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Sky News Afternoon Agenda, Interview with Kieran Gilbert



Subjects: IR Reform

KIERAN GILBERT: We can reveal this afternoon some very tough compliance measures on business when it comes to underpaying staff, this is part of your IR reform package. Can you talk us through it?

ATTORNEY-GENERAL: Yeah, that's right. And during our working group process, we started with some positions and concepts which we put to employers and unions and this legislation will create, for the first time ever, a criminal offence of wage theft. I wouldn't say that the business groups were necessarily enthusiastic about that concept, or this part of the legislation, but we considered with the raft of underpayments and the scale of some of them that a much clearer a message needed to be sent.

So for the first time ever, there'll be a criminal offence of wage theft, which will carry a maximum penalty of four years imprisonment. And at the same time, we're increasing most of the civil penalties where it's not a criminal offence by about 50% - but also very importantly introducing an alternative monetary penalty which is measured against the benefit obtained, so if you like the scale of the underpayment. So if it's not a criminal offense which requires dishonesty and intention in large systemic underpayments which constitute wage theft, it could still be a civil penalty, which is very large, where the civil penalty now can be a measurement of the actual scale of the underpayment. And indeed that might be either two times the scale of the underpayment or three times the scale of the under payment effectively as a fine. So you'll gather Kieran based on some of the underpayments we've seen that could be a very large fine indeed.

KIERAN GILBERT: It could be and for the most egregious cases, criminal penalties as you touched on there. There'd been some discussion about 10 year sentences, why have you gone for four years maximum, instead of 10?

ATTORNEY-GENERAL: Well overwhelmingly there was a view amongst the business groups that there shouldn't be a criminal offence of wage theft at all. We as a Government stood our ground that we considered that it was appropriate considering that the message clearly hadn't gotten through. We didn't consider too many large businesses that payroll was absolutely essential to their business and people just should not be underpaid. The criminal offence of wage theft is different from an inadvertent underpayment - even if the inadvertent underpayment is serious - a criminal offence is something different again, that's a next level where you've got systemic, large, repeated underpayments and there was dishonesty which involves some intention on the part of the person who was underpaying. That is a very big step we had started the discussion around a 10 year penalty. As I say, there was very little enthusiasm for the offence at all.

In the end we thought that at this point, given this is so new and such a significant departure from the law as it has previously existed that a four year potential maximum penalty of imprisonment was the appropriate one. It can be also the case that for individuals there can be a fine of up to $1.1 million or for corporations are fined up to $5.5 million in addition to that four year penalty. It's also notable that if someone's convicted of that offence of wage theft they're automatically disqualified from being a company director. So this is a very, very serious response. And not every issue that we took into the working groups is going to be completely loved in the outcome by the business or by the unions but we've constantly tried to strike a middle ground here.

KIERAN GILBERT: Minister are there any examples that you can give us, practical examples that we've seen that would meet that threshold of criminal penalties?

ATTORNEY-GENERAL: Well, I can't, we haven't done the process which only really Kieran a court can do of applying a new offence against new circumstances. But I would probably say that the most egregious and blameworthy example of the underpaying scenario was probably what occurred in 7/11. There have been a number of underpayments which even ones that have been large have been genuine mistakes. And particularly with small business, there are genuine mistakes. But this criminal offence is meant to capture that type of underpayment which is both large, systemic, it occurs in a pattern over a period of time; and there's a mental element of dishonesty which involves some level of intention to underpay. And the reason why this is so important is not just because we want workers to be paid properly when obviously we do; but for the overwhelming majority of businesses that do the right thing and pay their people properly, they get undercut by any competitor who doesn't pay their people properly either by inadvertence or more seriously if they intend to do that to give themselves a competitive advantage. So it's a very significant development in the law - both the civil penalties, the criminal penalty, for the first time ever being effectively able to fine people with reference to the amount of the underpayment. We think that this is probably what's needed to get on top of this problem that we've seen emerge in the last couple of years.

KIERAN GILBERT: You've released some details today on the casual worker component. Basically it seems trying to give certainty for business by giving a clarity around what meets casual work but also for the worker themselves, someone who's been on set shifts on casual pay for say 12-months, they can move more easily from casual to part time or full time work. The unions though and Labor have been critical here, they say there aren't enough safeguards for the worker to transition. Do you hear what they're saying on that?

ATTORNEY-GENERAL: Well, just like the business groups will be critical of us for having a criminal penalty for wage theft, no doubt there'll be some divergence of views as to have we've tried to fix what is a terrible mess in the economy with respect to what is or is not casual employment. In context for your listeners, is there was a very important decision of the Federal Court on 20 May 2020, and after that decision was made, it is very unfortunately the case in the Australian economy at the moment, that prior to that date of 20 May 2020, no-one really knows whether or not someone was employed as a casual, or as a permanent. After that day we still don't know whether or not people are being employed as casuals or permanents. Prior to that date there's massive confusion as to whether or not you need to be paying the 25% casual loading for things like sick leave, or whether or not you need to be paying sick leave, or whether or not in some circumstances, there could be claims in the courts for both those payments which has been calculated as a liability potentially up to $39 billion. And all of this goes back to the fact that the Fair Work Act when it was created by a previous Labour Government never included a definition of casual employment. So that just has to happen and the mess has to be sorted out.

We've taken two principles to try to sort out that problem. One - certainty and two is choice. We want to make it absolutely clear when someone has been engaged as a casual, or alternatively, as a permanent part-time or full time employee. And after they've been in that role for a year, with six months, regular hours, we want to make sure that they've got the choice, the genuine choice, to transfer from casual if they want to permanent part-time, or permanent full time. And the mechanism there is that we as a Government are actually going to require business to offer that right to their employees who meet this six month regular-hours criteria. Now that's the first time that would have occurred in this type of way. It's a very, very strong, right that would exist for people to convert if they wanted to, from casual to permanent employment. And the protections around that are the same protections that exist in some of the existing casual conversion clauses. At first instance that's a matter for discussion between the employer and employee, then it can be arbitrated if there's consent, and of course there's always disputes that can be determined in other ways. But it is a very, very strong way in which people if they want can convert from casual employment to permanent employment. And we think that's the best way to fix a problem; certainty - making sure everyone knows how they're employed – and then choice. And some people may prefer even if they do work fairly regular hours to receive their 25% loading and not convert and that will be a matter for then.

KIERAN GILBERT: Have you got a sense of how many jobs might be created here because it's clear the Government's view is that this confusion around casual work has been a handbrake around businesses putting people on?

ATTORNEY-GENERAL: It has been very difficult to quantify but there is no doubt in 150 hours of consultation with businesses and with unions that there is real confusion out there which is putting a handbrake on the difficult decision sometimes for employers to actually create a new position and employ someone. There is a lot of confusion about how they actually employ someone as a casual if that's what they the owner wants, and if that's what they, the employee wants – and then how to pay them. And, you know, to get some idea of the scale of his problem, the first 800,000 jobs (corrected) that were lost in COVID, 500,000 of them were casual positions. So trying to recover from COVID means trying to make sure that there are more offers to more people for more jobs everywhere, casual, permanent part time, permanent, full time. But clearly, we want to make sure that it is a growing part of the economy. And for many, many years casual employment levels in Australian economy have been very, very steady. We just want to make sure that businesses are confident to offer casual employment to people, which is a very important type of employment; that people can go into those positions knowing exactly how they should be paid and knowing that if they work for a period of time regularly, they've got a strong right to convert, if that's what they want, to become a permanent part-time or full time employee.

KIERAN GILBERT: The de-merger Bill that the Government's introducing, this is basically being called the Setka Bill because it's targeting the CFMEU, particularly the militant side of things. Are you confident of getting Labor's support to get the de-merger Bill through Parliament this week?

ATTORNEY-GENERAL: Like I can't see why Labor wouldn't support it. And the bill simply institute's a pretty basic, fair and reasonable principle of freedom of association; that if you are part of a group of people in a union who represent a sector, like mining, or manufacturing, so for instance in the CFMEU and you don't think that the union management and overall the union behaviour is in the best interest of your members then you can vote to leave and you can set up your own union. And the economic benefit for Australia could potentially be very large because we've seen that mining has been a saving industry during COVID, one of the few industries that actually managed to grow during COVID and keep employing people. So imagine a mining union, which deals essentially - only with miners which is managed, populated by decent, hard-working unionists who are representing the best interests of their members who have good relationships with mining companies and can work cooperatively, and then you compare that to the sort of behaviour we've seen on Victorian construction sites; having a specialist mining union, behaving well and dealing well with mining companies, can be a massive economic uplift for Australia. And bottom line is that if miners or any other part of the CFMEU are dissatisfied with the way in which the CFMEU is being run, and there's a lot of good reasons that you might think that they would be dissatisfied - they should be allowed to get out and go start their own union, by ballot, democratically, fairly and reasonably and according to a process. But at the moment the way that Act was drafted, once you're in, you're locked in forever, no matter how bad the management of your union might become and we just think that that's wrong in principle.

So this is good for the Australian economy. It certainly represents an important principle of freedom of association and what possible reason could there be for not supporting this, particularly when many people inside the union movement want this because it allows them the choice to leave a union if they think that union is behaving badly and not representing the best interests of their members.

KIERAN GILBERT: The Ensuring Integrity Bill obviously failed in the Parliament, is this a round-a-bout way to try and achieve that accountability? You've had a lot to do with union leaders the last few months, is this a way that you've worked in conjunction with them to attain a bit of accountability where it's needed most in that space?

ATTORNEY-GENERAL: Well I think this will have the longer-term effect of enhancing accountability in the union movement. It will have the short term effect of potentially creating a union that works well with employers in one of the key industries that we're going to rely on in Australia to get us out of the COVID recession.

But, you know I guess Kieran after months of working with employers and with the unions, you do learn a bit and one of the things that I've learned is like any organisation, people inside organisations often think and behave differently and there's no absolute unanimity of views or behaviour. And inside the CFMEU there's been a group of people who have behaved very, very badly and who've affected the construction industry in a very negative way, and hurt job growth. And there's other people in that union who's sick of it and who want a bit more cooperative relationship with employers in the mining industry; who want to represent miners in Australia, whether they're in Western Australia or Queensland, better than they're being represented at the moment. So why wouldn't we give them that chance and opportunity to do better for their members; do better for job growth; do better for the Australian economy. It is a simple principle of freedom of association and the choice to either stay in a mega-union or get out and start a union of your own which is more specialised and which has a greater chance of escaping bad behaviour, and doing better for your own members.

KIERAN GILBERT: Four weeks ago Four Corners ran a programme focusing in part on you. You rejected the claims categorically and described the report as defamatory – at the time you said you'd look at your legal options. Where is that at? Will you take legal action?

ATTORNEY-GENERAL: Well I'm still having a good think about that and I do reject absolutely the assertions that were made on that show. I don't want to get distracted from this type of work, so I'm going to have a bit of a think about that as we manage to bed down some of these important economic legislative changes. I'm also going to wait and see what they do by way of response to the Minister's letter which I think put in a whole range of pretty important questions that deserve a response, so I'll have a bit of a cold hard think about that over the coming weeks.

KIERAN GILBERT: So a genuine look at it, not one of those lines you say in response to a controversy at the time, you're genuinely looking at that?

ATTORNEY-GENERAL: Yeah, I mean like any good lawyer, Kieran, when I have a moment to have a little bit of quiet time to have a sober look at it and particularly the ABC's responses to the Minister's letter, I'll have a look at it.