2GB – Deborah Knight

E&OE

Subjects: Government response to wage underpayments.

DEBORAH KNIGHT: Now, there are some big changes in the wind for bosses who underpay workers, with plans to name and shame them, with public signs forcing them to admit to wage theft. Businesses could also be banned from hiring migrant workers for a period of time and company directors disqualified from even holding office. There are radical steps [audio skip] industrial relations reform be considered by Attorney-General Christian Porter to try to tackle serious underpayment of workers. And just this morning, supermarket giant Coles became the latest major retailer to be caught up in this, underpaying their managers $20 million. Last year alone, 22 instances where businesses, ranging from food outlets to fashion brands and even the national broadcaster, were all found to have underpaid their workers. Thirteen per cent, in fact, of Australian workers have been underpaid a total of $1.35 billion a year. In some cases, it's just a simple mistake. In others, it is deliberate. So to find out more about these reforms, Attorney-General and Minister for Industrial Relations, Christian Porter, is on the line for us now. Minister, hello to you.

CHRISTIAN PORTER: Yeah. Good afternoon.

DEBORAH KNIGHT: I just wanted to, first up, ask about the issue of criminalising wage theft, because I would have assumed that it would have already been a criminal offence. Theft is criminal; why not wage theft?

CHRISTIAN PORTER: Well, that's an issue about trying to distinguish between unintentional but nevertheless, very serious matters of wage underpayment and a smaller subcategory of that where there is knowledge, large amounts being underpaid, it's systemic and serious. And to this point, there hasn't been a specific offence for that very small category of that absolute, most serious, knowledgeable or intentional or systemic large underpayments and we've committed to do that, and the draft of that will be out soon. When we first came to government, we increased the civil penalties for wage underpayment by a factor of 10. We increased the funding to the Fair Work Ombudsman by $60 million. So they've now recouped 64 per cent more money for workers last year than, say for instance, in the last year of Labor's term in office. The Fair Work Ombudsman have increased their litigations filed by 300 per cent, their compliance notices by 500 per cent.

So we've entered into stage one, which is all those things. Stage two is actually criminalising the most serious types of underpayment as a wage theft. The third thing that we've put out a discussion paper on today is what other things can be done potentially to change this culture and ensure that the eye is on the ball and large Australian companies get this right into the future. And yeah, we've talked about things like adverse publicity orders, about banning orders-

DEBORAH KNIGHT: [Talks over] So signs at the front of businesses saying: I've committed wage theft. Would it be that sort of idea?

CHRISTIAN PORTER: Well, that happens in some aspects of the law already. So, adverse publicity orders can require persons to disclose or publish certain information in accordance with your order. Like for instance, they can require, at the moment, an employer to display a notice admitting that they have breached consumer law or work health and safety laws. And that is one option to address this type of conduct and that is in our discussion paper. We want to seek people's views on that, employers' view, employees' views, businesses. Big, large, medium, small, get their views on it. The view I have got is…

DEBORAH KNIGHT: [Interrupts] And if it does become criminal, if it does become criminal - sorry to interrupt there - what sort of jail terms and fines could be applied?

CHRISTIAN PORTER: Well, they'd be very serious terms of imprisonment because it would be a very serious offence. That draft of the legislation will be coming out very shortly, so I won't anticipate the exact penalty, but very serious matters. And, you know, these organisations, right - so you've had Coles today, you've had Woolworths, the ABC, Maurice Blackburn, Qantas, the Commonwealth Bank; large sophisticated Australian organisations, where wage underpayment seems to have been endemic for long periods of time.

DEBORAH KNIGHT: [Interrupts] So how are they getting it wrong? I mean, is it purposeful or are they just simply not getting it right with the bookkeeping, which you find just extraordinary for an organisation of that scale.

CHRISTIAN PORTER: Well I- yeah, I don't think it's intentional, but it's hopeless, and it's not good enough. And, you know, I think the question begs with these large organisations - the Coles and the Woolies and the Commonwealth Banks and the Qantas' - they spend enormous amount of time, energy, effort, money self-promoting, advertising, being involved in a range of community and social issues. It would be an interesting question as to how many people were involved in ensuring Coles or Woolies compliance with the tax law, compared to how many people in their organisations were engaged in ensuring compliance with laws around wages.

DEBORAH KNIGHT: Yeah, absolutely. Absolutely. Now, what about the businesses who self-report, because in cases where it has been accidental, and they've put their hand up and said: yep, we got this wrong - would there be leniency offered?

CHRISTIAN PORTER: Well, I mean, self-reporting isn't determinative of penalties, but obviously with respect to civil penalties, it's something that's taken into account, and we want to incentivise self-reporting. With the criminal penalty that we will release the drafting of shortly, again, it would not be determinative and we don't want to dis-incentivise the self-reporting. But if an underpayment is done knowingly or with intention, it's large, it's systemic - it wouldn't matter if you'd ultimately self-reported it. That would be a factor that would be taken into account, but that would not be determinative of whether or not you had committed a criminal offence. And if you've got degrees of intention and knowledge and large amounts of underpayments and systemic and repetitious conduct, it's likely those factors would overwhelming- overwhelm the feature of self-reporting.

DEBORAH KNIGHT: Now, I want to bring Rod in here, one of our callers, Minister, because he is- I'm going to let him ask the question I was going to ask, but, Rod, it's a good one that you want to ask Christian Porter here.

CALLER ROD: Yeah, g'day Minister, g'day Deb, how are you?

DEBORAH KNIGHT: Yeah, good.

CALLER ROD: So I do a lot in the risk and governance space, so we saw obviously with the banking royal commission, issues around governance and reporting and all of those kinds of things. So is this going to be like the WHS laws where ultimately it's the CEO or the board that are held accountable, and maybe they should be putting in risk registers in their businesses saying, you know, we've got a risk of underpayment.

CHRISTIAN PORTER: Well, Rod, you've asked the precisely the right question. It's the question on my mind and the government's mind, which is why also our discussion paper today seeks views on the issue of director disqualification, and as you point out, company directors can be the subject of disqualification orders. They're currently used in corporations and consumer law to prevent persons from managing a corporation. Under corps law, some directors can be ultimately disqualified in the certain circumstances. And obviously they're very serious circumstances, but some of the matters that we've witnessed here are very serious, so if that principle exists in corporations’ law and consumer law, I think it is very worthwhile considering whether or not it should be applied in the sort of circumstances that we've seen, sadly, to be endemic in terms of wage payment.

DEBORAH KNIGHT: Yeah. Well, it's obvious that something needs to be done here because clearly the mistakes keep happening, so making people accountable through serious crimes and for serious crimes and with serious penalties, hopefully will deliver results. Minister, we thank you for your time.

CHRISTIAN PORTER: No problems, thank you.

DEBORAH KNIGHT: Christian Porter there, Attorney-General.