Speech - National Press Club, Closing the Loopholes Bill

 

TONY BURKE MP, MINISTER FOR EMPLOYMENT AND WORKPLACE RELATIONS, MINISTER FOR THE ARTS: Thanks so much, Laura, and thanks to the National Press Club for having me here. I acknowledge the Traditional Owners and Elders and Ancestors and I’m very proud to be here as part of a government that’s asking the Australian people to respond to an incredibly generous statement in the Uluru Statement from the Heart with the same level of generosity with a Yes vote only in a few weeks' time. 

I want to acknowledge my parliamentary colleague Dave Smith, the Secretary of my Department, Natalie James, and we have a number of representatives from both the trade union movement and from business organisations. Sally McManus and Michele O'Neil, Innes Willox, Andrew McKellar, Tania Constable and Denita Wawn. All people who've been involved at different levels and in different ways in what has been a mammoth consultation task in getting the legislation together. Legislation which I'll be introducing after Question Time on Monday, and it will be called the Closing Loopholes Bill. 

Given it's the Press Club, I thought it was reasonable here, of all the different venues, that I could read something from the press. There's an article that was published on the 23rd that I want to draw to your attention. It'll sound familiar. "Australia's largest employer organisations have threatened a fully funded anti-government campaign unless the Minister for Industrial Relations satisfactorily consults with them on proposed changes to the Act. “A meeting of the five big organisations in Melbourne unanimously resolved to fund a campaign unless they were satisfactorily consulted. They were already funding commitments to the campaign and planning had begun. “The meeting was convened by the Australian Chamber of Commerce and Industry, and was attended by the Business Council of Australia, the National Farmers' Federation, and other organisations." 

They went on to say, "The legislation is an unfair and unbalanced document which ignores both employer interests and the fundamental issues of labour market reform. It's completely unacceptable to employers and it does nothing to encourage investment or create jobs. It would in fact cost jobs and reduce investment." 

Even though we're at the Press Club, the person who wrote that article's not in the room today. That's because it was Mike Taylor, when he was the writer for The Canberra Times on 23rd of September 1993.

Not much has changed. But when he wrote that, let's also remember what was the big reform that had different groups so alarmed? It was enterprise bargaining. It was the exact reform that, when we were dealing with multi-employer bargaining last year, we were told, "But surely if you want good productivity outcomes, enterprise bargaining is where you should be looking." 

There's a whole lot when you deal with reform where there are debates you are automatically in. And, similar to during the election campaign, when the Prime Minister talked about the need to make sure, in the Annual Wage Review, that wages didn't go backwards, we were told by our opponents at the time that that was reckless and dangerous. 

When Secure Jobs, Better Pay legislation was introduced to the Parliament last year, we were told it would lead to unemployment. We were told it would lead to strikes. We were told it would fail in getting wages moving. On all of that, the results are now in. 

At the exact same time that inflation has been moderating, what's been happening in our workplaces? Wages have gone up. The Wage Price Index at the moment at 3.6 per cent has a "3" in front of it - something that didn't happen under the previous government, where low wage growth was a deliberate design feature of their management. 

In fact, not only did it not have a "3" in front of it – the Wage Price Index in the entire history of the index has only had nine quarters where it's been below 2 per cent – and all of those have happened under Coalition governments. In terms of the threats as to what all this would mean for jobs - we had, as a new incoming government, the best new jobs growth of any incoming government. We now have more than half a million jobs that have been created. 

But are they secure? 85 per cent of the new jobs created are full-time. 85 per cent. You think of the four different categories that exist when you do the jobs data. Male full-time, male part-time, female full-time, female part-time. 55 per cent of the jobs that have been created are women full-time. The legislation's making a difference. It's making a difference. 

But then, what about the threats that, if we put that legislation through, we would have coast-to-coast strikes? The last quarter of the previous government, how many days were lost to industrial action for the last quarter of the previous government? 128,000. Think about that. 128,000 days lost to industrial action. We've got the figures for the most recent quarter for this government. Not 128,000 - 7,700 days lost to industrial action. 

The result of the legislation is exactly what we had argued it would be, and the result of this government's policies are exactly what we are intending them to be. 

We want people to be in work, and we want those jobs to be secure. 

We want wages to be moving as inflation is coming down. 

The work that we've done on the Annual Wage Review, and the work that we did in the Secure Jobs, Better Pay legislation affected every workplace in Australia, and affected it in a variety of ways. Because the other statistic that we don't want to let go of – because it didn't just deal with Secure Jobs, Better Pay, it also dealt with gender equality – the gender pay gap, is now the lowest it has ever been. 

You look at all of that and say, "Well, does that mean job's done?" The answer, obviously, is no. That's why we're here. Because, while last year's legislation was about - "How do we reach into all the workplaces and provide outcomes for those who are under the awards system, provide outcomes for those who are on the minimum wage, provide outcomes for those who are already bargaining and provide outcomes for those who want to bargain, but have had trouble getting into bargaining in the system, particularly in feminised industries?" this year's legislation doesn't reach into every workplace. 

It deals with the loopholes that undercut wages and conditions and closes those loopholes. Most businesses don't use the loopholes. Most will be unaffected. Although, for many businesses, they have competitors that are unreasonably undercutting them who do use these loopholes. 

There's a series of them in the Bill that I introduce next week, but I want to deal with the four major ones today. And, in particular, on the fourth, provide a good level of detail that hasn't been provided until now. 

The first of the loopholes goes to wage theft. 

Take any shop, for example. The employer and the employee both have access to each other's money. The employee has access to the employer's money through the till. The employer has access to the worker's money through the wages. It is and should be a criminal offence for the worker to be taking money from the till. But it is not a criminal offence, in most of Australia, for the employer to be taking money from the wages.

That loophole needs to be closed down. Most underpayments are not wage theft. Most underpayments are a mistake. Sometimes, there can be issues of recklessness and things like that. But often, there's just an honest mistake that's been made, and we don't want to catch any of that with the criminal law. But where someone has that same intention that the worker would have when they take money from the till, the criminal law needs to be available there as well. We'll close that loophole in the legislation that I introduce on Monday. 

The second one – and I've gone through this in some detail already through a speech I gave at the Sydney Institute – is when someone is forced to be a permanent casual. The concepts of permanent casual are logically either/or. You either have a permanent job as a part-timer or full-timer, or you're a casual. Increasingly, there are many people where the hours that they are working are indistinguishable from the hours that would be rostered for a part-timer or full-time worker, and yet they have difficulty transferring across. 

Under common law, the situation - and the previous government legislated around this - it was the case where common law had a definition and said, if you're incorrectly classified, backpay would have to be paid as well. 

That always carried the risk of backpay in those situations of discouraging someone from wanting to convert, because they would have a long period of time where they could be accumulating both leave and loading. The legislation that we'll deal with will increase the rights for people to make that conversion. It'll increase their capacity so they can do so after six months. 

They won't be able to keep asking every week or anything like that - it'll be every six months they can ask again. The existing system that the government put in place where the employer makes an offer after 12 months will remain. Most casuals won't take this up. Particularly casuals who are students, who are not the person responsible for paying for the main household expenses -things like that. But there will be people who want to be able to convert, who currently are having trouble doing so. 

There's a minority of employers that, as a management tool, like to avoid giving people security. It's a minority. It's not many. But for those people, this change will be life changing. They'll be working the same hours they were already working, but they'll be doing them with leave entitlements. They'll be doing them knowing that they have a secure job. 

The third of the loopholes is what we refer to as the labour hire loophole. 

This arises in industries where you have an enterprise agreement - so if you don't have an enterprise agreement, this is irrelevant for you. But if you have an enterprise agreement in place, the labour hire loophole is where the employer has agreed for particular tasks, particular classifications, that there'll be a particular rate of pay. And then, having agreed to it, having had it registered, says, "But I'm now going to use someone who's technically a different employer," and all those rules instantly disappear, and now we can go right back down to the award again. That's a loophole. It's not what's intended. It's currently legal for the companies that are doing it. 

It's frustrating, unreasonable competition for someone who's got a similar enterprise agreement and is not undercutting it in that way. But effectively, all we're saying here is the rates that should be paid are the rates that have been agreed to. It's as simple as that. 

That loophole is something that'll be closed in this legislation. It's not to get rid of labour hire. There are lots of appropriate uses for labour hire. At different times that I've been an employer over the years, I've used labour hire. The labour hire workers traditionally, particularly at one point when I was employing people running a bar in Lakemba, was that the temps you'd get in – because we didn't have enough people if we got a big function – were all paid more. 

That's how labour hire normally works, and that's fine. But if you have an enterprise agreement and you've agreed to certain minimum rates of pay, labour hire shouldn't be used as a device to undercut what's been registered and agreed to. 

The fourth loophole - and it's the one I want to spend most of the detail on today - is what's happened with the gig economy. 

To explain this, I'll start with this principle - the gig economy and the platforms that are involved are proud of their role of being disrupters. In their role as being disrupters, they have ended up with products that most of us have on our phones, that most of us like the convenience of, and that a whole lot of people working in the sector like the flexibility that goes with it. So, while there's been some campaigns and some concern - is the government going to try to turn everyone into an employee? The answer's no. 

We accept the technology. We accept the method of engagement. But we can't have a situation where we have this growing section of the workforce where they, at the moment, have no minimum standards. The reason they have no minimum standards is this - at the moment, you turn up to the Fair Work Commission, and the Fair Work Commission asks the initial question. "Are you an employee?" If you are an employee, you have a whole series of rights. If you're not an employee, all of those rights – all of them – fall off a cliff.

What we want to do is turn that cliff into a ramp. So, for people in the gig economy, have a situation where you don't get all the rights that you would have as an employee, but you do have some minimum standards. 

I'll never forget during the election debates, there was one - I think it was the one in Perth with Mark Riley chairing it, where each the Prime Minister of the day and Leader of the Opposition of the day got to ask each other a question as part of the debate. Anthony Albanese, as Leader of the Opposition - his question to Scott Morrison as Prime Minister was to say, "Should every Australian worker be paid at least the minimum wage?" Under current law, the Prime Minister of the day couldn't guarantee that, because we've got people doing jobs that we all used to envisage were the sorts of jobs where you'd have minimum standards – and because they technically fall outside the definition of an "employee", they've got none. 

So, along this ramp, at the top of the ramp, you've got the rights for employees. Halfway along, gig workers who are employee-like, and down the bottom of the ramp, independent contractor. I want to talk about each of those three levels. 

Right at the top of the ramp – most people won't be aware, but effectively, there's no definition of what it is to be an "employee" in the Fair Work Act. So, without that definition being there in any serious detail, what has happened is the courts have gone through a case called Jamsek to a principle that basically says, "If the contract says you're not an employee, then you're not an employee." 

Even if every feature that we look at, we say objectively we are talking about an employee here. If the contract says that you're not, then effectively you're not. That's not a common-sense way of making sure we've got standards here in Australia. 

We'll be putting a definition in of what it is to be an employee, which will go back more effectively to what the common-law definition had been thought to be before that case. Having established what it is to be an employee, that allows us to have the definition further down the ramp for workers in the gig economy for what it is to be employee-like.

Some good points were made – including from some of the people in this room – about some of the people who we wanted to make sure were not included in this and not regulated in this. Certainly, examples were put forward of people who get work just through Facebook groups or on WhatsApp groups. 

That sort of thing, even though it's digital - is that really gig economy? No, that wasn't what we were trying to capture. Other people have raised examples of, on building sites, do we suddenly want tradies, because they're doing work through Airtasker, to find themselves regulated in this way? No, we don't want that. So, the way we've drafted the legislation is to establish two initial questions, and unless you answer ‘Yes’ to both, this whole section is irrelevant. 

First question - "Are you on a digital platform?" 

Second question - "Are you employee-like?" 

If the answer is ‘Yes’ to both, then there's a new jurisdiction for the Fair Work Commission. 
So, what is it to be employee-like? There are effectively three things that the Fair Work Commission will look at. 

Do you have low bargaining power? 

Do you have low levels of control over the work that you do? 

And finally, are you being paid low wages in the sense that less than what you would get if you were being employed as an employee? 

With those three tests, and the digital concept, you put that together, and people say - OK, while it's a decision for the Commission, realistically, who's in and who's out? 

Realistically, the food-delivery apps that you use would be covered, and the workers there would be covered. The rideshare apps that you use would be covered. And the apps that are used in the care economy would be covered. Because they all meet that employee-like test. Obviously, they're all digital platforms, but people getting work through a Facebook or WhatsApp group would not be covered. 

People getting work in the way, certainly at the moment that I've seen Airtasker work, I haven't seen anyone using Airtasker who you could possibly satisfy that definition of being employee-like. They would not be covered, because effectively, Airtasker runs like a digital version of the Trading Post. That's effectively how it runs.

The next question - and I'm very grateful to the platforms, some of whom are represented in the room today, for the consultation that we've had. Because part of what they've put to us is said “OK, it's one thing to get that gateway right, but once you've got the gateway, you need to make sure that the rules that the Fair Work Commission brings in place don't effectively turn someone into an employee, even though you've said you want to accept the form of engagement.”

How does that work? Think of it in these terms. If the Fair Work Commission – as I reasonably expect it would – came up with a minimum rate of pay for people on various platforms. It probably wouldn't define that as an hourly rate. It may go for a 5-minute or per-minute rate or something like that. Why? Because if you had a minimum hourly rate, you would fundamentally change the form of engagement on a large number of platforms. 

Realistically, you'd find the Commission making those decisions on much smaller time periods as to how they worked out what those minimum rates were. But if the Fair Work Commission were to introduce rostering rights - at that moment, you have killed the form of engagement for people who work in the gig economy. Because the moment they're committed to a roster, the whole nature of their engagement would fall over, so rostering rights wouldn't be possible. 

Similarly, you've only got to wander past any of the delivery riders who are outside any of your takeaway places in your main streets, or if you're taking a rideshare arrangement yourself, you'll often see the case that someone's got multiple apps running. You couldn't logically pay somebody for the time that they're just on an app, because that would wreck the form of engagement. You couldn't do that. But things like minimum rates of pay, things like terms of payment, time periods, how quickly you have to be paid after a shift. Those sorts of principles would all be able to find their way through decisions of the Fair Work Commission into being minimum standards. 

This is a game-changer for what it is to work in the gig economy – because it means you keep all the flexibility that you know, all that flexibility is there, hop onto the app when you want, take shifts when you want. 

The apps will still have different surge mechanisms where, at different points of day, where there's higher demand, your rates go up. That will all still be possible. 

But we'll no longer have a situation where there is no floor. 

We'll no longer have a situation where some of the more reputable apps are being undercut by other apps that emerge on the market that are putting people into unreasonably poor remuneration and unreasonably unsafe working conditions. 

Those changes create the situation for those workers where they go from effectively no guaranteed rights at all to having some. 

I know technically at the moment, all of these people who work on the apps are technically small businesses. But let's be realistic here. I know what a small business is. I grew up in a small business family. I've run my own small business over the years. 

Someone delivering pizzas on the back of a bike is not running a small business. 

They are a worker with very few rights and, depending on their app, they'll get different levels of treatment.

We want them to have some minimum standards.

Because – while we all love the technology – it’s got to be possible to have 21st-century technology without having 19th-century working conditions.

That must be something that we can manage as a country.

The next right that'll be available for gig workers - and I hate the term, and I'm now going to say it out loud on television, so that's just life. I remember the first time I dealt with unfair dismissal jurisdictions, and people often used the word "termination", and the word - you know, as language, it's pretty dramatic language.

They managed to go one up in the gig economy, and they call it "deactivation". It's effectively what happens if you're dismissed from a platform. There can be cases here, like with any dismissal, that are completely reasonable. And there can be cases that are unreasonable. But at the moment, you don't have a guarantee of any dispute resolution mechanism for people in those circumstances. 

There will be a jurisdiction within the Fair Work Commission for people to be able to effectively make a claim for unfair deactivation if they're bounced off one of the platforms and they believe that there's no merit to that decision. That takes us halfway down the ramp. So, not as many rights as an employee, but certainly more than zero, which is where people are at the moment, and the full flexibility of the technology and the convenience of the technology remains. Down the bottom - independent contractors. 

There's a small jurisdiction that will be established in the legislation when I introduce it next week for the Fair Work Commission. In my first term here, John Howard was in his last term as Prime Minister. And, as part of the industrial relations changes - we all remember WorkChoices, but they also talked a lot about the Independent Contractors Act - that they were going to create rights for independent contractors, and this would be a game-changer. 

In the life of that legislation – so, it's about 17 years since it was brought in now – it’s been used 68 times. And only three occasions, in all of that time, where a court has made a ruling under the Independent Contractors Act. 

There's a reason for this. It's not that it created rights that no-one wanted. It's that, to be able to use the Independent Contractors Act, you have to be able to lawyer up and turn up with a legal team to the Federal Court of Australia. Most independent contractors are not in a position to be able to do that. We don't want to have a case where everything would come into the Fair Work Commission. What we will do by regulation is set a threshold, and below that threshold, the Fair Work Commission will be able to deal with cases as a no-cost jurisdiction, effectively, where you don't have to be able to lawyer up to exercise your rights. 

Above the threshold, it'll still be as the Independent Contractors Act as it currently operates. This will give independent contractors, for the first time, an affordable way of being able to enforce their rights. But the description of those rights won't change from what was introduced by John Howard when they introduced the Independent Contractors Act. It'll simply be that they'll now be an affordable jurisdiction. I don't know how many people will use it. I reckon it'll be more than three over the course of 17 years. That's the ramp. 

The higher you are on the ramp; the highest point is to be an employee. At the lowest point is to be an independent contractor. The employee gets the most rights. The independent contractor gets a right against unfair contracts. But that's it. Halfway along, for gig workers, we establish a set of minimum standards for them. 

All of that will be in what I introduce on Monday. I don't pretend for a minute that that will necessarily change the dynamic of the public debate. It will still be the case that, in the public debate, some things - no matter what's in the legislation - will continue to be argued are somehow at risk, and we'll have that debate, and it'll bounce back and forth. 

There will still be some articles - unattributed, which I don't think anyone's spotted the irony of this, but there were articles last week of an unattributed person complaining that they wanted all the consultation to be on the record, and to be made publicly. But those sorts of comments all happen, and people will give whatever off-the-record information they'll want to be able to give, and there'll be an advertising campaign, as there was in 1993, as there was earlier this year. That's all fine. Different organisations will represent their members.

But there are three arguments that are always put when people don't want to argue the merits of an issue. 

They will ask for delay. 

They will complain about consultation. And they will talk about something that the issue is not. 

My simple request in the debate is, for anyone who does want to stop us closing the loopholes - defend them. Because so far, no-one has defended any of the loopholes I've described. 

If someone thinks it is reasonable that wage theft is not a crime, argue it. 
If someone thinks it is reasonable that someone who can easily be converted to secure work isn't given it, argue it. 

If someone believes that gig workers should have a complete race to the bottom and no rights, then argue that. 

And if someone believes that the labour hire loophole is fair and having agreed to an enterprise agreement rate you shouldn't have to have that as the minimum standard for people who are working and embedded within your crews, then argue it – and let's have a serious policy debate. Because the serious policy debate is important, and what's happened behind closed doors, I have to say, has been really high-quality discussion. The legislation is different as a result. None of this, of course, will affect what happens in the debate between myself and my counterparts, where the other side of politics are already warming up to say this one is even worse than what Labor did last year. 

I'm not quite sure how Senator Cash and Peter Dutton will argue it's worse, given that last year's Bill was going to close down Australia, I'm not sure how you build a crescendo from there. If anyone can, I reckon Peter Dutton and Michaelia Cash will make a good fist of it, and they'll be able to get there. 

But all of that drama will be around us, and ultimately, at one level, none of that will matter either. What will matter is how does this legislation change people's lives. Because for the person working in a convenience store, who is worried about whether they might be breaking their visa, or what the laws might be for them, they had no protection that the employer was stealing their money and yet not committing a criminal offence. They'll now have the protection of the criminal law.

The casual worker who is supporting people, who hasn't had a holiday for years and years and years, will have some rights to be able to convert to more secure work – and that will be life changing. 

The labour hire worker, like the guy I met in the Hunter, who took me in his truck, well it was called a truck, but it was more like an apartment block that he drove in. The whole thing shuddered as the coal load landed behind us. He said he has never worked in another industry where casuals are paid less than permanent workers. How do you do that with a loading? Because of a loophole that radically cut the base. 

For a gig worker who we have all seen, currently out there, running red lights, going up onto the footpath, down on the road, on the road, creating an extra lane between the parked cars and the traffic, knowing at any moment if a car door opens, instead of riding between the lanes, they'll be lying beneath the traffic, they'll have some minimum standards. They'll have some minimum standards. 

Closing these loopholes will change their lives, and that's the debate that starts on Monday.

ENDS