House of Representatives

Fair Work Amendment Bill 2012

Second Reading Speech

Mr Shorten (Minister for Financial Services and Superannuation and Minister for Employment and Workplace Relations)

I move:

That this bill be now read a second time.

The government was elected in 2007 with a commitment to bring fairness, balance, flexibility and simplicity to the Australian workplace relations system. Prior to the 2007 election, Labor released two detailed policies on workplace relations, including a clear plan about how we would move from Work Choices to Fair Work. The government have delivered on our commitments. Under the Fair Work Act and the government's economic policies, 16,000 enterprise agreements covering more than 2.2 million Australian employees have been approved. Around seven million Australians are currently protected from unfair dismissal, and more than 800,000 jobs have been created since this government was first elected at the end of 2007.

There have also been landmark achievements in particular sectors. The historic equal remuneration decision for workers in the social and community services, the SAC sector, awarded wage increases of between 23 and 45 per cent to social and community service workers in recognition of the fact that their work had been traditionally undervalued due to the predominantly female work force. We now have consistent protections for TCF workers across the national workplace relations system, and we have now implemented a road safety remuneration system to make sure there are real protections for truck drivers across Australia who would otherwise face economic pressures to drive dangerously long hours that put all Australian road users at risk.

The government has also delivered on its commitment to undertake a review of our Fair Work Act within two years of its full implementation. On 22 December 2011 I announced an independent panel of three experts to review the fair work legislation. The terms of reference for the review were wide ranging, encompassing an assessment as to whether the legislation was meeting its objectives and any areas for improvement. The consultative approach the government adopted during the development of the Fair Work Act was mirrored by the review panel, which issued a discussion paper, received over 250 written submissions and held many meetings and round tables with a large range of stakeholders.

The panel's report was approved by the Office of Best Practice Regulation. The panel concluded that the Fair Work Act is working well and is meeting its objectives, and the economic outcomes under the Fair Work Act have been favourable to Australia's continuing prosperity. The panel made 53 recommendations to government. Since receiving the panel's report I have been discussing the recommendations with employers and employer organisations, unions, Fair Work Australia and the Fair Work Ombudsman as well as state and territory governments. I have also held two round table discussions with small business representatives to discuss the panel's report and the government's proposed response as well as other workplace relations matters that are important to small business, like compliance, advice and superannuation. It has become obvious from these consultations that there is broad support for around a third of the recommendations. These recommendations are reflected in the bill I am introducing today. I will continue to work with stakeholders on the remaining recommendations, with a view to introducing further legislation in the new year.

The key elements of the Fair Work Amendment Bill include four main elements: one, changes to the unfair dismissal provisions to improve the integrity of the application and hearing process and to align the time frames for making unfair dismissal claims and general protections dismissal claims at 21 days; two, changes to the structure and operation of Fair Work Australia as recommended by the review panel and proposed by the president of Fair Work Australia; three, a process for determining the most suitable funds to be listed as default funds and modern awards that meet the principles in the model outlined, by and large, by the Productivity Commission in a way which is workable for employers and employees; and, four, other technical and clarifying amendments recommended by the review panel for which there is broad agreement amongst stakeholders.

I want to place on record my thanks to the members of the National Workplace Relations Consultative Council, who have endorsed the government's broad approach in responding to the review, and to the NWRCC members who have assisted the Department of Education, Employment and Workplace Relations and Treasury in reviewing this bill and providing technical feedback.

Turning to the first of the key changes around unfair dismissal, under the Fair Work Act around seven million Australians are protected from unfair dismissal, and we are proud of that fact in the government. We are proud that the review panel did not recommend wholesale changes to the unfair dismissal regime, because it reflects a balance between the interests of employees and the interests of employers. We are proud that small businesses have told us that the Small Business Fair Dismissal Code is working for them. The proceedings before Fair Work Australia are improving, and the Fair Work Ombudsman is working with them on information and compliance. On this basis, we are waiting for the opposition to confirm that they will not wind back unfair dismissal protections for hardworking Australians and their families to anything resembling what they implemented when last in office.

However, this bill does amend the unfair dismissals and general protections provisions, as recommended by the panel review. The amendments are to ensure the right of an employee to bring an unfair dismissal claim is better balanced against the right of an employee to ensure that they are only required to respond to applications that are genuine and to ensure that Fair Work Australia has the power to deal with unreasonable conduct in relation to a claim, including dismissing an application and additional powers to award costs in certain circumstances. In relation to improving applications, the government has announced that the independent review panel recommendation that additional information should be required to be provided in applications about the circumstance of the dismissal is supported, and we will work with Fair Work Australia to implement that recommendation.

This bill will also implement the independent review panel's recommendation that the time frames for lodging an unfair dismissal claim and a general protections claim involving a dismissal should be aligned at 21 days. This will ensure that dismissed employees make the right claim in the right jurisdiction, this will ensure that employees have an appropriate time frame to seek advice about a dismissal so they can make this choice in an informed way and this will ensure that employers will respond to one claim in respect of a dismissal-not an unfair dismissal claim and later a general protections claim.

The panel's recommendations relating to costs orders where a party to an unfair dismissal matter has caused another party to incur costs by an unreasonable act or omission are also reflected in this bill. This recommendation reflects the panel's concerns that a few, a very few, unscrupulous lawyers and agents may be encouraging dismissed employees to pursue unfair dismissal claims without merit on a no-win no-fee basis. This government believes in protecting workers from unfair dismissal but also acknowledges that from time to time some people will pursue unreasonable claims. In these circumstances, there is a need to strike a balance. These amendments will enable costs orders to be made against a person or their legal representative when they have unreasonably pursued a claim but, importantly, will not stop a party with a genuine claim from robustly pursuing it through the avenues available to them. Similarly, the bill will allow applications to be dismissed in certain circumstances, such as when the applicant, without any reasonable explanation or excuse, has failed to attend a hearing or comply with an order made by the commission or has failed to discontinue an application after a settlement agreement has been concluded.

Let me make it absolutely clear: these amendments are intended to provide cost consequences for applications without merit and for actions taken during proceedings that are unreasonable; however, they will still ensure that employees with a genuine claim can fully pursue a remedy for unfair dismissal. This is balanced and fair. During my consultations, small business representatives have been supportive of these recommendations. My feedback from employers is that both small businesses and larger businesses believe they will benefit from these amendments in terms of reducing vexatious or speculative claims.

The second part of this bill is about technical amendments. The bill will implement several technical and clarifying recommendations made by the review panel, including that, in line with a recent decision of the full bench of Fair Work Australia, opt-out clauses cannot be included in agreements, and that under this government statutory agreements cannot be made with a single employee. There are also technical amendments implementing the panel's recommendations in relation to the notification requirements for scope orders and what may be included in a notice of representative rights to employees. The bill provides clarity around how protected action ballots can be conducted, while preserving the existing strict requirements and processes that must be satisfied before protected industrial action can be taken. It confirms that an official from one union cannot act as a bargaining agent for an employee where that union does not have coverage. And it implements the panel's recommendations to vary modern awards.

The third set of changes concern Fair Work Australia. The government is proposing a number of changes to the structure and operation of Fair Work Australia. A number of these changes were recommended by the review panel and further changes were proposed by the President of Fair Work Australia and considered by the members of the NWRCC. First, the government will give effect to the panel's recommendation to change the name of Fair Work Australia. The new name will be the Fair Work Commission. There has been much debate about the appropriate name for the national workplace relations tribunal in recent times. The government considers 'Fair Work Commission' accurately reflects the functions of this body and is consistent with the establishment and role of the commission within the fair work system. In particular, the commission takes its functions and powers from the terms of the Fair Work Act.

The bill includes administrative changes recommended by the review panel such as allowing any presidential member to make stay orders, allowing acting commissioners to be appointed if required and providing for the Governor-General to appoint the general manager on the nomination of the president. This change brings the procedure for appointing the general manager into line with the appointment of a registrar of the Federal Court.

The bill also includes additional measures relating to the internal structure of the Fair Work Commission that the government considers will improve the operation and the integrity of the body. The measures include creating two statutory positions of vice-president. This will assist in attracting senior practitioners to the commission, a highly desirable outcome given the significance of the matters that the commission deals with, and will ensure assistance can be provided to the president in managing the work of the commission as required.

The bill also contains a clear and transparent process for handling complaints against members of the commission. It also contains amendments to better deal with the disclosure of conflicts of interest. There are a number of procedural amendments relating to the handling of matters before Fair Work Australia such as allowing certain matters to be referred to a full bench when it is in the public interest to do so. These reflect terms used in previous workplace legislation and are designed to ensure that the commission can be responsive to the interests of the parties and respond effectively and efficiently to certain matters when required.

A further part of this bill concerns default superannuation funds and modern awards. As I announced on 15 October this year, this bill will include measures reflecting the government's response to the Productivity Commission's inquiry into default superannuation funds in modern awards. That inquiry delivers on the government's 2010 election commitment to review this important issue, and I thank the Productivity Commission on behalf of the government for their comprehensive engagement with this very important subject.

The government wants to improve the operation of the superannuation system to boost the retirement incomes of Australians into the future. Superannuation is a critical part of the industrial, economic and social safety net of our country. It provides a living wage for Australians in their retirement, allowing Australians to retire in comfort and with dignity. The default fund system is particularly important because it is relied upon by all employees who do not make active choices over their superannuation fund and are paid under an award. This is estimated to be a large proportion of all Australia employees. As noted in the Productivity Commission's report:

Over the eight years to 2011, default funds ... averaged an after-tax rate of return of 6.4 per cent, compared with 5.5 per cent for non-default funds.

Notwithstanding this remarkable outcome, the government agrees with the Productivity Commission's recommendation that there should be increased transparency and contestability in the process of determining which funds should be listed as default funds in modern awards. The government also agrees with the Productivity Commission's view that the overarching consideration in choosing superannuation funds as default funds in modern awards should be the best interests of the employees whose hard-earned wages will be contributed to that fund.

We agree with the Productivity Commissioner, that the review should be conducted in an open and transparent way against clear and objective criteria. We agree that the process should be open to all funds with a generic MySuper product and that the analysis of the funds against a statutory criteria should be conducted by an expert panel within the Fair Work Commission, comprising experts with experience in superannuation, finance and investment management, as well as Fair Work Commission members.

The bill I introduce today includes measures to implement all of these recommendations as part of a new system for the selection of default funds in modern awards. Under the provisions outlined in this bill, all funds with a generic MySuper product will be able to apply to the Fair Work Commission for selection as a default fund on an equal basis, which will bring greater contestability to the system.

We will create an expert panel within the Fair Work Commission to assess funds on the basis of clear and objective legislative criteria. The panel will be made up of part-time members with suitable experience in superannuation, finance or investment management, as well as members of the Fair Work Commission. The government proposes the expert panel would also subsume the existing minimum wage panel. This will provide a broader pool of qualified experts to assist the work of the Fair Work Commission while ensuring that experts with appropriate expertise are used for particular functions. The criteria against which funds will be assessed are largely those proposed by the Productivity Commission. The expert panel will consider the applications in any submissions in an open and transparent process. The panel will determine which funds meet the criteria and will publish a list of funds that do so.

However, we acknowledge that awards must be simple and accessible for those who use them every day. It is not simple for an employer to choose a fund from a large generic list of funds with no indication about whether a particular fund is more suited to their industry or workforce than another. Employees will also want reassurance that default funds used for their contributions most appropriately reflect their particular characteristics and needs as workers in a particular industry. That is why the government has decided that a full bench of the commission will determine which particular funds from the expert panel's list are best suited to each modern award.

The best interests of employees covered by each particular award will still be the overriding consideration. The full bench will also do this task in an open and transparent way. The government proposes that each modern award could include at least two, but no more than 10, default funds, unless the commission is satisfied there are particular circumstances relating to a range of occupations covered by the award to warrant the inclusion of more than 10 funds.

The government has departed from the Productivity Commission's recommendations in this respect to ensure that each modern award remains simple, relevant and workable for the employers and employees in each particular industry each award covers. The process will occur every four years, in line with the four-year review of modern awards commencing in 2014. The government has adopted this approach as it provides the greatest benefits to Australian workers for the long term.

This approach will ensure that default funds listed in modern awards are the best performing MySuper funds, and modern awards continue to be simple and stable documents that best meet the needs of employers and employees covered by them.

In conclusion, this bill represents another important example of the government's ongoing commitment to provide a balanced and effective workplace relations system and a superannuation system that operates to maximise the retirement incomes of Australian workers. The bill follows extensive consultation on policy questions and technical detail, with many stakeholders, in particular members of the superannuation industry and members of the National Workplace Relations Consultative Council and their technical advisers through the committee on industrial legislation.

However, this is not the last step. I am committed to continuing to work with all stakeholders on making appropriate amendments to the Fair Work Act where there is a clear policy justification and where they reflect the government's clear policy frameworks. I and the government retain an open mind on all remaining recommendations from the Fair Work Act Review Panel and none of them has been ruled in or out. I note the opposition have said they support the overwhelming majority of the panel's recommendations. Given this bill reflects the non-contentious aspects of the panel's recommendations, including measures to improve the operations of Fair Work Australia and delivers an improved process for choosing default funds, default superannuation funds and modern awards I trust the opposition will support the bill and assist its passage through the parliament. I commend the bill to the House.

Debate adjourned.