Q&A National Press Club Speech, Closing Loopholes Bill

 

LAURA TINGLE, HOST: Thanks, Minister. You mentioned that this will be the first time we've had a definition of what an employee is. Could I ask – what will that definition be? And given that we haven't had that, are there likely to be flow on consequences or reverse engineering of existing legislation outside this area of focus at the moment?

TONY BURKE MP, MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS, MINISTER FOR THE ARTS: Effectively the new definition of an employee will be a legislated version of the old definition of an employee. So, before Jamsek the common law effectively looked at all the elements of the relationship to work out whether there was realisitically an employment relationship going on. I call that sort of test “what's really going on” test. It's a very practical sort of definition. I get why business prefers the simplicity of ‘if it's in the contract that's the end of the matter’. I respect the simplicity of that. But we can't have a situation where you can put something in a contract that is objectively not what's going on and have it prevail. The extent it will be gamed will really only be the extent to which the old common law could've been gamed. That test – the employment one – will be very familiar to all the industrial relations practitioners in the way it's drafted.

TINGLE: Phil Coorey has a question.

JOURNALIST: Hi Mr Burke, Phil Coorey from the AFR. Just something – a lot of claims and counterclaims obviously in the lead-up to the release of the legislation. And – being in the fourth estate, we haven't been privy to any of the details or the discussions. Something that's come from the mining sector under labour hire, same job, same pay – the issue of service contractors. So an example, if a mining company brings in service contractors to maintain a big bit of equipment, or do catering or something like that, and the mining company itself doesn't have its own people doing that job, will those people have to be paid at a different rate? Or they're engaged under the rate their own employer has them at?

BURKE: Thanks for that. I'm not announcing all the bits all at once. There’s a bit more to come. But if I can put it in these terms, the relationship with AREEA was not good last year, in terms of the engagement. It was all done through newspapers and the media. This time AREEA came to me with their members, and I sat in the little room around the corner from my office in Parliament House and there with a whole range of service contractors who were everything from heavy equipment to repairs, to catering. The case they made was compelling.

Some of them acknowledged that part of their business is labour hire, and completely accepted that part of their business would be caught by what we were doing. But made a very good case that there is a good level of work that is done on site where the service provided is not labour. The service provided is far more specialist than that, and what I introduce will be drafted to take very full account of the points they raised with me.

JOURNALIST: So, they'll be exempt?

TINGLE: David Crowe.

JOURNALIST: Thanks Laura, thanks Mr Burke. David Crowe from the Sydney Morning Herald and the Age in Melbourne. There are many different aspects to the Bill that you’ll put next week, but one of them is about casuals. You mentioned the changes you have got in mind there. There are 2.7 million casuals in Australia. So, a lot of people in the community with a great interest in the changes you're going to make. Not of all of them want to be permanent workers, but some would. You mention back pay. And I just want you to clarify the situation there because there was a warning from your department several years ago that the cost to employers if this led to backpay claims would be 18 to 39 billion dollars. So, there's a lot riding on this. Are you closing off any option for those casuals who become permanent to seek backpay, an absolute guarantee there won't be back pay claims?

BURKE: The way we’ve drafted it is whatever could be owed is offset by the loading paid. If you had some weird occasion where the casual loading that was being paid was something like 5%, you’d offset it to 5%, but in most situations casual loading is at 25%, which would fully offset leave entitlements. Effectively you have a situation where you end up with a worker at any point in time, either getting leave, or getting loading.

JOURNALIST: So they could then claim some of what they are – what they believe they would be owed from the past?

BURKE: You’re talking about a situation-- I have invented an example of if the casual, because I'm trying to make sure we don't create a new loophole. Where an employer, for example, could put through a new agreement with a really low casual loading, that did not in fact offset the leave entitlements. So, similar to what the previous government put in place, we're not interfering with that concept at all. The concept of there being some big liability coming to business, no. We have ruled it out.

TINGLE: Rhiannon Down.

JOURNALIST: Hello. Rhiannon Down from The Australian. Thank you for your speech. Business groups have scheduled a press conference directly after your speech, it's likely they'll say the changes will increase complexity, cost jobs, and that the first and second waves are all one way of benefitting workers and unions. But how do these changes actually benefit employers rather than just deliver on a union wish list? And can you guarantee these reforms – especially in the gig economy – won’t just jack up the prices for consumers?

BURKE: OK, there's a lot in that. Let me work through it. First of all, what you say about increased complexity – I don't want to disregard that, it's true. Having no standards at all is really simple. Having no protections is completely simple. You don't need to put anything in the Act to provide the levels of protection that we currently have for gig workers. So, yeah, it adds something, it needs to. If we're going to be a nation where you don't have to rely on tips to make ends meet, then there needs to be some extra regulation and words on the page – and that has to be done. Businesses put to us there’d be some aspects and ways we could regulate that would create a real problem in complexity for them. So, we have evaded that. I went through in the speech the different ways we've made sure that you can't have a minimum standard that would change the form of engagement. 

That full level of flexibility is there. And once again, when you say, “Could there be a pass through to somebody getting the pizza delivered to their home?” Underpaying people is cheaper – yeah it is. Slavery is probably cheaper too. There is some modest pass through here. We are talking about some of the lowest paid people in Australia, and if that means there's a tiny bit extra you pay when your pizza arrives to your door and they're more likely to be safe on the roads getting there, then I reckon it's a pretty small price to pay.

TINGLE: David Speers.

JOURNALIST: Minister, thank you. David Speers from the ABC. What you said there, a tiny bit extra to get your pizza delivered, you also said, though, this will be a game-changer for that rider delivering the pizza, they won't have to, you know, weave through the parked cars and end up on the road. Is a tiny bit extra really going to achieve that game-change you're talking about? What can we expect in terms of the change for that delivery rider?

BURKE: It’s inappropriate for me to give you a figure here – simply because it's the Fair Work Commission that would be doing it, and ministerial direction on that would be really inappropriate. But can I also put it these terms, the co-operation from the platforms and the goodwill that's been there from all the food delivery platforms as we work through these principles would not be there if there would be a really significant cost impost on people. It just wouldn't be there. Some of the issues that go to people racing go to rates of pay. Some of them go to risk of unfair deplatforming, or deactivation. 

For example, people worried unless they get there at lightning speed, they'll lose their – they won't get the next shift, the speed being taken into account from the algorithm, those sorts of arguments. The delivery you get to your door is not the only delivery that person is making in the course of that hour. So, the fact that the cost might be modest for yourself doesn’t mean it doesn’t all add up in a significant way for that worker. Effectively if I go back to years ago, I remember when the delivery service used to be Pizza Hut and everybody doing it was an employee. They were all employees, they all had rights. We always accepted that this sort of work who be work that had minimum standards attached. In the last decade that’s gone. We're simply wanting to bring back what those appropriate minimum standards should be for the Commission to be able to work it out. If it created a price problem for consumers, you wouldn't find the co-operation we've had from the platforms. 

But it is a real change. Don't just think when you think of the people delivering your pizza, for example, if it's coming through Uber Eats, don't forget the disproportionate – for the size of the business – number of injuries we saw with businesses like Hungry Panda. There's some small apps out there, that have been radically undercutting, that have been a real safety concern. I’ve met with those workers over the years, I’ve been to memorials with them. That's why I say it's a game-changer.

TINGLE: If I could just intervene on that question of the gig economy, everyone is focusing on the delivery drivers, but a huge part of the gig economy as you mentioned is care economy workers now. It's hundreds of thousands of people who are going onto platforms to get work in the NDIS and the like. Are you sure that you are doing enough with these reforms to stop this trend to people being, you know, what's the opposite of being deplatformed – being platformed and becoming employee-like, rather than employees?

BURKE: If I can explain what one of those platforms does. A lot of people, if you're not involved in the aged care sector or the NDIS directly, you won't realise how much of this is being delivered through the gig economy. 

First thing to remember with this is, as taxpayers, we all pay for the service to be delivered at the rate of pay that would apply for an employee. As taxpayers, we've already made that commitment for that money to be spent. What happens is it then goes to the platform, takes a percentage from the user, and a percentage from the worker, and workers bid down against each other over who is willing to get the work. One of those platforms, for example, will say, “But we have a minimum rate.” Their minimum rate is not based on the award. Their minimum rate is not based on an award that would have a minimum shift attached to it. Their minimum rate is based on the minimum wage, not for an occupation that in fact has an award that is relevant. So, even on the platform itself where they say, “We do a minimum rate, and we do a loading, and we do money for superannuation”. It's still less than what you are legally meant to pay someone. They get away with it because of a loophole, and as taxpayers, we still fork out the full amount. 

That's not sustainable. The flexibility will work for a whole lot of people, and you can still have the flexibility, but our objective is to fund services for people with disabilities, and to fund services for people who are aged. That's the objective. It's not to make money for a platform that is underpaying workers. The platform I'm sure will be up in arms about these changes, and that's fine. They can have their argument. But I just suggest to them, don't pretend that this means fewer services get provided to the person needing them, because that's not true – because the Government's already fully paying for it. Be honest and defend the loophole. Be honest and defend that somehow there's a business out there that thinks it has a right to take taxpayers' money, clip the ticket, and underpay workers at the other end. And if they're willing to have that argument, I’ll turn up to.

TINGLE: Anna Henderson.

JOURNALIST: Anna Henderson, SBS News. Minister a substantial portion of the workers in the industries you’ve been talking about do come from migrant backgrounds and are new arrivals. So, what do you see as your IR obligations to protect new arrivals from exploitation, injury, or death at work? And do you see any merit in for some industries at least, the idea of default union membership as an extra form of protection?

BURKE: Default union membership is not something we're going to. That's not there. I hear the policy arguments about it. But it's not something the Government is proposing in any way. The issue with respect to – that you start with, though, Anna, is sadly true. People who are exploited are disproportionately here in Australia as our guests. And it's an issue that I've been grappling with both here, dealing with employment law, and similarly with the obligations I've got as Employment Minister dealing with the PALM scheme as well, trying to make sure that people are not underpaid. 

There is a particular obligation that Anna Booth will take on, in her ombudsman role, and there'll be that’s work happening there. There's legislation we have before the Parliament at the moment, improving the rights for workers who are on visas. But this is going to be a continued job lot. There is a cruel, deliberate and menacing project out there from some, to exploit people on the basis that you can't just threaten to fire them, you can threaten to deport them. It will take some time for us to get on top of that, but this legislation is part of that project.

JOURNALIST: Thank you.

TINGLE: Poppy Johnston.

JOURNALIST: Thanks for your speech, Minister. There's been some concern from industry, but you say you have responded to flexibility issues and the like. Do you expect any digital platforms to leave the Australian market in response to these changes?

BURKE: No, I don't. No, I don't. The only reason one would, would be if they were really determined to exploit people. And that's not the sort of business I would welcome anyway.

TINGLE: Melissa Coade.

JOURNALIST: Melissa Coade from the Mandarin. You mention the efficacy of the ICA legislation over 17 years and also the three perils, I guess, of pragmatic politics, where people delay, complain about consultation, and argue about issues that they're not. So, my question is about – if you want to make sure the legislation is closing loopholes, is there any sort of directive you have given to your public servants about evaluating whether those reforms are in place, what does that look like, how are you going to be looking a little this no fee jurisdiction and whether it's getting the uptake you like.

BURKE: Thanks. First of all, I will take the opportunity just to thank my department again. It has been a mountain of work and a mountain of engagement and for all the engagement that I've had personally with the different employer organisations, you can multiple that many times in terms of what the Department have put together. I really want to give full respect to their work on this. I keep checking in terms of trying to make sure people are working respectable hours, but I certainly know some people have been putting in hours beyond what I would hope would be part of a workplace. So, I just I want to pay respect to the members of the department.

The challenge is you need to get your data in two different ways. You need to get your data in terms of what is happening with the cases. But then you also need to be doing your general surveys for what is happening out there, because the cases will only be what happened when something was challenged, not what happened. For example, we don't have cases at the moment about family and domestic violence leave clogging up the system. But I know anecdotally it's being used and it's creating a circumstance where a whole lot of women in particular are not having to choose between safety and pay. But if we only went to court decisions, we wouldn't get that sort of information. It will be a combination of the department keeping a line of sight on what’s happening in first the Commission and then ultimately the courts on appeal. But secondly making sure both generally and specifically through Jobs and Skills Australia that we are continually capturing the data to be able to establish the extent to which we are improving job security for people in Australia. There will always be people who want some insecure jobs. They'll always be there and that's fine. They won't have trouble finding them.

But I'm very conscious, your rent’s not casual. Your bills aren't casual. Feeding your kids isn't casual. None of your liabilities are casual, and if you're in a circumstance where you've got all of those liabilities heading your way, it's not unreasonable you want your job to be secure as well. Finding out how that's happening across the economy is something that Jobs and Skills Australia I'm hoping will help me with.

TINGLE: Paul Karp.

JOURNALIST: Thanks very much Minister, Paul Karp from the Guardian. You've been quite clear you think that Airtasker, these new laws won't apply to that platform. How did you distinguish that -- a platform that says it just matches independent contractors with consumers of a service, with something like Mable, a care economy platform who would say it's doing the same thing. And relatedly, given the legislation gives the Minister the power to prescribe the characteristics of an employee-like worker by regulation, do you have an extraordinary discretion to get platforms you don't like and put them within scope?

BURKE: The latter is simply – if you end up with a decision that's widely off what anyone was expecting to be able to have a way of dealing with that. Because we're dealing with something new. The cliff I referred to has been within our workplace relations system in Australia right back to the days of the Harvester Judgement. This concept of an employment cliff has been there, and the concept of businesses being treated separately has always been there. The concept now of saying there's some people, they’re being classified as businesses, but they need some protection. This is a new jurisdiction for the Fair Work Commission that we're dealing with.

I can't give a short answer to the first question. So, I may talk a little bit faster to try to get through it. Because what you have described there, Paul, is something that we weighed up. 

It's described as vertical versus horizontal. One way of doing the test in this new jurisdiction was to say, whether the platform sets the rate, or whether the worker sets the rate. And could that be the way you define who was in and who was out. Here's the problem had we gone down that pathway. If you look at the airports at the moment, there's big signs up for a business called InDrive. And they say, “You set the price”. 

This is a driving app that will be a direct competitor with the other driving apps, which is using the exact method you just described of the matching Airtasker, Mable style matching. If we set minimum standards and didn't capture apps like that, effectively all the ones that most people will have on their phones at the moment, Uber and the like, they would have minimum standards, and they would be facing a competitor for the exact same customers that was able to undercut, because they found a different way of doing the algorithm.

What would happen at that moment – there would be economic pressure on all of those platforms to make the same jump and evade. That's what would happen. The idea of this reform is effectively to give the Fair Work Commission the same level of flexibility that the platforms have, because around the world, if you give too rigid a system and you give this high-definition, ‘This is how you're in’, ‘This is how you're out’, platforms would then say this is a how-to guide to evade it. One of them evades it and that then creates commercial pressure for all of them too. We would have replaced one loophole with another. I don't want to do that.

That's why we said instead of should the test be who sets the price, the test should be what do the workers look like? If the worker is, I gave those three exampling, low bargaining power, low control, low pay. If you look at those features, that tells you who is going to be employee-like, and once you look at it that way, businesses like Mable come in, businesses like Airtasker fall out.

TINGLE: Jack Quail.

JOURNALIST: Thank you very much for your speech, Mr Burke. It's Jack Quail from NCA news wire. On your point about those minimum standards, under Mable’s system, they would be covered by the minimum standards. You might have a worker doing the exact same work on Airtasker, then that doesn't have those minimum standards, how does that work – you said it wouldn't create another loophole, but effectively you have two different operating environments where one has minimum standards, and one doesn't? How does that work?

BURKE: We're describing in terms of the platforms, but the Commission will be able to deal with the type of work. It is not inconceivable, for example, a whole lot of people who are employee-like to start using a platform where the main business of that platform would never be caught – and there end up being minimum standards for workers on those platforms. That's not impossible. It needs to be that way. Otherwise, you end up with circumstances where once again there's a how-to guide on how to evade. So, the Commission would have the full flexibility to be able to work out how things were extended in that way.

JOURNALIST: So, Facebook Marketplace, because you've got people in the care economy there... Are they all going to be dragged into this too?

BURKE: No. There's seven or eight ifs there. We are talking about a jurisdiction that hasn't even heard the Mable case yet. Let's not get ahead of ourselves.

TINGLE: Kimberley Caines.

JOURNALIST: Kimberley Caines from the West Australian. Thank you, Minister, for your speech. Just following on from your response to Phil Coorey's question, how many mining and services companies have told you they will have to restructure their operations because of the new labour hire rules, and is your government preventing the critical minerals boom from happening in WA with these rules?

BURKE: The answer is none and no. For the very simple reason, the service contractors have come to me saying – they've come with a solution, to their absolute credit. They haven't come to me saying, this is a disaster, and we need to stop you from doing it. They’ve actually come and said, “part of what we do is labour hire, that's going to be caught, we're OK with that. But there's these other things that we do, which we don't think you're intending to catch”. And a proposal, in terms of – which has been written about – a multifactor test, to say how they think we may go about making sure that we only affect those parts of their business – and they're right – that we're actually trying to reach. As long as we get that right, and we've been following their advice on how we draft this, there is no restructure required from them. The restructure was required in terms of how we drafted the Act.

TINGLE: Andrew Tillett.

JOURNALIST: Thanks, Laura. Thanks, Minister. Just going back to Phil's question about – you said about exemptions for service contractors –  

BURKE: You all want to get a few days ahead of this announcement.

JOURNALIST: Well, I was going to ask about the Bulldogs but I think we're going through enough at the moment. But this exemption for service contractors, we understand and we're hearing they can only be exempt if they put themselves through a sort – a 12-factor test, and effectively litigate themselves out of the same job say pay system. What do you say about that?

BURKE: You're being told wrong.

TINGLE: Can I just – Phil Coorey is going to ask another question, but before he does. I'm just still a little bit unclear on what that minimum standards will be. In the sense that you were talking about delivery drivers getting injured in the traffic, a care worker getting injured looking after somebody lifting them or whatever, you're not talking about workplace safety rules here, are you? What are the actual minimum standards going to be?

BURKE: Workplace safety is already managed by the states. In terms of a jurisdiction, the states already regulate workplace safety. There is for riders, for example, an additional safety issue that if you're paid such low rates you have to absolutely rush to be able to get any sort of meaningful income – that regardless of safety rules creates an additional risk on the roads. That's the only real relevance to safety. The issues that the Fair Work Commission will be empowered to do is effectively to deal with establishing minimum standards that don't break the form of engagement. That's effectively the remit. There will be some things in the Act we make clear you can definitely do this, there will beother things where we say you definitely can't do this. Most of it is governed by the single test – if the minimum standard you were wanting to apply would change the form of engagement, then there's no jurisdiction to do it. If it simply provides minimum standards within the form of engagement, like rates of pay for example can do that. For the first time the Fair Work Commission can put that in place.

TINGLE: Phil Coorey.

JOURNALIST: Thanks again. Just back to the gig economy, and you said consumers should expect to say a little bit more just to guarantee the fair treatment of the workers. You have talked about minimum standards. I think on radio this morning you ruled out overtime. What about penalty rates? Is that going to factor into the minimum standards for Uber drivers and delivery workers?

BURKE: It's not something that’s specifically referred to in the legislation. It's something the Commission would be able to make a decision on. They’d hear evidence each way. Some people would argue for particular times of day. The reality is, at particular times ,of day those rates already go up, that’s sort of inbuilt into the algorithm. I don’t the extent to which that would be taken up. There's neither a requirement or a prohibition on that.

TINGLE: We're looking towards to an interesting few weeksof debate, I’m sure. Please thank Tony Burke for speaking.