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Wednesday, 29 November 2006
Page: 18


Senator LUDWIG (10:40 AM) —I rise to speak on the Independent Contractors Bill 2006. It really is the latest chapter in the Howard government’s extreme industrial relations reform. It is, sadly, the latest chapter in the government’s abuse of the Senate as well in its pursuit of its ideological agenda, since the Prime Minister promised to use the government’s majority ‘carefully and not provocatively’. They are the words he used, but, when you look at this legislation, and the extraordinary, late supplementary explanatory memorandum to the bill and the original supplementary memorandum, you really do wonder whether he said those words ‘carefully and not provocatively’ with tongue in cheek.

It is the latest chapter in this government’s attempt to ride roughshod over the states and territories since getting the green light from the High Court. Ever since Senator Minchin himself let the cat out of the bag in his secret speech to the HR Nicholls Society, there has been little doubt that the Howard government was not content with the reforms in its so-called Work Choices package. The ink had not even dried on this bill and there was Senator Minchin speculating about his wish list for future reform in this area.

In that sense these bills are, unfortunately, inevitable. With our ideologically driven government having gotten their hands on the honey pot in the form of control of both houses of parliament—and I might remind Senator Vanstone that in fact you do have control of this Senate—they could not resist the urge to push more and more of their extreme agenda through. And they are pushing so far that the rest of Middle Australia—working Australians, including many who voted for the government—are watching with amazement as this band of warriors runs off into the distance on some ideological crusade. The government just keeps on pushing, not even bothering to turn around to see that they have left the rest of the country far behind.

You can see this in the Prime Minister’s reaction to the results of last Saturday’s Victorian state election. Despite the Labor Premier being returned with a strong majority, having campaigned strongly on the impact that Work Choices is having on family life, Mr Howard is in complete denial about the impact his reforms had on that election result. The Prime Minister did not so much as utter the words ‘industrial relations’ during the last federal election campaign, but he then turned around to claim a mandate for some of the most extreme, regressive and, when you look at this independent contractors legislation I think you can also add, experimental reforms in this nation’s history. Talk about self-delusion in truth!

This bill shows how out of touch this government is becoming. It has shown no vision for the future of Australia—no vision for how to secure our future prosperity to build the wealth of tomorrow, only a vision for squandering the wealth of today. Just like the Work Choices legislation, this bill sends a very clear message to Australian workers: you are on your own now. Forget about looking after your workmate; forget about working together in the workplace; cooperation under this government is a thing of the past. If you want to get ahead and provide for your family, you have to squeeze every last dollar out of your boss—that is the unfortunate message that this sends.

It is sending the wrong message to business as well. The message it is sending to business is: if you want to stay afloat, drive down the wages bill; if you want your employees to work harder, add hours to their work, rather than taking a cooperative approach that drives productivity up. That is what we know will happen if you take a cooperative approach in the workplace. Productivity will be driven up, taking wages and profits with it.

In introducing this bill the government argued that it is built on the principle that genuine independent contracting relationships should be governed by commercial not industrial law. If the Independent Contractors Bill was genuinely about independent contracting and not just the latest instalment in this government’s extreme industrial relations reform, then it would have come out of the Treasurer’s mouth, in truth, and not that of Mr Andrews. But we know that it is not about that at all. When the minister in his second reading speech says:

... everyone’s life opportunities are diminished by restrictions on the freedom to work—

I could not agree more, because it is about this government. After all, that is why I voted against the so-called Work Choices legislation, which restricts the right of employees to bargain collectively and enables employers to offer individual contracts on a take-it-or-leave-it basis. There is no proper freedom and no dignity in that. For the government to try to argue that this latest assault on the employment conditions of Middle Australia is about ‘respecting’ and ‘protecting’ the Australians who make the ‘choice’ to work for themselves, they can only have had a Hobson’s choice in mind when they said that. Like Mr Hobson, Mr John Howard offers Australian workers a very simple choice: under Work Choices sign the AWA or there is no job; and under this bill become an independent contractor or there is no job. That is the choice you are given. In truth, there is no choice in that. This is yet another excuse for stripping away the protections of vulnerable workers.

Turning to some of the specific measures in this bill, this bill will force genuine employees out of the employer-employee relationship and into some sham independent contracting arrangements. As a result they will lose all the protections that go along with being an employee, being stripped of entitlements like sick leave and annual leave, and made to administer their own superannuation, tax, and workers compensation arrangements. It makes it easier for employers to force people into these arrangements, people who do not want to be in these arrangements and people whose work does not suit that style.

The bill will do this in a number of ways. It does it by overriding employee deeming provisions contained within state and territory legislation which would otherwise see certain categories as independent contractors deemed to be employees. In New South Wales, for example, this occurs for occupations such as cleaners, painters and bricklayers. It does it also by overriding state unfair contract provisions, which otherwise provide protection to employees, contractors and small businesses. Under proposed changes these groups will lose the ability to apply for an unfair contract review through an employer organisation or their union. Talk about removing choice! Talk about driving people onto sham arrangements! Talk about ensuring that the whip will be in the boss’s hand! That is what this legislation is about.

It introduces anti-sham arrangements that are themselves a sham. Even if an employee manages to satisfy the extraordinary burden of proof placed upon them, they would probably find themselves without the protection of unfair dismissal if their employer has fewer than 100 workers. Even if they managed to get to that point, they will be given the ‘no choice’ option—take it or leave it or go. The bill weakens the protections for outworkers and diminishes their entitlements, ignoring that many outworkers had previously been awarded employee-like protections because of their particular vulnerabilities.

This bill also puts at risk existing state owner-driver laws and overrides any future owner-driver legislation from the states and territories, which many are actively considering. The government should not be overriding any of these laws. This is a government that has lost control of itself. It has managed to use its legislative fiat to override state and territory law without consulting, without ensuring that there will be a positive benefit and without using a cooperative federalist model. It is using a unitary system approach to ensure that it will drive its view through to every corner of Australia. It is a negative view, a hardline view, an extreme view, and it justifies it on the basis of the inconsistency between different states and territories. What a furphy.

What this bill relies upon to determine who is and who is not an independent contractor is a complex common law test. It is a test that is stacked in favour of the employer, otherwise we would not have had legislation agitated and argued for, and finally introduced in states and territories to address it. It is not unusual for that to happen. It happens in a range of industries. But in this area we are taking a backward step. We are going away from ensuring certainty for business and for employees and ensuring that there is a fair test. We are driving it back to the courts for an independent contractors test, which has been oft argued about and will continue to be oft argued about. In many cases it could be enough for them to simply say, ‘I believed it was a contracting arrangement,’ and it is then left to the employee to prove otherwise. The employee will not have the senior counsel or the silk on their side. They will not have the legal advice. In many instances, they will be faced with an employer who will probably not even need senior counsel or legal advice either, because the choice will again be: take it or leave it.

The problem with the government’s refusal to provide a statutory definition of ‘independent contractor’ is that it will lead to inconsistent treatment. At the moment a person earning more than 80 per cent of their income from one source is taxed as if they are an employee. So we will have the absurd situation under this legislation where Commonwealth law considers someone an independent contractor for industrial or commercial purposes but an employee for tax purposes. With the latter comes financial responsibility for withholding income tax, superannuation and workers compensation—all of which come with a significant administrative burden.

Let me talk briefly about what happened in Queensland: it provided an alternative. If the federal government were serious about protecting independent contractors, rather than overriding state and territory laws, it would actually work with the states and territories and pick up some of their models. Even if you disagree with some of their models, you can argue for a consistent principal treatment to ensure that you have consistency across the system. You can argue for your model. That is what the Commonwealth heads of agreement is about, that is what SCAG does and that is how the Attorney-General works through difficult laws. It is about arguing from a principal position. If you do not have a principal position then do not expect to win the argument.

In my home state of Queensland, the Beattie Labor government introduced section 275—amending the Queensland Industrial Relations Act—which gave the Queensland Industrial Relations Commission the power to declare persons to be employees. Unlike some of the other deeming laws criticised by the government for their arbitrary listing of individual occupations in regulation, these provisions simply list matters to be considered by the commission in making a determination. Importantly, the section does so in a clear and simple manner, in stark contrast to this government’s reliance on the more complex common law test. The factors listed are:

(a)   the relative bargaining power of the class of persons;

(b)   the economic dependency of the class of persons on the contract;

(c)   the particular circumstances and needs of low-paid employees—

not that the Howard government would care—

(d)   whether the contract is designed to, or does, avoid the provisions of an industrial instrument;

(e)   whether the contract is designed to, or does, exclude the operation of the Queensland minimum wage;

(f)   the particular circumstances and needs of employees including women, persons from a non-English speaking background, young persons and outworkers;

(g)   the consequences of not making an order for the class of persons.

That list of factors is in stark contrast to the complex common law test and the indicia created under it. Those factors are not indicia that point to one or the other, as in the common law test, but a simple and reasonable list of matters that is easy for all to comprehend and that genuinely puts a stop to sham independent contracting arrangements.

The Queensland government also introduced section 276, which gave the commission the power to amend or void contracts deemed to be unfair. Similar to the previous section, this provision adds clarity to the process and actually gives practical protection to genuine independent contractors.

The Queensland government has managed to achieve in two provisions what the Howard government has failed to do in an entire act: provide genuine protection to employees from being forced into sham independent contracting arrangements and also provide genuine protection to genuine independent contractors. Independent contractors do exist and they do not want to be accused of being in a sham arrangement or argued about either; they want to continue to do their job as they always have. But what we need to make sure of is that the potential for abuse of the system that can be generated in these areas is put to bed, that it is not allowed to fester.

I remember a case—and I will leave out the name of the firm—where, depending on the times, they would directly employ drivers to drive cement trucks. If the business case for that changed, they would then sell the drivers the trucks and say, ‘You’re now an independent contractor.’ When the business case for that expired, they would say: ‘Those trucks are old. We think we might replace them. We might end your contracts. We’re not going to buy the trucks back. You’re an independent contractor—we can end the contract. We can sublet or directly employ drivers again.’ So we go back. The business case changes depending on the nature of the industry, the nature of the work and also the economics that are applied, and you will find that employers will exploit the arrangement unfairly and disingenuously.

But there is nothing in this bill to ensure that adequate protections do exist for employees and employers, and that there is fairness in the system. Otherwise there would not have been a drive for sections 275 and 276 in the Queensland legislation—but there was significant agitation for it, and the Beattie government perceived that there was a need to introduce it. The section is not often used, but it is there underpinning the system. It provides a floor on which people can rely, unlike spinning them off and saying, ‘We’re going to rip the floor from under you and let you float and see how you go.’ Some might do well, but what you are ensuring is that there will be inequities in the system and some people will do badly, some people will be exploited. But it really is the way of the Howard government to say, ‘That’s not a bad thing.’ I reject that proposition.

Labor is opposed to this bill because it is bad law and will only serve to further undermine workers in this country. In the committee stage, my colleagues will look at all amendments in the hope of improving the bill. The government have the numbers, but sometimes, as we saw in the families bill, even you lot can be embarrassed by the nature of the legislation that you are putting forward into withdrawing it. However, in the end I suspect your ideological agenda will drive this bill forward.

It is shocking that this Senate’s processes are being abused in the way the government are bringing in bills. You send them off to committees for which you set short timetables for hearings and then you do this—you bring in large amendments right at the end and say, ‘Well, some of these we may have already indicated.’ You could do this whole thing in a much smarter and much better way, but you do not want to do that; you want to drive this ideological agenda forward with these types of tactics, which you said you would not do. Well, Senator Minchin, you are doing it. You are doing it here today and you should be ashamed of yourself.