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Summary
Our self-employed rights under attack

1 April 2011 [Updated: 10 December 2011]

They say "... the freedom to choose to work or be engaged as a contractor rather than as an employee must be constrained ... "


During February and March this year we've given a lot of coverage to the attack being mounted against self-employed people in Australia under the banner of 'sham contracting'. The following is a summary based on our research and with links to the source material.

The BIG BOSS of Australia's unions says that our 'outing' of the campaign to suppress the right of Australians to be their own boss is wrong! We disagree. His article in Business Spectator is here. The facts are below.

Update December 2011

The union campaign alleging that sham contracting is a huge problem has been proven to be scaremongering. The December 2011 reports from the Fair Work Ombudsman and the Australian Building and Construction Commission have both shown that sham contracting is relatively minor, somewhat contained and that current processes in place to counter it are reasonably effective. See links below.

Where the attack is coming from

It's a broad-based campaign being mounted by a coalition of labour law academics, government-sponsored institutions and construction unions, with support and encouragement, it would seem, from the Gillard Government.

What they want

They say it's about stopping sham contracting. But when you look at the legislative proposals, the outcome would be the suppression and probable prevention of self-employment in Australia. Specifically what's being proposed is:
  • The denial of business tax treatment to people who are self-employed.
  • The changing of the definition of sham contracting so that a 'sham' really means any contracting.
  • The changing of the definition of self-employment, destroying hundreds of years of common law. This would eliminate the ability to be your own boss.
It's a fundamental attack against small business.

Why they want this

They believe that in the work environment there should only be employers and employees, that is, a boss and a wage-slave employee. They are the people who regulate this. They say if anyone is not an employer or an employee (self-employed), this removes self-employed people from the regulations and that's bad. They want everyone forced into their regulations. So if you are your own boss (self-employed), according to these people you are bad.

It seems weird that this is what they think, but have a look at our research because that's exactly what they are saying.

How they are conducting the campaign

  • They have an inquiry which is investigating 'sham contracting'. It will produce a report saying that there's a big problem and that laws need to be changed.
  • They have pushed government bodies---for example, the Australian Taxation Office and the Fair Work Ombudsman---to increase their audit activity to make it look like there's a big problem.
  • They are generating a lot of union activity and publicity, also to make it look like there's a big problem.
They will use all these self-generated reports and publicity to say that legislation needs to be changed.

Why they will succeed

On our assessment, they will have the numbers in Parliament to push through their anti-self-employment laws after July 2011.
  • These people have control of The Greens on this issue and The Greens will have the balance of power in the Senate after July.
  • The Independents in the lower house who control the balance of power there have proven in the past that they will vote against small business people. We expect them to do the same again.

Research Material

Here's our research and source material that caused us to come to the foregoing conclusions.

    16 February: Things seriously started happening with the ABCC inquiry: We said the inquiry is strange and gave a warning about being involved.

    23 February: The ABCC Commissioner was queried in the Senate.

    25 February: The ABCC commissioner wrote to us saying we are wrong. We disagree.

    5 March: The construction union CFMEU and the Master Builders Association in Canberra do a deal to squeeze out independent contractors.

    11 March: We did a summary and overview of the submissions to the ABCC inquiry.

    24 March: Robert Gottliebsen in Business Spectator describes this ' ... carefully orchestrated government campaign to decimate independent contracting in Australia' as a 'home grown threat' to the Australian economy.

    25 March: We explain the politics and why the campaign against us will succeed after July 2011. We've received lots of comments and replies to this.

    28 March: The Fair work Ombudsman is trying to do a legitimate job of investigating and stopping actual sham contracting, but is being pushed to do this in the middle of a political campaign.

    Late March: The construction union, the CFMEU, releases a report Race to the Bottom alleging massive sham contracting.

    29 March: Ken Phillips describes in Business Spectator the 'end game' that is being targeted by the CFMEU in its report, Race to the Bottom.

    29 March: The Shadow Small Business Minister, Bruce Billson, describes the campaign as a 'self-serving misuse of power'.

    2 April: Doyen of Australian political commentary explains the politics.

    6 April: The big union boss says we're wrong.

    7 April: Robert Gottliebsen responds to the union boss.

    14 April: ABC radio alleges the CFMEU has close connections with bikie gangs where extortion, bribery and blackmail are daily occurrence on construction sites. (starts about 1/3rd through the interview). Allegations of the CFMEU's having underworld connections have been around for some time.

    17 April: The issue has spun over to the financial problems at the troubled Victorian desalination plant where the CFMEU is a main union. Ken Phillips discussed this on ABC TV and again on Inside Business. The problems highlighted are spreading to new Australian construction projects.

    21 April: The Communist Party of Australia (yes it still exists) says that independent contractors are used to exploit workers.

    19 November: It's official. The problem of sham contracting in Australia is relatively minor. The Fair Work Ombudsman has released a report into its investigations into, and prosecutions of, sham contracting. Since 2007, only 4 convictions have occurred. We've done a summary of the report with commentary on the FWO's processes and bias.

    ICA member Graham has had a blast at the ATO for its treatment of self-employed people. The message? Yes, stop sham contracting---but stop the institutional discrimination against contractors. Stories of government ineptitude continue. John tells how Centrelink just can't get things right for small business people. 'Grozzle' gives his tale of the ATO giving him the complete runaround. Guy explains the double standards of the ATO. There is no justice here!

    29 November: The Australian Building and Construction Commission released its report into sham contracting. It found the extent of sham contracting is significantly overstated by unions, relatively minor, but still needs to be addressed.

    3 December: In February, we strongly criticised the head of the ABCC for the poor process being followed in his inquiry into sham contracting. The report was released this week. We are pleased that it shows a balanced assessment of the facts about sham contracting. It makes the 'hysteria' being created by Australian unions on the issue look just that: hysterical. Here's our initial assessment and commentary on the ABCC report.
(We will continue to update this summary as events unfold.)