House of Representatives

Second Reading Speech

Ms Gillard (Minister for Education, Minister for Employment and Workplace Relations and Minister for Social Inclusion)

I move:

That this bill be now read a second time.

The Rudd Labor government promised in Forward with Fairness to abolish the coalition government's unfair Work Choices industrial relations laws and create a simpler, balanced and modern workplace relations system.

We achieved this with the commencement of the Fair Work Act 2009 on 1 July this year.

We now mark the next stage in implementing our plan, with the introduction today of the Fair Work (State Referral and Consequential and Other Amendments) Bill 2009.

Before I outline the key features of the bill, it is important to recall the stages of the government's workplace relations reforms that have been implemented to date.

Legislation passed by the parliament to date

The Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 was introduced into parliament on 13 February 2008.

It abolished the making of new Australian workplace agreements and introduced the no disadvantage test to ensure workplace agreements could no longer disadvantage employees. That act also started the process to create new modern awards, which when coupled with the National Employment Standards will complete a fair and comprehensive safety net of conditions for employees.

Award modernisation will result in the creation of around 150 easy to find and apply modern awards with national application to replace more than 4,000 state and federal industrial instruments.

The next step of the government's workplace relations reform process was the passage of the Fair Work Act 2009, which commenced on 1 July 2009 and established:

•

a comprehensive safety net of minimum wages and employment conditions that cannot be stripped away;

•

a new agreements framework, with bargaining in good faith at the enterprise level at its heart; and

•

a new industrial umpire to oversee the system, Fair Work Australia, and a new education and enforcement body, the Fair Work Ombudsman.

We proposed in Forward with Fairness that a uniform national system would be achieved either by state governments referring powers for private sector workplace relations, or other forms of cooperation and harmonisation. Our vision is for a workplace relations system that is fairer, simpler and more flexible and promotes productivity and economic growth; and a system where businesses, large and small, are covered by one national law and system.

The Fair Work (State Referral and Consequential and Other Amendments) Act 2009, which I introduced to parliament on 27 May this year, was the first stage in implementing this national system.

That act supported a renewal of Victoria's referral of workplace relations powers from 1 July 2009 to provide continued certainty of coverage to the working people and employers of Victoria.

I indicated that the act's framework would be adapted in future Commonwealth legislation to accommodate anticipated further references of power from other states, while observing that the reference framework may require amendment to account for the views and needs of other states choosing to refer.

The benefits of a national workplace relations system for the private sector

The bill I introduce today answers the many calls made by business over many years to end the overlap and duplication of state and federal workplace relations systems; to end the inefficiency, uncertainty and legal complexity for Australian businesses and employees.

For example, the Australian Chamber of Commerce and Industry has stated:

The level of complexity created by competing state and federal workplace relations systems is a decades-old problem which has been thrown into sharp relief by our contemporary market economy. Replication, overlap and confusion between state and federal workplace regulation has become increasingly unsustainable.

And the Australian Industry Group has also noted the complexity and wastefulness of multiple systems. It said:

On top of this, all but one of the States continued to develop and enhance their own industrial systems. No matter how well many of these systems operate the fact remains that no employer wants to be faced with dealing with six different systems in order to expand its business throughout Australia. The intermeshing and clash of these systems has nourished generations of industrial lawyers.

In answer to these calls, the previous government took the significant step of relying upon the corporations power of the Constitution to regulate for a national workplace relations system.

But for many Australian employers and employees, Work Choices only continued-and exacerbated-the problems of complexity, confusion, overlap and waste.

We committed in Forward with Fairness to work cooperatively with the state governments to create a uniform national workplace relations system for the private sector. And with today's bill, we demonstrate once more the Rudd Labor government's commitment to achieving important national reform through cooperative federalism.

This partnership approach is in stark contrast to the bullying tactics of the former coalition government. Their refusal to work with the states resulted not only in grossly unfair laws but in an unwieldy system characterised by legal complexity and uncertainty of coverage.

In the absence of referrals of power from the states, the question of which system applies depends upon whether a business is a 'constitutional corporation' or not.

This means that corporations that derive revenue through donations (such as charities) or through government grants may not fall within the corporations power. The jurisdictional coverage of an employer can change at any particular point in time if its activities change.

For example, a charity raising money for medical research could open a second-hand goods shop to raise funds only to find it is now seen as 'trading' and that this leads to a change in its jurisdictional coverage.

The question of coverage also depends on the nature of the entity running the business. For example, a professional services firm (say, an accounting or medical practice) might run as a partnership or sole trader and be in a state system. A very similar business down the street might be incorporated and therefore in the federal system and on a different award.

And there are many more examples of perverse outcomes, confusion and complexity.

There are thousands of employers and employees who are not trading corporations but who have been in the federal system for a long time, as a result of longstanding awards made in settlement of an interstate industrial dispute. These awards were preserved on a transitional basis under Work Choices. In the absence of state referrals of power, employers and employees on these transitional awards would have fallen back to the state systems from March 2011.

For example, approximately 70 per cent of the farm businesses covered by the transitional pastoral award are unincorporated and without this bill, these farmers and their employees would fall back into state systems. And the uncertainty they were facing under Work Choices was exacerbated by the fact that many farmers operate across state borders and would have had to commence to apply different state and federal workplace relations laws.

In support of farmers, the National Farmers Federation has been a vocal proponent of a uniform national workplace relations system, stating that 'the overwhelming majority of farmers will be stranded [in the event that states do not refer their powers to the Commonwealth]' and that this would be 'totally unacceptable'.

The uniform national workplace relations system for the private sector will resolve once and for all the confusion and complexity I have described.

Employers and employees will for the first time have the same laws, tribunals, minimum conditions, rights and entitlements as their counterparts doing the same work, regardless of whether they are within the same state or across a border; regardless of whether they are trading as a corporation, a sole trader or a partnership.

The new national system will make it far easier for businesses and employees to find the information they need. This will result in a permanent, intrinsic efficiency for businesses, especially for small businesses that do not have the benefit of specialised human resources staff.

With this bill and associated state referrals, the Fair Work system will provide a single point of access for all private sector workplace relations services for Australia. There will be one website, one phone number, one tribunal and one inspectorate.

This means that governments and taxpayers will benefit too. Nationally, state governments spend upwards of $60 million of taxpayers' money each year maintaining duplicate administrative functions and regulation. The new system will be far more efficient into the future.

Cooperative federalism and the benefits of state referrals

For all of these reasons, there is significant support among the states for the national system.

The governments of South Australia and Tasmania have announced their intentions to follow the Victorian government's lead and make referrals of their private sector workplace relations powers. This is a significant vote of confidence in the new fair work laws.

Both state governments have introduced legislation into their respective parliaments to facilitate these referrals of power from 1 January 2010.

In leading these important reforms for their respective states, South Australian Minister for Industrial Relations, the Hon. Paul Caica MP, and the Tasmanian Minister for Workplace Relations, the Hon. Lisa Singh MP, have noted the broad support within their states to participate in a national workplace relations system and the significant benefits that will flow to employees and employers. I thank both of them for their support and leadership in this important endeavour.

At this time, the Queensland government has agreed in principle to refer powers to the Commonwealth, subject to resolution of related issues. I am confident that we can reach an agreement on these issues.

The New South Wales government has not yet made a decision regarding its participation but has engaged cooperatively with the Commonwealth to progress the national workplace relations system.

This leaves Western Australia as the only state to declare publicly that it will not refer its powers. Unfortunately this decision puts Western Australia out of step with all other states and prevents Western Australian employers and employees from reaping the benefits of the national system.

I note that the Chamber of Commerce and Industry of Western Australia has publicly indicated support for a Western Australia referral, citing the obvious problems of complexity, uncertainty and duplication.

The chamber joins many other business groups in supporting a national approach to workplace relations, including harmonisation of occupational health and safety laws, as essential reforms for the long-term productivity and efficiency of the national economy.

I urge the Western Australian government to reconsider its decision.

Supporting state referrals

And this brings me to the bill before us today.

To give effect to South Australia and Tasmania's referrals, I introduce to the House the Fair Work Amendment (State Referrals and Other Measures) Bill 2009.

Once enacted the bill will give effect to the references of South Australia, Tasmania and any other state that refers its workplace relations matters to the Commonwealth on or before 1 January 2010. These references will enable the Commonwealth to:

•

extend the Fair Work Act in referring states to cover unincorporated employers and their employees, outworker entities and extend the operation of the general protections;

•

amend the Fair Work Act so that it applies uniformly in referring states; and

•

establish arrangements for the transition of referral employees and employers from state industrial or workplace relations systems to the new national system.

Initial reference

The Fair Work (State Referral and Consequential and Other Amendments) Act 2009 inserted division 2A into part 1-3 of the Fair Work Act with effect from 25 June 2009. Division 2A gave effect to Victoria's workplace relations reference to the Commonwealth.

Schedule 1 to this bill will insert division 2B into part 1-3 of the Fair Work Act to give effect to state references of workplace relations matters to the Commonwealth after 1 July 2009 but on or before 1 January 2010. The creation of division 2B is necessary to accommodate differences in the timing of state references.

Like division 2A, division 2B will extend the meaning of 'national system employee' and 'national system employer' to encompass all employees and employers in referring states subject to exclusions relating to state public sector and local government employment.

Like division 2A, division 2B will also extend the definition of 'outworker entity' and extend the operation of the Fair Work Act's general protections in referring states.

Amendment reference

The bill will give effect to references enabling amendment of the Fair Work Act in respect of specified subject matters, to the extent that such amendments would otherwise be outside Commonwealth power. The bill's amendment reference provisions will enable the Fair Work Act to be amended to apply to all employers and employees in referring states uniformly. Consultation on amendments will be governed by a supporting intergovernmental agreement.

The subject matters of the amendment reference provisions correspond with the matters regulated by the Fair Work Act.

State public sector and local government

The bill recognises that referring states can choose the extent to which matters relating to state public sector or local government employment are included or excluded from references.

Schedule 3 to the bill amends the Fair Work Act to also enable states to exclude by declaration certain state public sector and local government employers over which the Commonwealth currently has jurisdiction (such as constitutional corporations) from the Fair Work Act.

Declarations would be able to be made by the State in relation to certain kinds of entities that are integral to state public administration or local government activities and which are therefore regarded as appropriately regulated in state systems. To be effective, a declaration would need to be endorsed by the minister administering the Fair Work Act.

Termination of reference

The bill will enable referring states to terminate their amendment references and remain in the national system in the following circumstances:

•

by proclamation of the state governor with six months notice, if the amendment references of other referring states all terminate on the same day; or

•

by proclamation of the state governor with three months notice, if the governor considers that an amendment to the Fair Work Act is inconsistent with the fundamental workplace relations principles.

The fundamental workplace relations principles encompass requirements that the Fair Work Act should provide for and continue to provide for:

•

a strong, simple and enforceable safety net of minimum employment standards;

•

genuine rights and responsibilities to ensure fairness, choice and representation at work;

•

collective bargaining at the enterprise level with no provision for individual statutory agreements;

•

fair and effective remedies through an independent umpire;

•

protection from unfair dismissal; and

•

an independent tribunal system and an independent authority able to assist employers and employees within a national workplace relations system.

These principles prescribe fundamental values that the Commonwealth and relevant states have jointly declared to be essential features underpinning a fair and effective national workplace relations system.

Transitional arrangements for State referral employers and employees

The state references will support the transitional arrangements for state referral employers and employees set out in schedule 2 to this bill.

Schedule 2 to the bill deals with instruments and processes on foot in state workplace or industrial relations systems and deals with federal awards and agreements made in reliance on the conciliation and arbitration power.

Schedule 2 to the bill also makes amendments to the Fair Work Act and other Commonwealth acts that are consequential on new referrals.

The transitional arrangements set out for incoming state instruments are, as far as possible, consistent with current arrangements for existing national system employers and employees.

The key features of the transitional arrangements are as follows:

•

State awards and state agreements will be preserved as federal instruments in the same terms as the state instrument. These will be known as division 2B state awards and division 2B state employment agreements.

•

Division 2B state awards and state employment agreements will operate on a 'no detriment' basis with the National Employment Standards and the national minimum wage order.

•

A division 2B state award (other than a division 2B state enterprise award) will continue to apply as a federal instrument for a period of 12 months from referral commencement. After that time, a relevant modern award will cover the relevant employees and employers.

•

During the 12-month period, Fair Work Australia will be required to consider whether a modern award should be varied to provide appropriate transitional arrangements for incoming state employees and employers.

•

Further, Fair Work Australia will be able to make remedial take-home pay orders where the take-home pay of one or more employees is reduced as a result of movement to the modern award.

•

A division 2B state employment agreement will continue to operate as a federal instrument until replaced at any time by a new enterprise agreement under the Fair Work Act or terminated in accordance with the provisions of the bill.

•

This bill provides a model dispute resolution clause to be prescribed by the regulations which applies in relation to division 2B state awards. Dispute resolution terms in state employment agreements will continue as terms of the division 2B state employment agreements derived from them.

•

The new transfer of business rules in the Fair Work Act will apply to transfers that occur on or after the referral commencement. Division 2B state instruments will be transferable instruments for the purposes of the Fair Work Act transfer of business provisions.

•

Bargaining and industrial dispute processes under state systems will not be carried over into the new system. Bargaining participants will either have lodged a state agreement for approval by a state tribunal before the referral commencement or commence bargaining for a new enterprise agreement under the Fair Work Act. This will ensure an orderly transition to collective bargaining in the national system.

•

As a general rule, proceedings in relation to conduct that occurred before the referral commencement will remain subject to state laws and be dealt with in state systems.

Other amendments

Schedule 1 to the bill also makes a number of amendments to division 2A of part 1-3 of the Fair Work Act for consistency with the arrangements set out in new division 2B.

Schedule 3 to the bill makes a number of amendments to the Fair Work Act to enable state ministers to intervene in court proceedings and make submissions in relation to matters before Fair Work Australia.

Inter-governmental agreement

States participating in the national system will each be party to a multilateral intergovernmental agreement which outlines the principles of the national workplace relations system for the private sector and the roles and responsibilities of those participating states and territories and the Commonwealth.

On 25 September 2009, workplace relations ministers from the Commonwealth, Victoria, South Australia, Tasmania, the Northern Territory and the Australian Capital Territory signed the multilateral agreement.

Education activities to accompany references

I advise the House that the Commonwealth will provide additional services to assist transferring employers and employees to understand the new system. Education activities will include telephone advice and visits to workplaces to be implemented in cooperation with referring states. There is scope for states to deliver services on behalf of the Commonwealth during the transition and constructive discussions on these arrangements are continuing.

Conclusion

The government is well on the way to achieving a uniform national workplace relations system for the private sector.

The fundamental basis of the new system was established with the passage of the Fair Work Act: fairness for working people, flexibility for business and the promotion of productivity and economic growth for the future prosperity of our nation.

I commend the bill to the House.