Media Conference, Parliament House, Canberra
Subject: IR Reform
CHRISTIAN PORTER: Good afternoon everyone. I'll start, I'm reliably informed there might be some divisions soon, so I'll try and be as succinct as soon as possible and I won't give you too much of a summary.
The legislation's been introduced; I spoke to you as a group this morning. Obviously, there's these five areas in the industrial relations system that we've perceived, and I think everyone agrees for a long time have been creating barriers to job growth. So this bill inserts a new definition of casual employment, it establishes rules to permit off-setting where previous casual loadings have been paid; and, it also provides, for the first time ever, a consistent, strong right to convert to casual that will exist right across the industrial relations system.
With respect to awards, I wrote to Iain Ross, the President of the Fair Work Commission, this morning seeking for him to commence a process that would end at the end of March next year to devise loaded rates in four key distressed award areas and also devise exception rates in four key distressed award areas. And of course, in the bill we are legislating for a part-time flexibility provision which would allow workers - particularly, this will have a great effect in retail industry - to work more hours they want to by agreement with their employer at their ordinary rates of pay.
The compliance and enforcement involves further strengthening of civil penalties; the introduction of a new concept of benefit-gained that relates to underpayment; and also the introduction of a criminal offence. It's also the case that we have established the potential for Greenfields agreements in major mega projects - usually oil and gas and resource projects - to go longer than four years, up to eight years during the construction phase of those projects where the projects are over $500 million, or there's a special certification between $250 and 500 million.
And with agreements and enterprise agreements we've made some changes. The BOOT test remains and its fundamentals remain. Some of the problems that have arisen where the BOOT test has become to be interpreted in an overall legalistic or technical way, which have made enterprise agreements very, very hard to conclude and far too easy to overturn - those problems are being fixed. They're about placing special weight on the agreement between the parties; special weight on the fact that there'll be a whole range of benefits which are non-monetary that will be accrued; but also very particularly, making sure that we remove the ability for these agreements to be prevented or overturned based on hypothetical scenarios, shift patterns, or work patterns that don't exist because the workers who work for them aren't employed.
Also, we've got a slight change to the BOOT test with respect to an already existing provision which is Section 189 which would allow, on a temporary basis for two years, if the business is suffering and needs to do something and change something because of the COVID pandemic, that they'll be able to do that if the independent umpire, the Fair Work Commission determines that's in the public interest, and of course, there is already existing agreement between the parties.
So these changes cover a wide range of problems, and there is a lot in this Omnibus Bill. They have a cumulative effect I think, rather than any single one of the changes being radical or, in itself, anything that represents a very substantial change. They are changes that have a cumulative effect by fixing known problems in a common sense, practical way.
QUESTION: Mr Porter, those slight changes you've described - it would seem one causing all the grief this morning, and Sally McManus has just said in the last little while that this bill, that the protections there are inadequate because they've - you've removed the seven-day period for workers to be appraised…
That's actually not, with due respect to Sally, that's not correct, but in any event, yeah….
QUESTION: Okay. I'll ask you to respond to that. And also she said this will drive a race to the bottom on wages - once one company does it they'll all do it. Could you respond to those two?
CHRISTIAN PORTER: Look, I just, I think that is a very substantial overstatement of the actual change. First of all, there - it's wrong to say that removing that seven-day rule - that's just not correct. So, and I appreciate the legislation’s come out just this morning so people will take their time to digest it.
But look, when Labor created the Fair Work Act they included a section called Section 189, and that says that the Fair Work Commission may approve the agreement under this section if the Fair Work Commission is satisfied that, because of exceptional circumstances the approval of the agreement would not be contrary to the public interest. Now, that was common sense for Labor to insert - I agree it was, like, complete common sense. It then, at Section 3, provides that an example of a case in which the Fair Work Commission might be satisfied of the matter referred to in that section is where the agreement is part of a reasonable strategy to deal with a short-term crisis - complete common sense.
All we are doing is saying that that provision which already exists is extended, and you can consider not just a short-term crisis, but the mid-term crisis over two years of COVID if that is the crisis impacting on your business.
Now, this was only, like this was only ever used under the previous government four times. I wouldn't expect it would be used many times, I expect it would be potentially used in a small handful of occasions - but it is not a ground-breaking change. And it's meant to draw the Fair Work Commission's attention and empower them to make an independent decision, as the independent umpire, in circumstances where a business thinks it needs to do something different in its EA to survive because of the impacts of COVID.
QUESTION: Can I ask you about the BOOT test? The thing is though, if the thinking - really, if the issue here is whether the Fair Work Commission is smart enough to notice we've been through a once in a century pandemic and that that's an exceptional circumstance, is it worth dying in a ditch over? Don't we assume they know that? And if it's only going to happen with a handful of cases, what's the point?
CHRISTIAN PORTER: I mean, we'll have this debate and discussion, but I think the point is that the existing provision talks about a short-term crisis - it's been used very, very sparingly. Having a legislative provision that establishes and empowers the Fair Work Commission to consider something a little bit broader than a short-term crisis - specifically pegged to COVID-19 of course. But there are going to be industries, right - you know, marine tourism operators on the Great Barrier Reef - this is not going to be a short-term crisis for them. I mean, this is going to be some that they're potentially going to feel the effects for as international tourism is stymied because of border regulations - they're going to feel for a year, 18 months, up to two years.
So what we want to do is make it very, very clear that this common sense exemption power can exist specifically for COVID, and for a period slightly longer than what legally would be considered a short-term crisis - that's it. And look, as you say, it's - there's going to be discussions around this but it seems to me that there's a bit of an outrage industry that goes on and they've got to find something to attach their outrage to and so they've attached it to page 34.
QUESTION: Can I ask you about the BOOT test? Would you agree with the contention that this - that what you've done with the BOOT test - is effectively overriding the - the interpretation the Fair Work Commission brought to the BOOT? That an EBA has to benefit, or be advantageous to every single member. Because remember, that decision was about Coles, and Coles has been very successful during the pandemic. Would this allow Coles to enter bargaining with a union which would see some workers worse off?
CHRISTIAN PORTER: Well, I don't think that it - it winds back some of the more legalistic and technical interpretations - not quite to that extent, I don't, don't think. But what it does do is it winds back interpretations that were based on hypothetical shift arrangements and people who weren't actually workers at the time working in reasonably foreseeable patterns of work.
QUESTION: Coles case….was very, very specific, and it was affirmed, I think, in the Penny Vickers case where you've got a part-time worker who was worse off when the SDA had organised with Coles something that was good for public…
CHRISTIAN PORTER: I’m familiar with the case, I just don't have a perfect answer for you because it would be up to the Fair Work Commission to apply these new, modified, interpretive tools to any set of factual cases. But it may be that the hypothetical scenario has some impact there. It may also be that the emphasis on non-monetary benefits, in the weighing exercise, would have some impact there. But I think it goes to the point that the BOOT test here hasn't been fundamentally changed - it's been modified around the edges to try and stop the excessively technical and legal interpretations that have caused what look like otherwise common sense meetings of the BOOT test to either not result in an agreement, or an agreement turning over.
And the other very important thing here that occurs with the BOOT test is that we are stipulating 21 days for the approval of an enterprise agreement, unless there are exceptional circumstances - which have to be published and which have to be transmitted to both of the parties who are involved in the negotiations. Now, this would be a dramatic improvement on the very long periods of time that it takes for many agreements to be achieved now - and there was an agreement recently that took up to 800 days. And this has been a matter of discussion with the Fair Work Commission - they think that this is a meet-able target, and that'll make a big difference in fixing this problem area.
QUESTION: Can you confirm, can you confirm that the, sorry. Can you confirm that the agreement struck without the better offer for all tests will expire after two years? What will happen then to workers pay? And why shouldn't employers have to prove exceptional circumstances if they want to lower pay, rather than that it's appropriate in normal circumstances?
CHRISTIAN PORTER: When you look in the way that this clause was used previously, it wasn't, there were four times- it was usually used around things like flexible hour arrangements and shifts patterns - they weren't debates about pay for a start. This is a time limited, COVID specific-exemption that builds on the existing exemption that Labor built into the Act. If you ever did get an exemption for an agreement under this provision, that agreement would only last for two years. That's the nominal expiry that exists already in Section 189. And after the nominal expiry of two years, either of the parties to the agreement can apply to the Fair Work Commission to have the agreement terminated, which the Commission must do unless it's not in the public interest. So these things, if they ever did occur, would only last for two years.
Building on Labor, why is it that the test appropriate in all the circumstances rather than exceptional circumstances?
CHRISTIAN PORTER: Well, the test builds on exceptional circumstances and specifies that the exceptional circumstances that must exist here are with respect to COVID. So, its terms are quite clear. And when you look at the Labor test, right? You’ve got to get this right in the question - the Labor test says because there are exceptional circumstances and then talks about a short-term crisis. And we're talking about the specific exceptional circumstance of COVID, which has to be shown to have had an impact on the business and be the necessary driver for the changes that you want to make.
QUESTION: Mr Porter, if I work for the Great Barrier Reef Tours and the Fair Work Commission approves one of these deals for two years, so I'll take a 5 per cent pay cut and my fellow workers, and the deal expires at the end of the two years and we're renegotiating a new EBA, do I have to be better off in comparison to emergency EBA or my conditions before the emergency? Does that become a new base?
CHRISTIAN PORTER: That’s one of the most complicated hypothetical questions I've ever heard.
QUESTION: Well, no, no. But what becomes the new floor for your future EBA?
CHRISTIAN PORTER: I think the confusion there is that in the first instance, the BOOT test is about a comparison to Awards.
QUESTION: Okay. So, you go back to the award…
CHRISTIAN PORTER: So, the likelihood of people being paid less than an Award, either through the present Section 189 or the modest extension to it that we are suggesting as a COVID-specific extension, I'd say is very, very, very low. You're usually talking about things like - have been occurred in the past - like shift patterns and roster arrangements and these types of things.
QUESTION: On the structure of the BOOT, the new factors include the impact of COVID. Is that something the company is able to assert the impact or do they have to show evidence to the Fair Work Commission that their, say profit has declined by specific amount to take advantage?
CHRISTIAN PORTER: Of course. I mean, the Fair Work Commission deals in evidence, right? So it's going to be a high bar for any business to cross. But if you ever got to the point where the impact of coronavirus, known as COVID-19, on the enterprise or enterprises to which the agreement relates gets to the point, where it is in the public interest, and both the employers and the employees are agreeing to a change, because they both think that change is going to preserve jobs and keep the business going and people won't be out of work, they're the types of circumstances based on evidence that the Fair Work Commission as the independent umpire would be considering.
But again, it's not at all dissimilar to the exemption built in by Labor to the present bill. It's COVID-specific, yes. It's time bound, yes. We think it represents common sense. And there may be a handful of businesses over the next two years in particularly distressed areas that do need to agree changes, and where the employers and the employees, potentially even the representatives of the employees, the unions, agree that this is necessary and put that application in.
QUESTION: So companies that have done well during the pandemic - Coles, Woolworths, Bunnings - you don't think that they…
CHRISTIAN PORTER: Well, I just can't see how they can possibly make that case. I mean - and you're right, Andrew, some businesses have done well because of the peculiar circumstances that have arisen in the pandemic. Another group of businesses have really struggled but are growing back very quickly. Another group of businesses again, particularly those related to the movement of international passengers, are going to find it really tough for a considerable period of time. And I think they’re particularly the businesses that we want to give every opportunity, not just through the other measures in this bill, but through making it easier to have an enterprise agreement in the usual run of business established for that business. But in exceptional circumstances, it may be that they present something to the Fair Work Commission under Section 189, as they can do at the moment.
QUESTION: Can I just clarify too, Minister? This BOOT non-compliance can't be applied to existing Awards. It's only new ones struck in for the two years after assent is that right?
You're confusing the language with respect again. Existing Awards are the Award system. You're talking about…
QUESTION: Sorry, existing agreements. I mean agreements, sorry. So, I've got an EBA that runs for the next three years, does that - it can't be changed, it can't be altered?
CHRISTIAN PORTER: Well, you can make an application for a new enterprise agreement, but you've got to wait for old ones to reach their expiry date. That's right.
QUESTION: Doesn't it show the perils of having introduced elements to the bill that weren't discussed in the roundtable process? And given these - it's come after that process, shouldn't you just take it out of the bill for, you know, good faith reasons, because the ACTU weren't shown it.
CHRISTIAN PORTER: So, we should take stuff out of the bill because there's disagreement about stuff? You'd never legislate anything; ever. I mean- and what we as a Government say is that when you're encountering practical problems, you're looking to institute practical solutions. Now, not every single practical solution was discussed or raised during the 150 hours' worth of consultation. Some of them came from other sources. This is one which we think is just a modest, time-bound change that could cater for a small group of circumstances and a small group of businesses and ensure their survival, which must mean that people are overall, better off, because if the business doesn't survive, then people don't have a business and people don't have a job.
QUESTION: Mr Porter, Sally McManus has said she's quite disappointed question…. They've said that these things that they were quite disappointed in didn't come to the roundtables. If they were big enough to be this important and this frustrating for the union, shouldn't they have been discussed? What was the point of these roundtables if they weren't to discuss all these elements?
CHRISTIAN PORTER: Well, the point of the roundtables weren't to make everyone feel better. They were to understand problems, harvest up ideas as to how to fix those problems, stress-test those ideas. The roundtable's finished - then there was a process of trying to assimilate everyone's views on those; other ideas came up as we were doing that. And this will go into Parliament, into a Senate committee, no doubt, it will be debated. I would predict that the debate around this rather modest section will die off and then you will have a thousand flowers of debate bloom on other sections and we'll move on. But it's not a matter of sort of making everyone feel better. It's a matter of stress testing ideas, which is what we're doing.
QUESTION: Can I just clarify your answer to Phil there? So, a company that finds itself in exceptional circumstances can't seek to terminate an EBA and renegotiate using this exemption?
CHRISTIAN PORTER: Well, any, you can seek to terminate, but I think the terminations only occur after the nominal expiry date. So, you'd have to wait to your nominal expiry date. I'll check that for you, but…
QUESTION: Mr Porter, one of the companies that has repeatedly struggled to pass the BOOT is Swissport, the airline catering and services operator. They are obviously battered badly at the moment by the coronavirus pandemic. But in other times, they've been a very successful business. Would you be okay with that being kind of exemplar of the company that would take advantage of these BOOT changes?
CHRISTIAN PORTER: I'm not giving grades of approval to companies who may or may not use different provisions. But, you know, I would encourage companies to talk with their employees to try and work out what agreements can be reached that might be necessary to save their business. That's always the first port of call. But what we want to do is establish an enterprise bargaining system where it's not impossible to have an agreement made or not so intolerably difficult that you don't even bother. And why would we want to do that? Because people on average get paid 40 per cent more under enterprise agreements than they do on the awards; 40 per cent more. And yet, from a peak of 2.6 million, there are now only 2.1 million people covered by enterprise agreements. And why have businesses turned their back on enterprise agreement making? Because it's been too hard to make enterprise agreements and too easy to have them overturned. So, if you want more businesses doing better with more jobs that pay more, you have to find ways for them within a reasonable ambit, to more simply negotiate and settle enterprise agreements. If you don't do that, the system will die, you'll have fewer jobs and people will get paid less.
QUESTION: …thresholds when it comes to the Fair Work Commission deciding if a business is under exceptional circumstances because of the COVID, or will it be entirely at the discretion of the FWC? And if not, what sort of circumstances would you describe as exceptional to qualify for this?
CHRISTIAN PORTER: You're looking again, if you look at the section, you have to - the FWC, the Fair Work Commission, the independent umpire, would have to look at the views of the employees and the employers, including their bargaining representatives. So everyone has to agree to the change, that there's proper notice been given and so forth. Then they have to consider evidence around the impact of the coronavirus known as COVID-19 on the enterprise. They have to pay particular attention to the extent of employee support for the agreement. And because of those circumstances, the approval of the agreement would not be contrary to the public interest. So, I mean, they speak for themselves. You've got a small group of businesses that have taken an absolute battering and will continue to do so. And it may be that they want to do something which is a process that already exists in the Act, which is applied to the Fair Work Commission to do something different in their EA.
QUESTION: Would they have to show something in regards to turn over? Like they wouldn’t have to prove a reduction in turnover; it will just have to be employers.
CHRISTIAN PORTER: Well they have to - they have to satisfy the Fair Work Commission. So it would seem to me almost certain that things like turnover and the disruption to their business that have been occasioned by COVID-19, would have to be put in a satisfactory fashion with appropriate evidence using precisely the things that you've just nominated before the Fair Work Commission. Otherwise you'd be destined to fail and the application would be pointless.
QUESTION: Australia has record low wage-share of national income. What in this bill will help restore the great Australian dream after the COVID come back?
CHRISTIAN PORTER: Well, if you want to have a greater wage-share of national income, you need more people earning wages, which means you need more jobs and you need more people working more hours. Everything in this bill is designed to grow jobs and grow the number of hours that people work – if they want to work more hours, they have more hours available. Everything in this bill is designed at job growth. Now, the alternative would be to leave the economy on autopilot and just hope for the best and leave all of these problems in the IR system. So at the moment, during the 150 hours' worth of roundtables, we heard consistently that businesses weren't feeling the confidence to re-employ casuals because there was no definition that told them what a casual was. And they felt fearful of the fact that they might potentially face double payments for the 25 per cent loading in the things that was meant to compensate for, not just going back six years, but into the future. And that confidence was killing their ability and want to employ people. If you have a look at the Award area, with respect to part-time flexibility in the retail sector, we heard, as the National Retailers Association has been saying for 10 years, that businesses are finding that they just don't offer the hours to people, even though people may want to work the hours, because of the restrictions that exist in the relevant Awards. Now, all of these things are designed to grow jobs. If you grow jobs, you grow the wages. If you grow wages, you grow the wages as a share of national income.
QUESTION: But is there anything that grows bargaining power to make sure that workers capture their fair share of that benefit ...
CHRISTIAN PORTER: Well, here's nothing that diminishes bargaining power. It just makes reasonable bargains somewhat simpler to do than the intolerably complicated system, which Paul Keating himself described as too legalistic. And if someone jumps over the top of your negotiation as an employee or an employee represented by a union with their employer, and you all agree and someone jumps over the top of that, finding a technical or legal way to overturn your agreement, that doesn't empower people involved in the bargaining process. It actually robs them of their power to bargain.
QUESTION: Given the fact that you're squeezing the opportunity for scrutiny of some EBAs because you want these things to be hurried up. Would you encourage people about the virtues of collectivism? Would you encourage people to join a union?
CHRISTIAN PORTER: I think the unions do a great job in representing their members by and large. There is a specific- part of a specific union that hasn't done so well there, but that was dealt with in a way with legislation this morning. But they do a great job. But I don't accept the premise of the question that in any way we're diminishing the scrutiny of agreements. There's few things more highly scrutinised in Australia than agreement making in the enterprise agreement system. What we are doing is making that less technical and legalistic. So Andrew, an example is that the requirement, which presently exists, includes a requirement to basically explain to your employees the relationship of every section or clause of an enterprise agreement to an Award, even if all those sections are the same as your last enterprise agreement. Now, that to us seems like duplication and overly technical and legal approach to agreement making. They're the sort of things we're trying to fix and that doesn't diminish people's bargaining power. In fact, we'd argue that whether you're represented by a union or another organisation or employees represent themselves, making it in the fairest way simpler to reach resolutions with their employers actually empowers people.
QUESTION: Did you or have you agreed to Labor's request that you confine the grounds for de-merger to unlawful illegal behaviour?
CHRISTIAN PORTER: Well, we had some discussions with Labor over the course of the last 24 or so hours. There was a slight tinker to the bill. The view that I took legally and based on the advice that I had, is it didn't make much difference to the process. All we were ever trying to achieve here was that if a constituent part of a union, considered that they weren't being well represented and they could - and they found that the representation wasn't in the best interests of their members, that they could leave. And the essential grounds for that that we always considered appropriate, was to consider the lawfulness of the operation of the union, including the constituent part that wants to leave and obviously the broader public interest. But secondarily the financial capacity of the part that wants to demerge to represent its members. And that's where the bill landed in Parliament, and it's a very, very good landing point.
QUESTION: Minister, I just wonder if you could just explain to the workers on a personal level who will be worse off as a result of these changes. How do you justify those changes directly to them on a personal level?
CHRISTIAN PORTER: Well, I just don't accept the premise of the question. If you are able to negotiate an enterprise agreement, history tells us that on average, you get paid 40 per cent better than if you're on an Award. And nothing about the fundamentals of that BOOT test change here. All we are doing is making it simpler to have that outcome where people get paid more, which we believe will lead to more enterprise agreements, more jobs of better quality, more productive businesses, more businesses surviving through COVID, and more workers moving off the Award system and onto enterprise agreements where history has told us they are paid on average, 40 per cent more.
Okay, thanks very much.