21-October-2005
Speeches, Workplace Relations
Address by Andrew Robb AO MP to the ODCO Forum
Introduction
Good evening, and thank you for the opportunity to discuss the Government’s reforms which seek to deliver on its election commitments – to keep interest rates low, inflation low, unemployment low and incomes high.
Kevin Andrews has already spoken at length to many of you this morning, so I will try to avoid repeating what the Minister has already said.
What I want to do is to put workplace relations reform into some context and look at the current debate about WorkChoices, looking at what’s in it for independent contractors.
Background to reform
The reforms we have announced recently are the next step in an evolution which started on the ground in the early 80’s, and which as with many legislative reforms, has essentially been forced on the government by what was happening on the ground.
A significant part of this movement on the ground came from independent contractors.
The ODCO contract was born over a serving of Peking Duck in a small restaurant in Chinatown about eighteen years ago.
In those days, rigid work practices based around comprehensive awards were the way business was done. Awards were made by powerful unions forcing their agenda in an environment where national stoppages and secondary boycotts were the norm.
Awards dictated just about every minute of every day. They dictated exactly how much a person was to be paid for their job, regardless of effort. They dictated who an employer could employ. They dictated when an employee was allowed to have a cup of tea. They dictated who could pick up which tool and who could not.
This level of third party control is almost unimaginable today.
Yet, even back then, there were many people whose voices could not be heard above the noise made by the union movement. These people valued freedom, mobility and above all, the chance to put in the effort and get a fair reward for it.
ODCO contracting offered those people a chance to do this. As expected, there was bitter opposition to ODCO contractors, and the matter was taken to the High Court.
Fortunately, for the sake of freedom, the High Court upheld the arrangement, and those aspiration workers were given the chance to get ahead.
Despite various attempts by State governments to stymie the enterprising spirit of ODCO contractors, they have gone from strength to strength. Now, for the first time in history, there are more independent contractors than there are union members.
In the robust modern Australian economy, it is the “enterprise workers”, like ODCO contractors which have played such a significant part in delivering better living standards for everyone.
For industrial relations, the 80s was a turbulent time, and ODCO contracting began its slow rise to prominence as part of a significant thrust against the choking award system and union dominance, from the ground up. Slowly, but surely, a number of critical disputes forced an overhaul of our archaic industrial relations system.
These included the Mudginberri dispute, where a small abattoir sought to pay its employees on the basis of productivity, the Wide Combs dispute, where the introduction of new technology was bitterly opposed, and the Dollar Sweets case, where an employer finally stood up to a union, a union which had stated that its intention was to drive the employer into the ground, and rediscovered the effectiveness of the common law against union bully-boy tactics.
Eventually, despite bitter conflict and often vicious opposition, the Australian economy began to evolve to meet the challenges of a globalised economy.
In 1993, as we struggled with the effects of a million people unemployed, Paul Keating announced a vision for the labour market:
“let me describe the model of industrial relations we are working towards. It is a model which places primary emphasis on bargaining at the workplace level within a framework of minimum standards …Over time the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses…We need to find a way of extending the coverage of agreements from being add-ons to awards … to being full substitutes for awards.”
This was not John Howard in 2005, but Paul Keating in 1993.
Following this statement, Keating’s subsequent legislation was seriously nobbled by the ACTU, but it did mark the beginning, in a legislative sense, of the move away from the centralised system towards a system based on agreements at the workplace level.
In 1996, the Howard Government took this reform agenda another step forward, including introducing agreements between individual workers and their employer. However, without control of the senate, the reforms did not fully realise the model Keating spelt out in 1993.
The Effect of Reforms
The Labor and Liberal reforms to workplace relations have contributed substantially to the continuous period of economic growth that we have enjoyed. They have contributed to the historically low interest rates and historically low inflation and unemployment rates. Importantly, industrial disputes are at an all time low.
Yet despite our successes, the same people who resisted the ODCO contract, the same people who resisted the introduction of enterprise bargaining and the same people who resisted the Coalition’s 1996 reforms are now resisting this Government’s next round of reforms.
Had this country not voted with its feet, nay-sayers would have deprived Australia of significant opportunity and well-being. In fact, Access Economics estimates that if structural reforms since the early 1980s had not taken place, Australian workers would be an average of $8,000 per year worse off than they are today. Not only this, but interest rates and unemployment would also be higher.
Steven Smith, the current Shadow Minister for Industrial Relations, has had this to say about workplace relations reform:
The Howard model is quite simple. It is all about lower wages; it is about worse conditions; it is about a massive rise in industrial disputation; it is about the abolition of safety nets; and it is about pushing down or abolishing minimum standards. As a worker, you may have lots of doubts about the things you might lost, but you can be absolutely sure of one thing: John Howard will reduce your living standards
But this was not Steven Smith in 2005 – this was Steven Smith in 1995, opposing the Coalition’s industrial relations platform.
How wrong he was. This platform has brought massive benefits to all Australians.
Yet today, just as in 1996, the Government faces significant scaremongering from the Labor party and from the ACTU.
The level of dishonesty and hypocrisy in the campaign has been a little surprising.
From the word go, the ACTU’s ad campaign sought to deliberately mislead the public about the nature of the announced reforms. Their first ad campaign suggested that a mother could be sacked for caring for her sick child, a claim which was blatantly untrue.
Among the many deliberate deceptions peddled over recent weeks we have heard both Labor and the ACTU cry wolf over the ability of an employee to trade penalty rates, public holidays, overtime or average ordinary hours over a year – even though many unions have traded these things away in any number of agreements over recent years, to the great advantage of the workers and their employer. It’s called flexibility in the workplace and giving workers the choice about terms and conditions that better suit them.
Underpinning the whole case against WorkChoices is the assumption that employers are out there to screw their workers out of every last cent.
This “them and us” view is a 19th century view of class struggle and the inevitability of conflict, and is a view which has no place in the modern economy. No-one wins at the workplace when there is conflict, and WorkChoices is about achieving results through cooperation.
While I don’t intend to go through every detail of the scaremongering, I want to discuss something that I am starting to find particularly offensive.
In the race to discredit the Government, employers, particularly small employers, have been unfairly targeted by the ACTU’s dishonest campaign.
I find it offensive that the good men and women of Australia who have worked so hard and have risked so much to start their own small business are painted as people who hire people just to sack them or who would sack an employee on a “bad hair day”, as Sharan Burrow has said, or who sack someone because they stayed home to look after their sick child.
These types of claims are an insult. They belittle the effort put in and the pain and sacrifice that small business people must endure.
And these claims ignore the reality that small business people know that their best asset is their staff, and that arbitrary dismissal would be totally counterproductive to the morale and productivity in a business.
Of course there are always some “bad apples” – both employees and employers – and we are determined to ensure strong protections exist to catch the “bad apples”.
But the “bad apples” are the exception, and we are not going to leg-rope the other 95% of good employers; we aim to let them get on growing their business, with the ability to remove poor performing or disruptive staff without fear of industrial blackmail.
Some opportunities for independent contractors
Similarly, we aim to make it easier for independent contractors to grow their business.
When the opportunity to expand arises, there are a number of possible options for the small, one-person operation – they could do the extra work themselves, hire an extra set of hands, sub-contract the work or pass up the opportunity.
Up until now, there have been too many people passing up opportunities which arise because their decision making has been severely distorted by the inordinate amount of regulation covering both employment and independent contracting.
Our reforms are a very deliberate attempt to free up the labour market so that more people can take up more opportunities more often.
When this happens, the whole nation is better off.
People can only work so much, and as an independent contractor’s goodwill grows, they are left with the decision to employ, contract or pass up the opportunity.
Faced with the prospect of an unfair dismissal claim that would cripple a one-person operation, many would-be employers have avoided hiring in the first place, combined with a hugely complex award system, there is a great disincentive for many, many employers in taking on staff.
WorkChoices is going to address these issues by making the risk in employing someone much lower, and by making the process for setting the terms and conditions easier, as Kevin outlined today.
Even where there is another sub-contractor willing to do the work, many states deem independent contractors, even genuine ones, to be employees. This places yet another hurdle in the decision making process.
To prevent this, the Government will be introducing legislation to protect the status of independent contractors.
This legislation will also provide certainty to businesses which engage ODCO contractors from the harmful consequences of deeming provisions.
Deeming provisions have led to massive problems for businesses taking on extra work.
In one recent case, some independent contractors operating in Sydney asked, completely of their own free will, to work longer shifts instead of the proposed 8 hour shifts, as they wanted to work less so that they could have more time off and avoid extra travelling time and toll payments.
Having satisfied himself that health and safety was not an issue, the subcontractor who engaged them agreed to the request.
As a result of the deeming provisions, the subcontractors claimed that they were entitled to be paid under the award, which included double-time penalties due to the length of the shifts, even though the independent contractors were paid at a rate which would have satisfied their award entitlements working eight hour shifts.
What’s worse, the provision deemed the head contractor, who had never met the independent contractors and had no say at all in the decision to work this shift arrangement, to be liable for the provisions.
The two contractors claimed a combined total of $120,000 in unpaid overtime and allowances over an 18 month period. The matter settled, with the head contractor being forced to pay substantial monies to two people that they had never even met.
This is absurd, and the Government is determined to remove provisions such as this from preventing people who wish to exercise their own free choice.
WorkChoices, as part of the Government’s commitment to providing choice, will open new doors for people and provide a better outcome for everyone.
Conclusion
The changes that I have mentioned are just some of the substantial changes that this Government will be putting into place to make sure that this country continues to outperform the world.
Central to this is unlocking the productive potential of all Australians. WorkChoices is the first step in achieving this goal.
Over the last 20 years, hard-working enterprise workers have provided so much for Australia. Our hope is that WorkChoices opens even more doors for these people to take Australia to new heights.