Economic and Finance Committee: Inquiry into the Labour Hire Industry

Adjourned debate on motion of Mr Odenwalder:

That the 93^rd report of the committee, entitled Inquiry into the Labour Hire Industry, be noted.

(Continued from 19 October 2016.)

Mr ODENWALDER (Little Para) (11:44): I was reminded by the Clerk that I have three minutes left for my remarks, even though they are essentially finished, so I will take the opportunity to bring the house up to date on a couple of things. It is my sincere hope that the recommendations are adopted by the government. They are good recommendations.

I had the good fortune after the last time I spoke to be invited to Victoria by the Hon. Natalie Hutchins, the Minister for Industrial Relations in Victoria, for the launch of the results of their inquiry into the labour hire industry, which grew out of the same impetus as ours. Theirs was conducted by Professor Anthony Forsyth. It was a slightly different type of inquiry. It was not a parliamentary inquiry: it was done by a professor from RMIT. Their findings were essentially the same as ours. They chose to go down the path of implementing almost immediately a state-based scheme.

I am not entirely sure where that is up to, but they were certainly talking about implementing it immediately, or starting that process immediately, so I wish them the best of luck. As I said, I hope that our recommendations are adopted by the government, because they are good recommendations. Ours favour a federal system before a state system but anticipate the introduction of a state system if a federal system is not acceptable to the federal government, which I suspect it may not be.

With those remarks, I will hand over to the member for Schubert, who is champing at the bit. Before that, I want to thank the executive officer, Lisa Baxter, for all her hard work, and Kendall Crowe before her. They brought together what could have been a sprawling, wide-ranging inquiry and focused it and made it very worthwhile. I also want to thank Dr Gordon Elsey, our research officer. With that, I commend the report.

Mr KNOLL (Schubert) (11:46): Unlike our wonderful occupational health and safety committee, unfortunately the Economic and Finance Committee could not come to a unanimous view on this report. First and foremost, in going through my remarks, I want to state that both sides agreed that there was an issue at hand. Both sides agreed that the stories we heard did outline improper and potentially illegal behaviour. We saw that, we heard the stories, and I think everybody was unanimously convinced that there is an issue there that needs to be solved.

I think we differed completely on what the solution is but, having said that, we cannot get away from the fact that there is an issue in the labour hire community. It is not the majority of labour hire providers that are a problem: it is a minority. Someone put the figure at somewhere between 5 and 10 per cent. It is a minority, but a large enough minority to show there is something there that needs to be done.

So, we have identified that there is a problem with potentially illegal behaviour happening. Workers are being exploited and underpaid. Workers are being housed inappropriately by their employers. Workers are not being given all their full entitlements. Labour hire companies are failing to pay WorkCover premiums and failing to pay superannuation and are doing so by essentially removing normal workers' entitlements and conditions. They are trying either to have a fantastic profit margin for themselves or pass on a lower and more competitive rate to the businesses that use their labour hire.

What this report sought to do was reduce this already illegal behaviour. The member for Little Para contends that, by introducing a licensing scheme, we are going to reduce the level of illegal behaviour that happens within the labour hire industry. The linking of those two ideas together is where I take issue. Simply creating more red tape for those who already operate inside the law is not the answer in my view, because we already have the vast majority of the industry doing the right thing, so they are the ones more likely to get themselves licensed.

These dodgy operators, who most of the time rise and fall like the phoenix trying to keep one step ahead of the authorities who are seeking to prosecute them, are the businesses that are much more likely not to engage in a licensing scheme in the first place. What I think will happen is that we are going to see normal compliant firms have their regulation red-tape burden increased and noncompliant firms continuing to be noncompliant.

I think it would be a perverse outcome if we put the cost burden on those who do the right thing and provide a larger gap or incentive for host employers to use unscrupulous labour hire companies who, not having to bother themselves with licensing, will be able to provide a differentially cheaper rate from those who do the right thing.

We heard from a number of regulating bodies that attempt, in my view with varying levels of success, to have oversight over labour hire companies. They are: ReturnToWorkSA, in relation to the correct payment of premiums; RevenueSA; the Australian Taxation Office, in relation to taxation requirements; SafeWork SA, in relation to compliance with the Work Health and Safety Act; the Fair Work Ombudsman; the Australian Securities and Investments Commission; and the Department of Immigration and Border Protection—all bodies that, as part of their mandate, inquire into workers and ensure that businesses and labour hire companies comply with their obligations.

I want to bring into the debate, and for the benefit of the member for Little Para, an article that was in the Sunday Mail on 23October 2016, entitled Look, No Licence. It stated that that more than 1,400 motorists a month were being caught driving without a licence and creating potentially tragic consequences for public safety. What we have for driving is a licensing scheme that is designed in much the same way as the one the member for Little Para proposes for the labour hire industry, a licensing scheme that he believes will reduce criminal behaviour.

When it comes to driver's licences, we have a licensing scheme, but there are still people who engage in illegal behaviour by not having a licence and potentially flouting the law. The reason that we know that there are 1,400 people who have been caught driving without a licence is that the police caught them. That shows that the system works: the police caught the people who were doing the wrong thing. The act of having a licence did not in and of itself reduce illegal behaviour: it was the police enforcing the law as it exists that reduced the criminal behaviour.

I would say that in regard to the labour hire industry this is exactly the same approach we need to take. The act of licensing a labour hire company does not in and of itself change compliance. What changes compliance is the regulatory bodies that are supposed to enforce compliance actually enforcing compliance. That means that we need SafeWork SA, ReturnToWorkSA, ASIC, the Department of Immigration, RevenueSA, and everybody else whose job it is to make sure that illegal behaviour is brought to justice and fixed, to do their job, and they need to be given the resources in order to do their job. That is what will help reduce the illegal behaviour that exists within the labour hire industry, not a licensing scheme.

A licensing scheme is more red tape for the people who already do the right thing. I would be extremely frustrated, especially in relation to recommendation 2, which states that if the federal government does not go ahead with a licensing registration scheme we in South Australia could go it alone. In my view, what would happen in that scenario is that we would have a labour hire company setting up in jurisdictions where there is no licensing requirements, so that all we are doing is creating a burden on South Australian businesses compared with businesses interstate.

Fair enough, recommendation 1 does talk about the fact that the commonwealth should be implementing a licensing scheme for themselves but, as the member for Little Para pointed out, that is highly unlikely, so we are going to see a patchwork of licensing regulations across the country, and those low regulation jurisdictions are going to be the ones where those businesses are set up. If those businesses set up, they have no need in their own jurisdiction to be licensed: they provide labour to employers here in South Australia. It will be South Australian businesses that are punished, and that is not something I want to see happen, and that is why the member for Hartley and the member for Bright agreed with the minority report about the fact that a licensing scheme is wrong.

I think this is a fundamental difference between the Liberal Party and the Labor Party both here in South Australia and nationally: we want to get to the cause of the problem and deal with the problem that exists, rather than creating a whole new bureaucracy to wrap around the problem to make it look like we are doing something. The truth is that, if we were to have a licensing scheme in place, the only way that we would know that it was being enforced was if the regulatory bodies charged with the enforcement did their job, which they can do without a licensing scheme.

I sincerely hope that the government does not take up these recommendations to create increased burdens on the businesses of South Australia. As we all in this chamber know, we need more jobs in South Australia, not fewer, and we need to make it easier for employers to employ people in South Australia. Sure, they need to do the right thing when they employ people, but we should not make it harder for them to employ people.

I implore the government to look closely at the minority report, to see sense, to look at what works, as opposed to trying to look good and look like they are doing something about what works, so that we can all get on and look to a brighter South Australia that has fewer regulations and less red tape and deliver better outcomes for workers through increased compliance and hopefully create a few jobs in South Australia to keep our kids here at home.

Debate adjourned on motion of Hon. S.W. Key.