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Legislative Council - Fifty-First Parliament, Second Session (51-2)
2008-02-13 Daily Xml
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FAIR WORK ACT

The Hon. R.D. LAWSON (17:33): I move:

That the regulations under the Fair Work Act 1994, concerning clothing outworkers, made on 18 October 2007 and laid on the table of this council on 23 October 2007, be disallowed.

I propose to make some introductory remarks this evening about this matter but will seek leave to conclude my remarks on the basis that, as a result of a briefing provided to me by the Employee Ombudsman earlier this week, I understand that an official from one of the organisations deeply concerned with this matter will be in Adelaide to brief all members about the code before the next sitting week.

This proposed code of practice will commence on 1 March this year, unless disallowed before that date. It is proposed that there be an amnesty for a further six months after that commencement; therefore, we do not have perhaps the urgency in considering this matter that might otherwise apply.

This particular code of practice is fairly unique, and it has a number of features of which the council ought be aware. In particular, this code of practice will apply to retailers in South Australia. It will oblige them to provide certain information to SafeWork SA and also to the union that has been conducting this campaign, namely, the TCFUA (the Textile, Clothing and Footwear Union of Australia).

It is a fairly extraordinary code of practice. Within the Fair Work Act, there are already detailed provisions relating to outworkers, provisions which are designed to protect their interests generally. There are also provisions within both the state and federal Clothing Industry Award that deal specifically with outworkers. Of course, those provisions bind employers within the industry, as do most industrial instruments.

Third parties, such as retailers, customers and other people, are usually not bound or required to do anything under an industrial award. An industrial award is an instrument that binds employers and employees and does not impose obligations on others, such as retailers or other businesses.

This code, however, will bind some retailers. It will require them to provide information about their businesses. It will require them to supply, for example, details of orders and suppliers on a quarterly basis, require them to fill in a very extensive form and file these returns with the union, and provide details of their business on a quarterly basis. It has always been sold on the basis that Business SA, the employers' group on behalf of employers in this industry, agrees with the code and supports it. Material has been published in an explanatory brochure containing that implication.

However, on 7 February this year Business SA wrote to the chief industrial relations adviser at SafeWork SA, saying that it did not agree with the outworker code of practice or its immediate implementation. A letter signed by Mr Peter Vaughan, the chief executive, expressed severe reservations about the code, but more particularly about the process that has led to the code being promulgated. The Liberal Party supports the conditions of the industrial award and supports the provisions that exist for the preservation of outworkers' entitlements contained in the Fair Work Act.

We support those instruments and do not approach this issue with any hostility towards outworkers or with any desire not to ensure that outworkers are protected: we seek to have them protected, but we also seek to know exactly what effect, not only on outworkers but on other sections of the economy, is wrought by these regulations. Mr Vaughan writes:

While some may consider it a priority to introduce new regulations to address the exploitation of outworkers, a number of factors must be considered before any such regulation is introduced. Business SA maintains that there has been inadequate consideration and assessment of the need and impact of the introduction of the clothing outworker code of practice. The accepted method for this is through a regulatory impact assessment (RIA). A formal RIA would have, one, assessed the scope of the outworker problem in South Australia. It must be noted that no empirical evidence has been provided with respect to the scope of the problem in South Australia.

I interpose that when I had a briefing I asked the Employee Ombudsman how many retailers would be affected by this and what was the situation in South Australia regarding the number of outworkers and organisations employing outworkers and similar detail, and he was unable to provide me with any, other than the fact that an academic survey conducted in New South Wales a couple of years ago estimated that there were 3,000 outworkers in Australia, but it provided no detail of the break-up for South Australia or the extent of the problem.

I return to Mr Vaughan's letter, in which he suggested that a regulatory impact assessment would also have:

...assessed the scope, that is, the number and size of businesses that would be covered by the proposed regulation. Business SA's research and feedback from members has indicated that the scope of coverage is far greater than that which would have been indicated by both the government and those who are proposing the code. Thirdly, a formal RIA would have revealed whether the mandatory code regulation would indeed achieve the intended outcome. Fourthly, such an assessment would have provided an analysis of the difference in imposition on business, particularly small business, relating to the volume and regulatory codes. Fifthly, it would have analysed the cost of compliance, particularly on small business, of both the regulations and volume codes.

Sixthly, it would have analysed current methods and resources available to address outworker issues and provided transparent and subjective analysis as to why methods and resources are inadequate to address the problem in South Australia. Next, it would have analysed whether it is appropriate for employers bound by the clothing trades awards, and complying with the awards' onerous requirements, to also be required to comply with even further regulatory obligations on top of award requirements. Next, it would have revealed that there is, first, a lack of clarity in the terminology used in the code and, secondly, in the practical impact of the code on business covered by the regulation. Next, it would have revealed that there are differences in definitions used in other state and federal legislation. Next, it would have identified what is required to ensure appropriate consistency with other jurisdictional activity with respect to outworkers. Appropriate courtesy between jurisdictions is essential to encourage and support economic development in South Australia.

Next, an assessment would have ensured that the imposition of significant record keeping requirements on small business is required and is therefore not in conflict with the Premier's commitment to reducing the red tape burden on South Australian businesses by 25 per cent. Next, it would have researched the impact on the equivalent regulation on small business in New South Wales. This research would also have included an analysis of the adoption of the volume code and whether businesses resorted to supplies from overseas rather than Australian suppliers, and next it would have identified the requirements of a comprehensive process for public comment.

Mr Vaughan goes on to say:

The failure to address the above issues through a regulatory impact assessment or indeed any transparent process raises considerable doubts as to the validity or requirement for the need to introduce the legislation. While a public comment period has been for approximately three months, this period of time included the Christmas period and public holidays—a time when small business would not be able to be focused on the proposed regulation. There is a significant and disturbing lack of awareness of the proposed regulation throughout the employer community, who would be required to comply with the excessive compliance paperwork.

A further concern is that the voluntary code was not made available with the proposed regulation so that concerned businesses could make an informed decision. Until the issues identified above and, in particular, those with respect to a regulatory impact assessment have been addressed, it will be inappropriate to proceed with the proposed regulation. Yours sincerely.

So these concerns raised by Business SA are indeed significant and important, and it is a matter that the government and the minister proposing these regulations ought to identify. It is all very well to be keen to protect outworkers and, as I say, we do not run away from that, but, in their eagerness, the proponents of this code have not investigated important issues about the cost of compliance and also whether or not South Australia needs regulation of the rather heavy-handed kind that one finds in this proposed code.

One of the matters that concerns me is the fact that this code is mandatory. There already exists in New South Wales a voluntary code. This mandatory code that is being presented in South Australia has an out, and it does not require every South Australian business to comply with this code. It says, 'You must comply with the code or you can take the outlet and subscribe to the New South Wales voluntary code.' That is a form of blackmail

We normally have laws in this state which say, 'You have to comply with the law of the state of South Australia.' We do not say, 'You have to comply with the law of South Australia unless you are prepared to sign up to some voluntary code that is privately established in New South Wales' and meet whatever obligations are contained there. It is interesting to note that this regulation does not actually spell out where you find the New South Wales so-called voluntary code. It is, indeed, in the Homeworkers Code of Practice, a code of practice that constitutes an agreement between the union and other organisations in New South Wales.

The fact of this method of forcing some South Australian retailers to sign on to another code is a matter of concern. But the real difficulty is that there does not appear to have been any attempt to ascertain who are the retailers in South Australia, how many there are and how much clothing they sell. There are many businesses that sell, for example, T shirts, and no doubt there are garages, Ford dealers and Holden dealers out there selling Clipsal memorabilia, some of which might be covered by this code. Those businesses on a very part-time basis conducting clothing retailing are required to sign up to this code and are required to go through the business of filing quarterly returns and providing their business information to a union.

It is all very well for the explanatory note that accompanied the Clothing Outworker Code of Practice that was presented to the Legislative Review Committee to talk about rogue employers and the like and mentioning an invisible workforce that is being exploited, but there was no mention of who they are, where they are and how many they are. One would have thought if there are these rogue employers out there we should be attacking the rogue employers. We should be attacking the rogue dealers. What we are apparently doing is attacking the South Australian clothing retailers and requiring them to do the work that a vastly expanded sector inspectorate in SafeWork SA ought to be doing itself.

With those preliminary remarks, I will seek leave to conclude my remarks later, because I wish to present to the chamber other information which the Employee Ombudsman says will be provided to us. I urge members to examine carefully the extensive regulations that were gazetted on 18 October. I seek leave to conclude my remarks later.

Leave granted; debate adjourned.

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