Media Conference - Melbourne

Attorney-General
Minister for Industrial Relations
Leader of the House
The Hon. Christian Porter MP

E&OE

Subjects: Government response to wage underpayments, secondary boycotts.

CHRISTIAN PORTER: Thanks for being here. It's timely just to speak briefly about what is the second in a two-part series of discussion papers that the Government has released today, pertaining specifically to the issue of combatting and particularly enforcing penalties with respect to the underpayment of wages. If any more evidence was needed that this is an issue that required a full-court press across policy for government, that evidence today came in the form of Coles, another obviously substantial listed Australian company, notifying publically of what appears to be another very large instance of systemic underpayment of wages inside its organisation. It goes without saying that for the government that is incredibly disappointing, frustrating. Coles now sits on a list of other organisations - Woolworths, the ABC, MAdE Establishment Group, Morris Blackburn, The Sunglass Hut, The Super Retail Group, The Commonwealth Bank, Michael Hill, Qantas. All sophisticated large Australian business who have, to very substantial degrees, underpaid wages.

The Government has proceeded in three stages on this issue. The first stage, reforms that are already in place and they've been very substantial. We increased the civil penalties for wage underpayment ten-fold. We increased the powers available to the Fair Work Ombudsman with respect to requirements to produce information under court ordered penalties if that information is not provided. We have refunded with over 60 million in additional resources to the Fair Work Ombudsman. The result of that has been that we've seen 64 per cent more wages being returned, money being returned to workers in the last year, compared to the last year of the previous Labor government. We've seen a 300 per cent increase in litigations filed by the FWO. We've seen a 500 per cent increase in compliance notices issued by the Fair Work Ombudsman. That has been an important stage one. Very shortly we'll be releasing the drafting around the criminalisation of an offence of wage theft. That was the subject of the first discussion paper, as well as other matters pertaining to increased penalties. That will be a very important stage two, to have a clear criminal offence that deals with the worst types of systemic, large, knowledgeable underpayment by companies.

Today's discussion paper goes to a range of additional issues, and it is, in effect, the third stage of a full-court press response to this issue of wage underpayment. It looks at other potential ways in which we can ensure that the culture going forward is one where large Australian corporations pay proper, dutiful and clear attention to paying their staff the right amount in wages. So, unashamedly, we've asked for consultation and responses on issues such as banning orders for company, particularly with respect to migrant workers, where there has been a history of exploitation of those workers. The way in which directors should be made directly responsible for instances where there's significant underpayment of wages, and also ways in which there can be appropriately publicised knowledge to the community about organisations that have underpaid wages. So, this is now the third stage of a full-court press response to what has become, in corporate Australia, an endemic of underpayment, and it is immensely frustrating for the government, as I am sure it is for all Australians. Happy to take any questions you might have.

QUESTION: If you used Coles as an example, could you say it's not [indistinct]… $20 million in six years. Would any of these penalties apply?

CHRISTIAN PORTER: Well, I don't have all of the information, and that's why the Fair Work Ombudsman investigates these matters, but I would hazard a guess that some penalties will apply. And there is a massive suite of penalties, from the civil penalties, which we increased by a factor of 10. Soon there'll be a criminal penalty, but also we're now talking around how you would formulate further and additional penalties relating to directors of those companies, relating to banning orders, relating to matters of that type. So, it depends on the facts. And of course, this third stage now is about how you might design those further penalties. So I can't give a specific answer, but what I can say is that with organisations like Coles or Woolworths or Qantas, when this process is complete, penalties will be inescapable, whether they are civil, criminal or of the type that we are now proposing with respect to directorships, banning and publicity. In many instances, more than one type of those penalties might apply. But corporate Australia surely now has got the message that they need to get their house in order. And if they haven't got that message, well, then they're going to be absolutely and utterly compelled to in the future by the most vigorous, robust and complete set of laws around wage underpayment that Australia's ever seen.

QUESTION: What will be the broad criteria for criminal penalties? And if a company self-reports, will that necessarily avoid a criminal penalty?

CHRISTIAN PORTER: Well, self-reporting wouldn't be determinative of whether or not an offence of wage theft had occurred under the draft that we'll release shortly. I mean, obviously that would be one factor that would be taken into account in the favour of the organisation who self-reported, and we don't want to discourage self-reporting. But in essence, a criminal penalty of wage theft would relate, generally, to large amounts of underpayment, systemic behaviour, and with a requisite degree of knowledge, so that this was meeting all of the general requirements of a criminal offence. So, you're looking at patterns and systemic behaviour, the quantum of underpayment, and the extent of the knowledge inside the organisation of the fact that the underpayment had and was occurring.

QUESTION: So if they knew about it, for example, rather than saying: I just found out about it now.

CHRISTIAN PORTER: Well, the draft will be released shortly. But knowledge isn't just a snapshot in time, concept at law. Knowledge is about, at a requisite point in time, over a period of time when the wrongdoing was occurring. That draft will be released shortly for the actual offence of wage theft. But all criminal offences that involve matters of this type have an extent to which knowledge has to be shown. That's far from unusual. In fact, that's standard in offences of this type.

QUESTION: And what's your view about underpaying employers, having to put up notices - one of the options discussed in the paper. Do you have any view about that?

CHRISTIAN PORTER: Well, that is included in the discussion paper, because it's a real live option which we're considering. Now, my personal view is that if an option is available in the context of consumer law, which that option is, then there is a good reason to suspect that it should be a live and usable option in the context of wage underpayment, particularly when it appears to be the case that this is now an endemic problem in corporate Australia, where cultures need to change, and the government has to do everything that it can at law to encourage and compel that cultural change inside corporate Australia. So, my personal view - that we want everyone's view - but my personal view is that if that is an appropriate way of many ways in concert to address issues in Consumer Law and breaches of Consumer Law, why would we not consider it in issues of wage underpayment?

QUESTION: You're talking about these underpayments in cases of this systemic problem endemic in corporate Australia. Why do you think it's happened in so many [indistinct]-

CHRISTIAN PORTER: Well, my view is that they have had their eye completely off this ball. I just think that-

QUESTION: [Interrupts] Why do you think they [inaudible]…?

CHRISTIAN PORTER: Well, ask them. My theory is that they are so far away, many of them, from their knitting, and we've had large organisations that involve themselves in any number of social issues, that spend enormous amounts of time, money and effort self-promoting with PR campaigns and national advertising telling us how good they are - pay your people properly. I mean, a redirection of resources, acumen, intelligence, effort and spending to put appropriate platforms in place to ensure that this doesn't happen is absolutely required. And if that message hasn't got through, well, the Government is about to take a third stage of reform to ensure that there is no option for corporate Australia but to get its house in order.

I mean, look, these are not unsophisticated businesses. Maurice Blackburn is a company that represents people who have been underpaid, which itself has underpaid its workers. Now, if that doesn't demonstrate that a sophisticated organisation has had its eye off the ball, I don't know what other evidence is needed.

QUESTION: Can I just ask about the discussion paper around business and the Building Code, and there is a suggestion here – a question about using the Code [Indistinct]… do you have any sense about….

CHRISTIAN PORTER: Well you have used a word that we haven’t used, secondary boycotts we said…

QUESTION: Not all secondary slash environmental boycotts …

CHRISTIAN PORTER: Yep, secondary boycotts which would include any number of different reasons for a secondary boycotts, and look, this a discussion paper. We have come across a range of instances where businesses have been damaged by behaviour that can be described as secondary boycotts. The Commonwealth Government is a massive purchaser of construction services. We are interested to hear from all of the parties in that industry as to whether or not there is a role for that Code to play in ensuring that businesses don’t get damaged by unfair secondary boycott behaviour.

QUESTION: Could you consider for example using the [indistinct] contracts in order to make a difference where businesses might be engaging in these boycotts or bowing to pressure from environmental groups or other [indistinct]?

CHRISTIAN PORTER: Well they are all possible options obviously, so they are the sorts of things that we want to see peoples’ views on, organisations’ views on. Employers’ views on and employees’ views on so that we can actually get a sense of what is happening in the marketplace and whether there is a role for the Building Code given that the Commonwealth is such a massive purchaser of construction, whether there is a role for the Building Code to produce better results in that market.

QUESTION: Can I ask you about George Calombaris?

CHRISTIAN PORTER: Yep.

QUESTION: Innes Willox last week saying that the union so called pile on contributed to the collapse of his MAdE’s empire. What did you think about that and [indistinct]

CHRISTIAN PORTER: Well I don’t know if that is precisely the words that he used, but those words that you used, that is not a view that I share. But at the time that the penalty occurred in respect of MAdE and the Calombaris group of restaurants, I think there was a $200,000 contrition payment and at the time I made the statement that I considered that was something people would perceive as too light. I know that one of the things that would be considered by the Fair Work Ombudsman in determining the amount of that contrition payment was that they had information about the nature of the business and its financial stability. And obviously one things that the Fair Work Ombudsman did not want to do was place such a high contrition payment on the business that that catalysed or facilitated the business going into receivership or administration, which is a terrible outcome for workers. But what the Fair Work Ombudsman was able to do was make sure that all of the monies were repaid, have a contrition payment that, taking into account the stability of the finances of the business at the time, they considered to be appropriate. So I think that they handled the matter extremely well. But the idea that that business, its failure to pay workers properly - the absolutely fair, just and lawful and correct thing happened which was repayment of the wages and the payment of a contrition fee - somehow should not be the matter of a public discussion or shouldn’t be known publicly, or shouldn’t be the subject of adverse comment by any who considers as I do that the behaviour was incredibly poor, is not something that I join issue with. I don’t agree with that perception of the relationship between fair, open public criticism of that conduct and the result.

QUESTION: What do you say about employer groups saying that one of the factors here is that the system is too complicated?

CHRISTIAN PORTER: Well, there are complexities in the awards. The Fair Work Commission has gone through now a four year process and we are at the end of that process and I think the the first tranche of the release of redrafted awards has now occurred and the Fair Work Commission has gone through its best efforts to try and simplify awards. A further discussion paper will relate to this issue of after the work of the Fair Work Commission whether there were further ways that awards could simplified to make them more user friendly. But, notwithstanding that there is probably room for improvement, the proposition that all of these incredible, in some cases colossal mistakes, errors and failures of large sophisticated businesses is because the system is all too hard is something that I fundamentally reject. And again, businesses like the ABC or Maurice Blackburn, or Coles, or Woolworths are very sophisticated businesses. Many of them run with enormous profits. Many of them engage in massive expenditure effort on self-promotion, on advertising, and they have had their eye off the ball. The fundamental problem is that they have been far too slack in this core business area of paying their staff properly. So to blame complexity, from some of the most sophisticated organisations in Australia, is just something that I fundamentally do not accept.

QUESTION: Do you think that wage theft is a business model for these companies?

CHRISTIAN PORTER: No I don’t. It is clearly not a business model and wage theft as it will be defined will be the most serious categories. I do not think that this is intentional, but that doesn’t make – in some cases we may discover that there has been knowledge and it would meet the definition of wage theft – but in what appears to me to be the majority of cases it is not intentional. But that doesn’t make it any less terrible, particularly for the people who are being underpaid. So with respect to increasing penalties tenfold, with respect to empowering the Fair Work Ombudsman, it doesn’t matter if you didn’t intend to underpay your staff, just get it right.

QUESTION: What is your warning to these companies?

CHRISTIAN PORTER: I don’t know whether or not I can state it any better than I have throughout this press conference, but get your house in order.

QUESTION: Can I quickly ask, in November you talked about a crackdown on Market Forces and [indistinct]…

CHRISTIAN PORTER: On Market Forces? As in you’re talking about the secondary boycotts issue again now? Yep? That work is being conducted across Ministers and portfolios including from Treasury and across AG’s and we are considering a variety of options to prevent the sort of behaviour that we have seen. For instance, with a service delivery company who was providing services legitimately pursuant to contract, employing people and providing services to the Carmichael coal enterprise, and it was being called up by advocates being incentivised to do so by websites where the advocates were told to try and waste the company’s time on the phone and try and set records for how long you could keep the staff of this small business on the phone with a view to trying to destroy the commerciality of that business. That type of behaviour and other examples of it, the government thinks is unacceptable and we are looking at a suite of measures across portfolios to try and prevent it.