work exclusively for a single firm in continuous engagement. Opposition senators reject the notion that this bill creates more certainty for sub-contractors who continue to work as de facto employees, without the entitlements of employees. The committee received strong evidence of the inadequacy—some would argue the irrelevancy—of provisions in the bill which purport to protect contractors from sham arrangements; that is, disguised employment relationships.

If a person walks like an employee, talks like an employee and acts like an employee, the chances are they are an employee. That is really the nub of this. A lot of these people—not all contractors but a number of these people—to all intents and purposes are employees. They are nothing more and nothing less than that. They take on all the attributes, all the functions, all the roles, of employees, and yet the government are trying to get around that by saying that these people no longer should be called employees and we should appeal to the entrepreneurship of these people. They can still be entrepreneurial and be an employee. There is no harm in being entrepreneurial and being an employee and getting ahead and being rewarded for your efforts. There is nothing wrong with that whatsoever. But having to go down the path of calling them independent contractors just does not gel at all.

How confused are the government on this? One only needs to read the explanatory memorandum, the other source that I generally turn to. At page 3 on the explanatory memorandum to the bill, the government address the issue of who is an independent contractor:

An ‘independent contractor’ is a person who contracts to perform services for others without having the legal status of an employee.

Isn’t that bright and intelligent! The explanatory memorandum goes on:

The term is generally used to refer to a person who is engaged by a principal, rather than an employer, on a labour only contract.

None of this gets to the heart of what really is an independent contractor or what is an employee. I note in the report that that debate was sought but it did not get very far. The explanatory memorandum goes on:

Under such a contract, the principal pays the independent contractor a one-off flat rate.

So what? The fact that you pay someone a flat rate does not make them an independent contractor. It goes on:

There are generally no legislatively prescribed minimum entitlements or other employee-style benefits and the independent contractor is responsible for a number of aspects of the relationship that would usually be the responsibility of an employer (for instance, remitting income tax to the Australian Tax Office and contributing to a superannuation fund).

That is right. That attempt to explain what an independent contractor is says nothing at all. It talks about a principal. When I go to the legislation and try to find out what a principal is, there is no definition, none whatsoever. This is just a ruse on the part of the government. They are just using jargon to cover their own tracks. All that this will do out there in the workplace is lead to confusion.

I read somewhere in the material that was put to me that the Australian Taxation Office have a test whereby if a person earns 80 per cent of their income from one source then they are taxed as an employee. Here, though, with the attempts the government are making to create independent contractors, we will end up with a pineapple being the answer. In circumstances where a person is an independent contractor under this bill and earns more than 80 per cent of their income with the same employer, according to the bill they will be an independent contractor but, as I understand it, according to the Australian Taxation Office they will be an employee. So these people will be even more confused about their own state.

As I say, Labor is not opposed to independent contractors. I cannot say that often enough. There is a role for them, there is a place for them, but creating a sham category of people out there in the workplace and leading them down a path where they have unrealistic expectations of their own role in the work relationship is quite wrong indeed. This bill is going to add a layer of complexity that is not needed and will only serve to cost individual workers in the hip pocket in the longer term.

I am disposed to say that the ideas put forward in this bill should be sent to the scrap heap. The government should relook at the bill and, if they want to come back and do something genuine for genuine independent contractors, by all means they should do so. This bill is not about the dignity of the individual, it is not about security of employment, it is not about choice and it is not about flexibility for the worker. It really is about the exploitation of these people, a class of people that deserve their basic entitlements protected under the laws of Australia. Going down the path of trying to convince some people that they are something that they are not is quite wrong indeed. The bill needs to be defeated. If the government want to bring back some realistic conditions for independent contractors, they should do so at a later date.