5AA with Leon Byner

E&OE

Subjects: IR discussion paper on wage underpayment and Coles

LEON BYNER: We have on the line and we thank his time, the Federal Attorney-General, and I'll tell you why. Because today, there's a push in the Federal Parliament that businesses which failed to prevent wage underpayment could be banned from hiring migrant workers for a period of time, company directors disqualified from holding office and employers who underpay workers could be forced to name and shame themselves with public signs admitting their wage theft as part of industrial relations reforms. Now, this is an interesting proposition because hot off the press, right now, supermarket giant Coles has announced it has identified a total of, listen to this, $20 million in underpayment for its salaried team members across its supermarkets, liquor businesses becoming the latest major retailer to be caught up in the underpayment scandal. So Attorney-General Christian Porter- and thanks for coming on. Were you saying here that we might force (business) to put a sign in front saying that they underpay?

CHRISTIAN PORTER: Potentially and that's something that happens in other context particularly for breaches of consumer law. I mean it's an option, at this stage, that we put out a discussion paper on today with a number of other options to seek …

LEON BYNER: [Talks over] Alright.

CHRISTIAN PORTER: ... responses from business, from unions, from employers, from employees. But you know, it's interesting fact that today, at the same point that we put out this further discussion paper on further options to tackle this problem of later underpayments that you've got this Coles issue arising and certainly my assessment is that whilst many of these underpayments aren't deliberate, and they may be inadvertent, they're not good enough. And it's a basic obligation on employers particularly large, sophisticated employers like Coles to pay the appropriate and correct wages and …

LEON BYNER: [Interrupts] Christian, I need to ask you about this. Your people have- and you yourself, you must be getting some feedback as to why this is so endemic. Because I think you will understand early in the piece, and we've been taking about the underpayment of wages for a long time, but then some big kahunas have come up, you've had the national broadcaster, you've had the big supermarkets, you've had a stack of other businesses. So what seems to be the problem? Is it they're all slack or they've got people who don't understand the system? What is it?

CHRISTIAN PORTER: Well my view is it's just slack. I mean people might contest that view but you've got, you know, everything from the ABC- you've got law firms who represent people in wage underpayment matters themselves guilty of underpaying wages.

LEON BYNER: [Laughs]

CHRISTIAN PORTER: And so, okay, these aren't unsophisticated businesses. Now, there is some level of complexity to the awards and there's a process that's actually coming to its sort of final stages through the Fair Work Commission to try and have those re-written to make them easier to understand …

LEON BYNER: [Talks over] Yeah.

CHRISTIAN PORTER: … and they're particularly complicated I think in restaurant and retail and tourism.

LEON BYNER: Yeah.

CHRISTIAN PORTER: But ultimately, we've got these major organisations, you know, Qantas, the ABC, Coles, Bunnings and a lot of those organisations spend an enormous amount of time and effort in promoting themselves, in PR, in getting involved in any number of social issues. But their eye appears to have been off the ball when it comes to the basic obligation to pay their staff, what their staff deserve to be paid and that's not good enough.

LEON BYNER: [Interrupts] What are you- what are you warning them? Because I mean, you've got legislation that's going to- well you've got a draft paper out and there will be legislation on this. What are you warning these companies that you say, are just slack?

CHRISTIAN PORTER: Well it's not a warning. I mean, I think that these companies have had their wakeup call, and they need to self-audit, they need to improve their systems. But as a government it's incumbent on us to make sure that people are paid what they're owed. So when we first came to Government we increased the funding to the Fair Work Ombudsman, who's the regulator that recovers and investigates underpayments. We increased their funding by $60 million, they now recoup 64 per cent more money for workers than they did in the previous Labor government's last year in office. They've had a 500 per cent increase in compliance notices, a 300 per cent increase in litigation. So they are very, very active and all these companies know that. We've also increased, this Government, has increased up to tenfold the civil penalties. We've said very clearly we will create a standalone criminal penalty for the worst types of this behaviour which would fall into the category of wage theft. And then today we've gone the next step to say, are there other things that occur in other circumstances, in other contexts, like consumer law and company law, looking at the role of directors, looking at the way in which you would publicise underpayments, looking at banning certain companies and certain industries from, say for instance, employing migrant workers if they exploited them. So we are looking at everything and anything that we think is reasonable as a response to what has become something of an epidemic of underpayment. But you know, ultimately, the responsibility to pay staff properly is the responsibility of the business in question.

LEON BYNER: Now, what about superannuation? Because this is a chestnut issue, no minister that's been around for a while - and that's all part of this - where a lot of businesses are just not paying the super, even in the quarterly instalments they're supposed to. Some do it monthly or however often they pay. Is there going to be legislation that says, on the day you get paid is the day you pay the super - are we looking at that?

CHRISTIAN PORTER: Well, you'll see that with some of these organisations as they've audited and found the underpayments, they've also found underpayments of superannuation. And so obviously the issue is how you would have the same types of penalties in that context and we're open-minded to all of that.

LEON BYNER: Yeah. So Coles, you're saying, that the self-reporting today, there's $20 million just over their liquor outlets - your message to them is?

CHRISTIAN PORTER: Well, get it right into the future. And it's not just a message to Coles, I mean, if there is a major business in Australia who doesn't consider itself on notice that they have to invest and improve their systems of payments, and their platforms, and their technology, and their auditing, then that system, that company would have rocks in its head. I mean, they're all on notice, you're on notice if you read the newspaper.

LEON BYNER: Alright. Inadvertent error as opposed to deliberate? Do we make a distinction here?

CHRISTIAN PORTER: Well, of course. And I mean, obviously one of the things that we've said that we'll do and this will be in draft form shortly, is to criminalise the most serious types of underpayment and in criminalising underpayment which reaches a point of wage theft. We've put out a paper, we've consulted, we've asked the questions at what level of repetition, how systemic does it have to be, what level of knowledge has to attach to the wrongdoing for it to actually constitute a criminal offence. So, we'll release that legislation shortly. But of course an offence which is criminal of underpayment, which isn't just inadvertent or slack, has to involve repetition, has to be serious, the quantum has to be large, it should be systemic, and of course, there's got to be the appropriate level of knowledge that attaches to criminal offences. But having a peak offence for the worst types of underpayment is, I think, a matter of common-sense because there will be instances where there is knowledge, where there is repetition, where it is systemic, and where that occurs it should be punished appropriately.

LEON BYNER: Christian Porter, thank you for joining us. That's the Federal Attorney-General who's put companies on notice.