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Legislative Council - Fifty-First Parliament, Third Session (51-3)
2009-10-27 Daily Xml
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FAIR WORK (COMMONWEALTH POWERS) BILL

Second Reading

Adjourned debate on second reading.

(Continued from 13 October 2009. Page 3491.)

The Hon. R.D. LAWSON (15:35): The Liberal Party does not support the passage of this legislation. We believe that South Australia ought to have the capacity—

The Hon. B.V. Finnigan interjecting:

The PRESIDENT: Order! The Hon. Mr Lawson has the call.

The Hon. R.D. LAWSON: —to provide for an industrial relations system for small enterprises to enable small enterprises in this state to thrive. It was the vision of Thomas Playford in the 1940s, 1950s and 1960s in this state, so often lauded by Premier Rann, which led to the industrial development of this state. He recognised that an industrial relations system and an economic environment in which business could thrive were important. He realised the necessity, in order to attract business to this state and to attract economic activity, of South Australia having a system which was adapted to this state, which provided an advantage to this state, which provided a difference between this state and other jurisdictions and which gave this state a competitive advantage.

This bill seeks to take away that competitive advantage from the state of South Australia. This bill will ultimately make it impossible for a South Australian small business to be conducted as efficiently and economically as is the case in other states. For example, it will mean that eventually award rates in, say, the retail industry after a transition period are the same here as they are in Sydney. There will be no capacity for differing award rates to apply in different jurisdictions. That means a small business in Sydney, for example, which is a higher cost environment, can charge higher purchase prices for its goods, its customers being used to paying higher charges as they pay higher rents because of the higher cost of living. That will enable that small business in Sydney to raise sufficient funds to meet its award obligations.

Of course, in South Australia, a retailer will not have the same capacity to increase charges because of the fact that in this state people are simply not prepared to pay those high charges. So, what it will mean is that small business in South Australia will be disadvantaged. We will be competitively disadvantaged. At the moment we accept that, as a result of the High Court's decision and the Howard government's poorly named work choices legislation, all corporations are currently covered by the federal act and will be caught in the federal jurisdiction.

That is fine for large businesses; we accept that will be the case, but in South Australia we believe there ought to be a residual capacity for the South Australian parliament and the South Australian Industrial Relations Commission to attend to the interests of those businesses which are not caught in the federal system. We do believe in cooperative federalism but, more importantly, we believe in competitive federalism. We understand that South Australia has to compete and, by removing the power of the Industrial Relations Commission in this state to have jurisdiction over certain enterprises, we are reducing our competitiveness. Ultimately, we think it is madness to allow a centralised wage figuring system to apply across the whole of Australia, given the different cost structures that apply in different jurisdictions.

So, we believe in that particular principle. However, we are also opposed to this legislation because it is half-baked and half-hearted. It purports to facilitate the establishment of a national system in which the federal body will have overarching power over all enterprises. However, we know, for example, that Western Australia has said that it does not propose to play any part in this particular system. So, South Australia is out of the system.

We also know that the New South Wales Labor government has been opposed to the introduction in that state of similar legislation. It does not want to refer all its powers to the commonwealth, and it has not yet committed to do so. Frankly, until the New South Wales government is prepared to join in the system, I cannot see why South Australia should be one of the first to jump off the plank into these shark-infested waters.

It is true, of course, that in 1996 the Kennett Liberal government in Victoria transferred all of its industrial relations powers to the commonwealth—all of them; holus-bolus—and there are arguments for and against that. I think Victoria had good arguments for doing that—better than South Australia because, as I mentioned, for us to do so puts us at a competitive disadvantage.

However, this legislation is not like the legislation in 1996 whereby the Kennett government referred its powers holus-bolus, as it were. What we have here is a conditional form of referral which is, indeed, highly complex. I would have to say, as a legal practitioner, that this particular bill is full of complexity and exceptions, and it is not at all clear in its application. It is all very well to put into legislation of this kind a provision such as clause 4, relating to fundamental workplace relations principles, which are as follows:

Strong, simple and enforceable safety net of minimum employment standards.

Genuine rights and responsibilities to ensure fairness, choice and representation at work, including the freedom to choose whether or not to join and be represented by a union or participate in collective activities.

Collective bargaining at the enterprise level with no provision for individual statutory agreement.

Fair and effective remedies through an independent umpire—

and so on. These are all motherhood statements of little practical or legal significance. However, when one gets into the more arcane areas of the reference we find, for example, in clause 5 the following convoluted language:

…the matters to which the initial referred provisions relate—

these are the provisions to be referred to the commonwealth—

but only to the extent of making of laws with respect to those matters by including the initial referred provisions in the commonwealth Fair Work Act as originally enacted and as subsequently amended by amendments enacted from time to time before this act commences in terms or substantially in terms set out in the scheduled text.

I might add that, in relation to the scheduled text, as I understand it the Fair Work Act of the commonwealth was introduced only on the first of this month. It comprises some 600 pages and here we are—without having had an opportunity to examine all of its provisions—being asked to, as it were, refer our powers in relation to it. I believe further legislation relevant to the issues presently before us was introduced either late last week or perhaps this week in the commonwealth parliament.

It is claimed in the minister's second reading explanation that this bill is the result of extensive consultation. Well, it certainly was not consultation at any sort of political or parliamentary level, and my understanding of the consultative process is that it was highly structured and that those on the Industrial Relations Advisory Council who were asked to comment were sworn to secrecy and could not consult their members about the effect of the provisions. So, the consultation was highly limited.

It was not until after the bill was introduced in this place—I think the night before the committee stage was due to be considered in another place in this parliament—that the government produced what is said to be a core document, namely, the intergovernmental agreement for a national workplace relations system for the private sector, an agreement of some eight pages. The copy supplied to the opposition is an unexecuted, undated copy, and I ask the minister, in his response, to inform the council of the date of that particular document and also confirm that it has, in fact, been signed by all of the states and territories that are referred to in it.

This agreement refers to three types of jurisdiction: those that are referring states—and this government proposes that South Australia be a referring state; those with mirroring jurisdictions, and I do not know who they are and I ask the minister to indicate who the mirroring jurisdictions might be; and it also refers to what are called cooperating jurisdictions. Presumably, these are jurisdictions which do not refer their powers but are cooperating jurisdictions. I suppose the question is: why ought we not be a cooperating jurisdiction rather than a referring jurisdiction, because if, as I suspect, Western Australia and New South Wales are to be cooperating jurisdictions, which gives those states greater flexibility, we ought to opt for that type of status?

I have said that this is a half-hearted and half-baked scheme. It is also half-hearted in the sense that the government does not propose that all of the existing state jurisdiction be transferred to the commonwealth. Government employees in South Australia are excluded, so the public sector is excluded entirely, and local government, for some reason not explained, is also excluded in this state. So, in South Australia we are going to maintain an industrial relations system—I think its current cost is well over $20 million a year—for the purpose only of handling industrial matters in the public and local government sectors.

If one is really serious about referring to the commonwealth and ensuring national award rates for labour across the whole system, one would have referred the public sector and local government as well, but that is not what the government has done. The government is keen to maintain an industrial relations system, presumably as a place where it can put some of its mates out to pasture but with little valid purpose—really, a duplication of powers. So, we are concerned about that aspect of it, but we are more seriously concerned about the fact that this bill will put our state at a disadvantage.

There are a number of complex provisions which concern the way in which the reference can be altered after we have referred powers. There are complex issues about how the state of South Australia can, upon giving notice, be permitted to withdraw its referral. There is a mechanism under which the states and territories can vote in relation to certain matters, and both the states and territories are given equal voting rights. There are complex issues about why the territories, which actually do not have any non-commonwealth powers over industrial relations, should have any say in deliberations of that kind, other than to make up the numbers to get the two-thirds majority to override the wishes of any particular state.

There are some complexities in the current system; we recognise that. We recognise, for example, that there are some not-for-profit organisations about which there is some doubt as to whether or not they are covered by the commonwealth or state systems. There have been some judicial decisions to differing effect in relation to that matter, but the solution to that would be targeted specifically at that particular issue.

This solution is not targeted at resolving the status of not-for-profit corporations, clubs and the like. It is a scattergun approach which simply refers to the commonwealth all of our industrial relations powers in accordance with the text and retains for South Australia power over local government and public sector employees but does not create a national system.

It is for those reasons—principally reasons of principle—that we are opposed to this legislation. We believe in the states in this country. We believe that the states have something to offer and that state parliaments, state governments and state jurisdictions are important, and that Australia is a large enough place to have competing industrial relations systems. We have had competing industrial relations systems for 100 years. There is no reason why we should absolutely abandon that. We are not in favour of abandoning it, in general, and we are certainly not in favour of abandoning this system under this scheme.

The Hon. P. Holloway interjecting:

The Hon. R.D. LAWSON: The minister is suggesting that we did agree to it in relation to WorkChoices. We did not agree to it in relation to WorkChoices. What happened with WorkChoices is that the commonwealth passed laws, which the High Court subsequently upheld and which extended its industrial relations power over all corporations. Fair enough. That might be a substantial part of business enterprise at the moment. Whether it will be the same in the future, whether or not other business models will be developed to provider greater flexibility for enterprises, remains to be seen. This government is seeking to prevent the development of some other enterprise models which might flourish under a state system.

We are opposed to the passage of this bill. I look forward to the committee stage because there are complex provisions, the operation of which can best be explored by questioning the minister.

The Hon. D.G.E. HOOD (15:54): This bill sees much of South Australia's industrial relations power go to the commonwealth, as has been outlined by the honourable member. It is an important, far-reaching bill and Family First has a number of concerns with it, which I will outline. The first issue that is important to raise at this point is that this matter has come on very quickly. It is a very significant bill, and we find ourselves seeking information on the detail of it, because it will significantly change the way we operate in South Australia.

If I may I will give a little bit of history, dating back to 1901 when, of course, federation brought together six individual British colonies. Using the United States partly as a model of federation, each colony agreed to cede some of its powers to a new commonwealth government, the powers now found in section 51 of the Commonwealth Constitution. During the first of the convention debates in 1891 Sir Samuel Griffith, who would later become the first chief justice of the High Court of Australia, said:

We must not lose sight of the essential condition that this is to be a federation of states and not a single government of Australia. The separate states are to continue as autonomous bodies, surrendering only so much of their power as is necessary for the establishment of a general government to do for them collectively what they cannot do individually for themselves.

Despite the wishes of Sir Samuel Griffith, since that time we have seen a progressive shifting of power in favour of the commonwealth, to the detriment of the states on many occasions (although, of course, on some occasions there have also been advantages). This has partly been due to a series of High Court decisions in cases such as the famous Tasmanian dams case, and others, which have allowed the commonwealth to pass laws on almost any subject of international treaty as it sees fit. The corporations power has also been widely interpreted by the court, as have other heads of power contained in section 51.

One of the most significant controls the commonwealth has lies in commonwealth grants. The figure—a few years ago, at least—is something like 60 per cent of our state revenue, which comes from commonwealth grants, many of which have special conditions attached to them. This can lead to accountability problems; that the commonwealth raises the money but is not specifically responsible for the way in which it is spent, and, of course, the state government spends the money without being specifically responsible for the manner in which it is raised.

Through these various channels, and now in a number of the so-called COAG bills which are increasingly presented here, we are progressively reducing this state's influence over its own governance in favour of national schemes in order to reduce red tape. No longer can we even dare imagine that South Australia could out-compete its eastern neighbours; instead we take cover in various national schemes.

It has been said that capital—that is, business or money, however one likes to think of it—goes where it is made welcome and stays where it is looked after. State governments, of course, play a vital role in this, creating the right environment to attract and retain capital to the various states; but creating the right environment does not mean offering inducements as a sole means of doing so. Inducements may attract capital but they do not necessarily retain it. Further, they offend existing state-based businesses by transferring wealth from locals to those moving to that jurisdiction. Indeed, this was Thomas Playford's grand strategy: cheap land, lower housing costs, and lower input costs to build this state. This is basically what competitive federalism is all about. It should never be about states trying to out-buy each other, using other taxpayers' money to attract companies to set up in their particular jurisdiction.

In the opinion of Family First it should be about making our state more attractive than the others for a variety of reasons, and not just in the initial set-up phase. When Queensland abolished death duty some time ago all the other states quickly followed, and that showed the impact that one state's actions can have on another in order to maintain relative competitiveness. South Australia should be setting the trend, by having the lowest stamp duty and the lowest land tax rates in the country—an area in which we do not presently compare favourably, it must be said.

Some 25 years ago South Australia was home to 21 of Australia's top 100 companies, whose head offices were based here in this state. Fast forward 25 years to the present day, and there are only two of those top 100 companies remaining in South Australia: Argo and Santos. Of those, Santos is still here only because of an act of this parliament which prevents it from being relocated or swallowed up. In other words, we have only one left—and Argo is not even really a company in the usual sense of the word, being, in fact, a financial investments firm.

I understand that South Australia is one of only two states (Tasmania being the other) that receives more from the commonwealth in tax disbursements than it actually generates. This is not something of which we should necessarily be proud; since when has being reliant on others, rather than being self-reliant, been something to boast about?

Something like 70 per cent of South Australia's annual state budget now comes from the federal government. South Australia has been slowly losing its competitive edge for the past 25 years. As I said, 25 years ago 21 of the top 100 companies in Australia were based here. We used to offer a higher standard of living and quality of life, together with a lower cost of living, in exchange for slightly lower wages than Sydney, for example. South Australia will never be able to compete with the major metropolises in the Eastern States, in particular, Sydney. We cannot match the port facilities, the financial institutions, the manufacturing base or the sheer population scale of those centres.

If we are to overcome these natural disadvantages, we need flexibility in other areas, such as lower taxation, lower input costs, and so on. In short, we should not agree to cede our powers in some of these areas without considering the full ramifications, particularly in the area of IR, which is one of the few areas left where we can give ourselves a competitive advantage and stop ourselves becoming another commonwealth-reliant entity like Tasmania or one of the territories. The so-called benefits or advantages of reducing red tape across borders does not necessarily outweigh these disadvantages.

I also raise a constitutional concern. It has been put to me that the legislative measures in these bills give effect to an intergovernmental agreement that gives rights back to the states, so-called. However, our constitutional advice is that it is not that simple. The constitutional reality, so I am told, is different and the federal takeover using the corporations power is effective and permanent. I put on record some concerns we have as recorded in the briefings and retrace those briefly for members and also for our constituents.

It is pleasing to see that South Australia retains legislative power concerning outworkers. We have agreed to the regulations in this parliament and it would be a shame to see that important work for the protection of vulnerable workers lost in a handover to the federal government. However, the question to the minister is: will employers be able to escape the South Australian outworker regulations by incorporating?

Talking about outworkers, their exploitation and poor wages brings to mind our taxi drivers, who are in a similar regulatory limbo. The trouble we have in that industry is that many would be considered independent contractors. I can appreciate that the federal regime has provisions against so-called sham contracts designed to avoid workplace relation laws, but I am not at this stage convinced that there will be any time soon a reform of the taxi industry in relation to working conditions and wages for taxi drivers. I ask the minister for a commitment to look into the laws, should this bill pass, insofar as they relate to taxi drivers, to see what can be done to improve their shocking wages and conditions.

We are pleased to see that police officers are excluded and kept in the state jurisdiction. My office dealt with National Police Association representatives when the federal debate on Forward with Fairness was occurring, and they did not have kind things to say about the Victorian total handover experience, so thankfully jurisdiction in South Australia is retained for South Australian police, the most obvious reason being the special disciplinary tribunals for police that need to exist at a state level. Police officers would not fit well into a federal regime.

I want to talk briefly about the horticulture industry award as well. Family First has been working with local horticulture industry representatives—another of the industrial relations minister's portfolios—and has applied pressure on minister Gillard to review the horticulture industry award due to the devastating effect that it looked likely to have on our irrigators. The federal minister has made a commitment to review the award, and we will look closely at the results achieved on that.

Here, however, we have seen the demonstrated shortcomings of a one-size-fits-all approach to industrial relations, and I am pleased that the federal IR minister has seen her way to modify that award to recognise the unique conditions in that industry. I ask the minister whether any state awards are in place currently for the horticulture industry, how similar they are to the new federal horticulture industry award, and what is the time frame for any harmonisation of those awards.

I also note that TransAdelaide and SA Water employees, who might think of themselves as public servants, are not being kept in a state system under this proposal but will now be under the federal IR system should this bill pass. I have been provided with details of the critical times and the process that were not included in the minister's second reading explanation. We know that the whole private sector, be they incorporations, partnerships, private individuals, businesses or otherwise, will all be transferred over to the federal system in their entirety on 1 January 2010, if this bill is passed and finalised before then.

However, I note in that in July 2009 some elements of the Forward with Fairness regime, including the unfair dismissal regime, came into force. On 1 January 2010 the rest comes into effect, except for the parallel award modernisation process, some of which comes into effect on 1 January 2010, and also others on 1 July 2010—changes such as those to minimum wages, loadings, penalties, shift allowances, and the like.

Furthermore, state awards will need to be converted into federal awards. Apparently, this needs to be completed on 1 January 2011 for conversion of those awards, but there will be transitional periods under the award modernisation process under these awards.

After the federal changes to the unfair dismissal guidelines, there was a lag period on the implementation of the changeover of unfair dismissal laws given that, if I recall rightly, the federal act had a honeymoon period on unfair dismissal where you were exempt if you had 15 full-time equivalent employees for an 18 month period. Then the unfair dismissal laws were broadened to all employers with 15 employees which, in fact, could be .1 employee; that is, work very little time, for instance.

As I understand it, those changes come into full effect with the 15 employees instead of the 15 FTEs from 1 January 2011. I seek clarification from the minister on whether the unfair dismissal definition still comes into effect on 1 January or some other time.

As I have outlined, Family First has a number of concerns with this bill. We are yet to decide our final position on the matter, but I would say with clarity at this point that the issues that I have raised today are very significant, and we would need to be satisfied that they could be addressed once and for all in order to gain our support for this legislation.

The Hon. R.P. WORTLEY (16:06): I am very pleased to rise today to add my voice to those already heard concerning the government's Fair Work (Commonwealth Powers) Bill 2009. This bill is part of a suite of legislation which refers powers to the commonwealth in order to facilitate our private sector's participation from 2010 in the new Australia-wide system of workplace relations.

The legislation forms an essential part of the federal scheme aimed at restoring honour, dignity and reliability to our industrial relations system. These qualities have been the foundation of our industrial relations system since the time of the Harvester decision in 1907. It was more than 100 years ago that the President of the Court of Conciliation and Arbitration, Sir Justice Higgins, set the first minimum weekly wage.

I take the opportunity to remind members of the terms of that decision. The Harvester judgment ensured that a worker received enough remuneration to provide decent food, shelter, water and frugal comforts for his family. In his decision, Sir Justice Higgins said that every Australian was entitled to every single one of these standards every day of their life and that if we, as a nation, did not endorse this concept, we could not claim to be a civilised society.

These entitlements which once epitomised a civil society here in Australia were cynically eroded by the previous federal government, driven by an obsession with market forces and nonchalant—I would say callous—disregard for the human components of their pitiless scheme.

Most Australians have no trouble remembering the long Howard incumbency, the sleight-of-hand introduction of WorkChoices, the widely publicised stories of the abused and the ripped off, and the national mobilisation of workers and their representatives prior to the last election.

The Hon. R.D. Lawson interjecting:

The Hon. R.P. WORTLEY: I note that the Hon. Mr Lawson has contributed to this debate. I have always had great regard for the legal knowledge of Mr Lawson, but I have always been fascinated by how so much knowledge can be squeezed into such a little head. Obviously, there was never enough room for any common sense. I think it is a very sad state of affairs for Mr Lawson, in particular.

Whatever their political persuasion, most will concede that WorkChoices loomed large in their thinking about the way the Howard government wanted our Australian society to function and about the qualities and the values they hold dear. In a clear repudiation of the Howard government's twisted vision of industrial relations, the majority endorsed Labor's Forward with Fairness policy: fairness for workers, employers, families, women and for disabled workers; fairness for those for whom English is not a first language, who were often at a particular disadvantage when negotiating contracts of employment; fairness for young workers and for the traditional owners of this land; and fairness for workers in the city and workers in the regions.

Unlike the genesis of the draconian scheme imposed on Australians by the Howard government, in formulating its policy both nationally and on a state basis Labor has been intent on seeking the views of all relevant stakeholders.

If one casts one's mind back to when the federal Liberal government was looking at formulating WorkChoices, when it employed numerous very high paid lawyers from very conservative law firms (one would not have found too many Labor lawyers who wanted to work on the legislation that was developed), at no time was the trade union movement or any state government involved. When this very unpopular measure was introduced, the government was prepared to spend hundreds of millions of dollars on pushing the philosophy behind it.

This bill is indicative of Labor's consultative and inclusive approach, which contrasts so starkly with the way in which the previous federal government interacted, for want of a better word, with stakeholders and other interested parties. I am advised that there is widespread endorsement of our entry into the national system and for the text-based referral of power presently under discussion. The referral of power will be entirely advantageous to the private sector and to the general community in South Australia.

A consistent national industrial relations regime will mean fewer bureaucratic hurdles for companies and businesses, large and small, and enhanced management efficiencies due to a simpler system and procedures and the reduction of duplication. Businesses operating interstate will no longer have to deal with potentially expensive and invariably time-consuming differences and anomalies in the industrial relations system.

As my colleague the Minister for Small Business pointed out on the occasion of the introduction of this bill, a single cogent suite of industrial relations laws can only be beneficial for both employers and employees. One of the key features of this legislation is that it provides certainty for the worker and certainty for management.

Each party to an employment arrangement will be confident of his or her rights and, equally, assured of his or her responsibilities. As I have said, the referral of power will enable the commonwealth to make laws in regard to industrial relations in the private sector in South Australia. In this way, jurisdictional intricacies and the resulting uncertainty are dispensed with.

As my colleague said when introducing this bill, its terms provide for a text-based referral, an amendment reference and a subject matter transition to facilitate South Australia's participation in the national scheme of industrial relations for the private sector. Why is this amendment reference included? Because vigilance is always the key.

Since the last federal election, certain members of the coalition have indicated that they continue to yearn for the good old days of WorkChoices and that the reintroduction of their tattered and discredited imitation of an industrial relations system might be considered should they return to government. We must stand ready for the zealots and the diehards of the coalition who, as recently as last month, refused to rule out the reintroduction of individual workplace agreements should they return to government.

On 14 September, the acknowledged 'mad uncle' of the Liberal Party, Wilson Tuckey, even asserted that he was totally supportive of reviving stronger laws, including individual agreements. While he has been largely discredited, he is not alone by a long shot, and that is why we have ensured the presence of an amendment reference and the termination provisions of this draft legislation. My colleague discussed these in considerable detail when introducing the bill; suffice to say, these will operate only in the most immoderate of circumstances.

On a positive note, through this referral mechanism, South Australia will have a seat at the table should changes to industrial relations laws be mooted in the future. With the passing of this and the Statutes Amendment (National Industrial Relations System) Bill, South Australia will be party to a truly fair and truly national system.

Together with the commonwealth and other states and territories, we have been working to assist workers and business to move easily and smoothly to the new workplace relations system. From 1 January 2010, minimum wages and national employment standards will apply to all workers in the national system. These include workers who entered into instruments before the new system starts.

In a welcome departure from the callous WorkChoices regime which stripped workers of their pay, Labor's national employment standards ensure that all workers will be entitled to the minimum rate of pay set out in a modern award from 1 January 2010. I have great pleasure in commending the bill and urge its rapid passage to enable the commencement of this national scheme in a timely fashion.

Debate adjourned on motion of Hon. S.G. Wade.

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