Bills

Labour Hire Licensing Bill

Second Reading

Adjourned debate on second reading.

(Continued from 14 November 2017.)

The Hon. R.I. LUCAS (15:31): I rise on behalf of Liberal members to speak to the second reading of this bill, and in doing so will try to indicate how I, on behalf of the party, will try to approach the second reading and the committee stage. For the reasons I will outline, I think the vast bulk of the work, in terms of discussion and debate, will need to be done during the committee stage of the debate, which will occur in the next sitting week and probably, I suspect, in the optional sitting week as well, given, looking at the Notice Paper, there are 36 agenda items at the start of play today.

I understand three or four of them might have been completed, so we are still at 32. As we speak, I think more bills are being passed in the House of Assembly and messages are to be received this afternoon, so we are going to have close to 35 bills to consider in the last sitting week and then the optional sitting week, I suspect, as well, assuming the government wants to get the bulk of its program through before the house rises before the next state election.

To that end, my normal course in relation to complicated bills like this one would be to outline in the second reading all of the detailed questions and allow the government to take advice and pursue the issues in the committee stage. For the reasons I will outline, I have found that impossible in relation to this bill because this bill is, to use a colloquial expression, a dog's breakfast at the moment. We have now received five separate sets of amendments on behalf of the government and three of those sets of amendments have been received in the last, approximately, 48 hours.

I and the shadow minister, the member for Bragg, are finding it impossible to keep up with the constant stream of amendments that are arriving from the government, trying to correct some of the clearly identified deficiencies in the government's drafting of the legislation.

I am sure the government's response is that they are just responding to the criticism. The position I would adopt is, if there had been proper consultation in relation to the legislation, then many of these particular problems could have been sorted out during the consultation phase rather than dropping the bill into the parliament and then, as I said, now having five separate sets of government amendments in relation to the legislation. We are not aware, given we have at least one and probably two sitting weeks left, of whether there will be further sets of amendments from the government as they recognise further inadequacies in the drafting of this complicated piece of legislation.

What I will endeavour to do is, firstly, put the Liberal Party's general position in relation to the need for the legislation, and then I will really only address two major submissions that I think all members, but certainly the opposition, received as recently as October, roughly four weeks ago, from the Ai Group and a little bit earlier than that from Business SA. These were on the original drafting of the bill.

Some of the issues that have been raised in those submissions, I understand, are being addressed in some of these five separate sets of amendments that have been filed, but because we have not had the time this week to keep track of all those amendments, as each new set arrives, we have sent it out to the stakeholder groups, to consult with those groups to see whether or not the amendments meet some or all of the criticisms they have identified in the drafting of the legislation.

This is no criticism of the stakeholder groups. If you get three new sets of amendments in the last 72 hours or so, it is not possible for those stakeholder groups to have instant turnaround in terms of taking legal advice on what the implications of the government's re-drafted amendments might mean in terms of the inadequacies that have been identified in the legislation.

So, that is the general approach that I will adopt. I acknowledge that some of the criticisms identified by the Ai Group and Business SA, which are indicative of the range of other stakeholders who have identified problems, might have been addressed in some of the more recent amendments that have been filed by the government. We will consult over the next 10 days, before the parliament reconvenes, and address the issues.

I want to refer, in the South Australian context, to the seminal work on the labour hire industry, which was undertaken by the parliamentary Economic and Finance Committee's inquiry into the labour hire industry. The 93^rd report, which was tabled in the House of Assembly in October last year, just over 12 months ago, has clearly been the genesis for the government's response in the legislation we have before us.

In that particular report, the position of the Liberal Party was clearly outlined in an attached minority report, signed by Mr Stephan Knoll (member for Schubert), Mr David Speirs (member for Bright) and Mr Vincent Tarzia, the lion of Hartley, or the member for Hartley. They signed the following minority report. The first thing they did on our behalf was as follows in their opening paragraph:

Over the course of this inquiry there were a number of stories outlining improper and potentially illegal behaviour in relation to the conduct of labour hire companies in South Australia. The evidence was at times disturbing and represented a significant wrong in our community; much of it perpetrated upon some of the most vulnerable in our community. More must be done to stamp out the illegal behaviour and to ensure that all who work in Australia share the same basic working rights and conditions.

This report does highlight illegal behaviour but it does not identify an area where the law is insufficient, indeed the report centres around ways to reduce already illegal behaviour. The South Australian Wine Industry Association makes this point in its submission:

'There are already extensive protections under both State and Federal harassment and discrimination legislation, including employers having vicarious liability for any acts by their employees. On this basis there is no need for additional legislation.'

The majority report proposes to significantly increase the regulatory and financial burden on labour hire firms and those that use their services through a licensing scheme. The increased burden aims to increase compliance, but will also add additional cost to all industries involved, a factor ignored in the majority report.

Given that the behaviour that this report seeks to reduce is already illegal this minority report merely differs on how to achieve increased compliance. Simply creating more red tape for those who already operate inside the law will not of itself increase compliance.

I think that is a fair summary of the strong position that Liberal members adopted on the Economic and Finance Committee inquiry into the labour hire industry.

Put simply, we are saying that we acknowledge there have been problems, but our approach is: why not use existing powers and, if need be, we can look at existing powers and penalties if there is a judgement that they are insufficient and penalise and punish the rogue operators in the labour hire industry. Do not penalise and punish the 90 per cent plus genuine, law-abiding, legally operating labour hire companies that are operating without criticism from either workers or regulatory authorities and agencies.

The Economic and Finance Committee took evidence that indicated that an estimate of over 90 per cent of all participants in the industry were compliant labour hire firms. It is a similar view that we have adopted in relation to the government's attempts to, in our view, overregulate young people drinking in the entertainment precinct of Adelaide.

The government's response is to punish everybody, lock down everything for a compulsory period of three hours, even though the majority of young people are quite happy to behave themselves and enjoy the entertainment precinct of Adelaide in the early hours of the morning without causing any grief to anybody else. But, the government's response is that all must be punished for the sins of the few. This is the approach this government adopts in so many areas, and it is the approach this government is adopting in this particular area.

So, consistent with the position of our members on the Economic and Finance Committee, the Liberal Party will, in relation to this bill, support the second reading to enable debate in the committee stage. We will be sympathetic to a number of the amendments that will be moved by members, not just government members but the Hon. Mr Brokenshire has flagged an amendment as well, where we think it might improve the bill, but when it comes to the third reading the Liberal Party will vote against the third reading of this legislation, with or without the amendments that have been flagged in the committee stage.

We think the mere fact that the bill is in such a mess that five separate sets of amendments have to be moved is an indication that the government does not really know what it is doing. It is not aware of the consequences of the legislation that has been drafted. It has been poorly and hastily drafted, poorly consulted upon and, in a rush prior to the end of parliament and before the state election, the government is desperate to get anything into operation prior to the end of this particular parliamentary session.

It will be a long committee stage, as it should be. The government will be held to account in relation to what it does or does not know, what it should have known and what it did not know in relation to its original drafting, what consultation it did undertake and if it did undertake consultation why are there now five separate sets of amendments being moved to try to get the legislation through the parliament, what will be the implications of some of these amendments and what has been the legal advice available to the government.

The final part of the dissenting or minority report to the Economic and Finance Committee report that I want to refer to is the potential impact in terms of new industries growth in terms of jobs and economic growth in the South Australian economy. I look in particular at the information technology sector. The ITC sector is clearly a source of new jobs, in particular for young people, in the future.

Our industry sectors in South Australia will need to be nimble and to be able to adapt quickly and not be tied down by unnecessary red tape and regulation. They need to be in a position to move quickly in terms of how they reasonably treat their employees as companies live and die relatively quickly in the new economic environment. Not every new IT firm is going to succeed and not every new IT firm is going to churn out millionaires or multimillionaires. Some will succeed and many will fail.

Our labour hire systems, our industrial relations systems, our workplace systems will need to acknowledge that that is the reality in terms of the future, at the same time stamping out obvious offensive and obnoxious employer behaviour in terms of treatment of workers and employees.

The minority report quotes a statement made by the Information Technology Contract and Recruitment Association in a submission. I am not sure whether it was made to the South Australian inquiry or whether it was made to a federal Senate inquiry of a similar nature, but it is nevertheless quoted in the South Australian report. It says:

…ITCRA is not convinced of the need for a national licensing system or industry code, as this would only serve to increase costs for already compliant labour hire/contracting providers and fails to prevent unscrupulous operators... Further, disparate forms of regulation and more onerous licensing requirements in South Australia may deter national and international labour hire/contracting firms from operating in South Australia.

I think that is a salutary lesson to legislators and to those of us in this chamber—some of us anyway—who might be forced into a position of saying that we are going to support this with amendments or not. That is not our position. What we are saying is that this is a dog's breakfast in terms of its drafting.

The government or a future government needs to go back to square one and either adopt the alternative mechanism, which is the one that we have indicated, or if a government is intent on overregulating and more red tape, it needs to at least get the balance right in terms of its drafting of its legislation and not just introduce something and then patch it up with five separate sets of amendments and hope that the mess can be understood and that the ramifications and implications for businesses and industry will not be significantly impacted in terms of economic and jobs growth in South Australia.

I now refer to the submission made by the Ai Group, which I received by way of a letter dated 9 October, just over five weeks ago, from Mr Stephen Myatt, the head of the Ai Group in South Australia. In that covering letter, he says:

…numerous genuine contracting arrangements would be covered by the Legislation which go far beyond a reasonable notion of labour hire. Within industry, businesses provide a huge array of different services and other labour is involved to a greater or lesser extent. The Bill would lead to the disruption of countless business to business services and expose businesses, their owners and managers to significant risks and added costs.

Secondly, the penalties in the Act are unjustified. These penalties go way beyond those of a similar Bill which passed the Queensland parliament—despite considerable opposition—and to have jail terms for breaches of this proposed Act is unnecessary and unjustified. Indeed, upon reflection you would wonder why any individual in South Australia would operate a business with such huge penalties in areas based around licensing.

That is again an important message. It is a warning: why would anyone want to invest in South Australia in some of these new areas if the sort of onerous penalties and onerous red tape and overregulation is to be imposed on the costs of doing business in this state compared to some other jurisdictions? Increasingly, as I said, our businesses are going to have to compete internationally as well as nationally in terms of the products and services they produce.

The third point they refer to is the not-for-profit group training companies. We understand in one of the earlier sets of the amendments the government is moving they are seeking to address that particular issue. The end of the letter states:

The bottom line in relation to this Bill is that if there are labour hire operators that are presently breaking the law, then we should be enforcing the law. There is no need to add extra red tape and regulatory burden to all labour hire operators, the vast majority of which operate professionally and legally. It merely imposes additional costs on good operators.

The licencing regime as proposed by this Bill will not be successful in driving out underhanded operators from this industry unless enforcement is put in place.

In the detailed submission attached to that October letter the Ai Group addresses a number of clauses of the legislation. The first general point they make is that the alternative procedure is that there are a number of existing pieces of legislation. They refer in particular to the Fair Work Amendment (Protecting Vulnerable Workers) Act 2017, which has passed the commonwealth parliament, which will amend the Fair Work Act to introduce a new serious contravention penalty, up to $540,000 per breach for a company, 10 times the current maximum penalty; increased penalties for pay slip and record keeping offences, up to $54,000 per contravention, which is double the current maximum; and up to $540,000 for a serious contravention, 20 times the current maximum.

The act gives franchisors and holding companies more responsibility for breaches of workplace relation laws and instruments by franchisees and subsidiaries. It also grants the Fair Work Ombudsman compulsory interrogation powers similar to the powers of the Australian Building and Construction Commission. The Fair Work Act equally applies to labour hire operators and users of labour hire services. The Ai Group identifies the fact that there is already significant new legislation that is about to come into operation, as we understand it, which purports to cover a number of those areas.

I think other submissions identify other pieces of legislation. Business SA identifies not only the Fair Work Act but also the Work Health and Safety Act, the Return to Work Act, the Criminal Law Consolidation Act, the Competition and Consumer Act, the Independent Contractors Act, the Fair Work Act South Australia, the Migration Act, the Superannuation Guarantee, the Superannuation Guarantee Charge Act and the Taxation Administration Act as all being current legislative protections that are available in terms of monitoring compliance and enforcing compliance on some rogue labour hire firms in this industry sector.

The Ai Group then goes on to identify some specific areas. They argue that clause 3(1)(a) of the bill should be deleted as it implies that providers of labour hire services exploit workers. This is clearly untrue in the vast majority of cases. They argue for an amendment there. I will go through the detail of these arguments in the committee stage, but I am going to flag the nature of the complaint from Ai Group. They say that clause 6, in terms of the meaning of labour hire services, has an extremely broad definition of 'labour hire service provider' and 'worker', which they say will include on-site maintenance and repair, professional services, professional secondments and group training organisations.

To that end, I thought the Business SA group was instructive. In their submission, under the meaning of labour hire services, they state:

This section uses the following wording: 'in the course of carrying on a business, the person supplies, to another person, a worker to do work'. Professional organisations such as accountants, lawyers, business consultants, nurses and I.T professionals may, from time to time, place workers in other workplaces or be seconded to clients. A few examples of such arrangements are:

A corporate health service that 'supplies' a nurse to deliver flu vaccinations

An I.T professional setting up computer systems

An auditing accountant

A translator supplied to assist migrant workers

A first aid attendant at a sporting event

What Business SA is saying is that, under their legal advice, the definition of 'labour hire service' and 'worker' in the bill would cover all those sets of circumstances. I do not think anybody in their right mind would contemplate that professional services and professional secondments or a corporate health service that supplies a nurse to deliver flu vaccinations and the like were intended to be covered by the definition of labour hire services and this particular legislation. The lawyers for the Ai Group and Business SA are clearly arguing that that is, in essence, what is going to happen.

Ai Group has argued for a particular definition that we will explore in the committee stage as being a better definition. Under clause 7, the meaning of 'worker', they argue, is highly problematic, open to misinterpretation and needs to be clarified. There is a long section on the not-for-profit group training companies that I will not address because I think the government's first set of amendments has sought to address them.

Regarding clause 9, they raise significant criticisms about the fit and proper person provisions. They say here that the government wants to give the commissioner broad levels of discretion in determining who is a fit and proper person for the purpose of holding a licence or to be a director of a body corporate. They are arguing that that could lead to arbitrary outcomes, that the commissioner could make highly subjective assessments that would lead to unfair outcomes for individuals. Again, I think it is instructive in relation to that particular clause to look at the Business SA submission, which does look at some examples. They say:

For example, a person will be excluded from holding a licence due to an estranged family member e.g. step-brother being involved in criminal activities covered by the Serious and Organised Crime (Control) Act 2008….Section 9(2)(a) of this bill does not allow for discretion if a person was found guilty of an offence but a significant amount of time has elapsed since the offence.

Business SA gives some very useful examples of the sorts of—one would hope—unintended consequences of the current drafting of the legislation in relation to fit and proper person.

In relation to excessive penalties under clause 11, the Ai Group and also Business SA argue that they are too harsh. We will describe those and argue that case in the committee stage. In relation to clause 15, the Ai Group argues that this particular power could be used inappropriately by trade unions against licensees for reasons unrelated to the act, such as the licensee's decision to not agree to negotiate an enterprise agreement with the union. Their argument is that clause 15(5)(a) should be deleted.

In relation to clause 16, which concerns the grant of a licence, again they are arguing that the commissioner is given a very broad discretion in relation to the granting of a licence. 'Inappropriately broad and unfettered' is their description of the commissioner's power, and we will explore that in the committee stage.

In relation to clause 18, they have raised significant questions about the meaning of prescribed information and what the government is intending to be provided with every 12 months. They say that this will impose, potentially, an extremely lengthy and onerous cost burden on the 90 per cent plus of legitimate operators in the labour hire sector with the intent of trying to catch the less than 10 per cent, perhaps, of rogue operators within the industry.

In relation to clause 19 concerning notification of changes in circumstances, again they have argued the onerous nature of this, in that within 14 days of a change, licence holders will have to notify the commissioner of a change in respect of prescribed matters relating to the licence. They say this is unfairly vague and onerous. They say:

Many established labour hire operators have an extensive number of services, activities and clients which regularly change. This provision not only imposes an unfair regulatory burden on licence holders but also potentially requires the disclosure of confidential or commercially sensitive business information, to which we have referred above.

In relation to clause 21—Suspension and cancellation, again they argue that the powers the commissioner has are way too broad and unfettered. They argue that the commissioner has broad powers to cancel a licence if he or she is satisfied that a licensee, employee or representative of the licensee has contravened a relevant law, whether or not the licensee, employee or representative has been convicted of an offence for the contravention.

What the Ai Group is saying is, 'Hold on, fair suck of the sauce bottle' (or whatever colloquial expression you want). They are saying that the commissioner can actually close a business down because, in essence, that is what happens: if you lose your licence as a labour hire service operator, that closes your business down. The commissioner can do that, whether or not the licensee employer representative has been convicted of an offence. So, it is a judgement that the commissioner (he or she) is satisfied that one of the representatives, an employee—not necessarily the licensee—has contravened a relevant law. The commissioner can just close the shop down.

That seems to be an extraordinarily broad provision to be allowed. I would be stunned if some members in this chamber who understand business and business operations could, in any contemplation, support such broad powers for a commissioner. Some members of this chamber have very great respect for our commissioners. They seem to be growing like Topsy—left, right and centre. Personally, I am not a great lover of the mushrooming growth of commissioners that we have all over the place. My view—a simple view, perhaps, and a solitary personal view—is that we have ministers who should accept responsibility, we have departments that are meant to be implementing the policies and we now have an ever-increasing number of commissioners, and many of them are being supported by both sides of politics. I accept the reality of that.

However, they are a special breed unto themselves, and parliaments and executive government are, at some stage, going to have to have a good, hard look at the number we have and the powers they have. If we continue to give them unfettered, subjective, broad discretions in relation to closing businesses down just because they are satisfied—even though they have not been convicted of anything in relation to a particular action—we are taking a very big step, in my view.

My earnest entreaty to members of this chamber is that there is no crying need for this. Unless every i is dotted and every t is crossed in relation to this, and you are satisfied that there are no loopholes, then we should not be passing faulty legislation. That is certainly the position that the Liberal Party is adopting. Under clause 24—Requirements for responsible persons, Ai Group is arguing for the deletion of subclause (1). With regard to part 5—Monitoring and enforcement, Ai Group proposed those powers. We will take those up in the committee stage of the debate.

Let me conclude by saying that I have approached the second reading in a completely different way to most other pieces of legislation because of the continually changing nature of the government's bill as a result of their constant series of amendments to their own legislation. We are now going to pause and, hopefully, see the end of the government's amendments and then be able to consult with stakeholders, finally, on where they see the legislation.

We will, as I indicated at the outset, support a forensic examination of the provisions of this bill during the committee stage. We will raise the issues that the Ai Group, Business SA, the Wine Industry Association and others have raised in relation to deficiencies in the drafting. We will support some amendments that may well marginally improve the legislation, but, ultimately, we believe this legislation is wrongly based. It approaches the problem of a small number of rogue operators in completely the wrong way.

For an alternative government, which has pledged to try to grow our state economy, grow jobs in South Australia, reduce red tape and overregulation and reduce tax levels, this overregulation approach to the labour hire industry is completely opposed to the philosophical and practical direction in which we would like to take this state. Therefore, for those reasons, we will be strongly opposing the third reading of the bill.

Debate adjourned on motion of Hon. T.T. Ngo.