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14 May 2007
[Click here for a related news story from The Australian]
To follow are the relevant excerpts from the ALP's small business and independent contractor policy, as passed at the ALP National Conference held on 28-29 April 2007.
ICA's responses and comments on each of the 17 clauses appear below.
In summary, ICA notes the following:
The ALP has made a significant shift towards a new understanding of independent contractors and their key role in the Australian economy. In supporting the principle that independent contractors are governed by commercial law and not employment law, a giant step forward has been taken.
Further, the ALP has taken an additional step by placing independent contractors in a specialised small business shadow portfolio and out of the industrial relations portfolio. This is a significant and important development which also shows that the ALP recognises that independent contractors are governed by commercial law and not employment law.
This is historic for the ALP. Moreover, it signifies an emerging political consensus on the central policy principles covering independent contractors. On these central issues of principle there is now little difference between the Howard Government and the ALP. This political consensus is highly welcome.
On matters of policy detail, ICA finds itself strongly disagreeing with both the ALP and the Howard Government on regulations covering TCF outworkers and owner-drivers. The two political parties appear to support identical policies on these regulations which, in ICA's assessment, destroy jobs and reduce the incomes of independent contractors in these areas. The regulations also set unwelcome precedents for equally flawed laws to be applied to other independent contractors in the future.
More policy detail is needed from the ALP before a proper assessment can be made about its approach to unfair contracts and small claims processes. These are two areas of strong priority for ICA. In each of these areas, broad political statements can be made, but the true test is in the legislative detail.
(From ALP policy statement passed at ALP National Conference, April 2007)
134 Labor supports reward for effort, risk-taking and entrepreneurship.
ICA strongly supports this.
135 Labor supports the choice of Australians to pursue a career as independent contractors and small business operators. Australia's independent contractors and small businesses are vital contributors to national prosperity and job creation.
ICA strongly supports this.
136 Labor recognises, as recognised by the ILO, that genuine independent contractors are governed by commercial law, while employees are governed by employment law.
ICA sees this as a significant and welcome breakthrough for Australian independent contractors. Finally, the reality of the legal framework in which independent contractors work is recognized as a policy principle by the ALP.
ICA is keen to see this policy principle fully reflected in the specifics of ALP policy and that it is not subverted or reversed in the policy detail.
137 Labor opposes sham contractor arrangements, where employees are re-classified as contractors by employers to avoid obligations such as superannuation guarantee payments, workers' compensation coverage and the payment of annual leave and sick leave entitlements. Labor will ensure that, as far as practicable, ambiguity and uncertainty regarding the nature of the contractual relationship is minimised.
ICA strongly supports this.
138 Labor supports the principles behind the alienation of personal services income regime and will apply these principles with consistency and transparency.
ICA strongly supports this.
139 Labor recognises that TCF workers and owner-drivers are among the most vulnerable groups of workers and accordingly commits itself to the maintenance and enhancement of existing protections for these workers.
ICA strongly rejects this. On ICA's investigations and experiences, many of the existing alleged 'protections' for TCF workers and owner-drivers in fact disadvantage TCF workers and owner-drivers. TCF workers and owner-drivers, like all independent contractors, are vulnerable to bad commercial practices and bad laws.
- TCF: Because of the nature of the clothing contract manufacturing chain, the processes imposed by Federal and State laws deliver price control to unions. These processes have escalated the cost of contract transactions and depressed the price paid to TCF workers. Further, the complexity of the processes has encouraged the closure of the local industry---directly costing the jobs of some of the most vulnerable NESB, women in our community.
- Owner-drivers: The NSW owner-driver laws facilitate massive intimidation of owner-drivers by unions. The NSW laws directly dictate prices paid under commercial contracts, thereby suppressing the pay to NSW owner-drivers. The Victorian owner-driver laws are largely beneficial to owner-drivers because they impose processes for ensuring integrity in commercial contracts. ICA supports these aspects of the Victorian laws. Regrettably, the Victorian laws also allow for processes that impose price controls under commercial contracts for owner-drivers. In the long term, this will suppress owner-drivers' remuneration.
ICA supports law that strengthens the integrity of commercial transactions and the operation of free markets. Any form of price-fixing, however disguised by sham language, distorts commercial transactions and free markets, and disadvantages independent contractors.
140 Labor believes cooperative relationships between small business operators and employees can create the conditions for higher profitability, higher productivity, higher wages and better working conditions.
ICA strongly supports this.
141 Labor recognises the difficulties faced by small businesses in recruiting and retaining suitable staff and, through its policies to ease skill shortages and wider labour shortages, will assist small businesses in overcoming these difficulties.
ICA will reserve comment until the policy detail is revealed.
142 Labor supports competition in the business sector. Where market failure creates anti-competitive conditions Labor will legislate to promote competition. In particular, Labor will legislate effective protections against monopolistic pricing, collusive behaviour, abuse of market power, predatory pricing and unconscionable conduct. Labor recognises that collective bargaining can benefit the public by allowing small businesses and independent contractors to address imbalances in bargaining power with larger businesses. Labor believes small businesses and independent contractors should have choice as to who represents them in collective bargaining.
ICA supports this with the proviso that the way in which 'choice' is allowed under law does not force independent contractors into a collective arrangement or compel them to use a union or any other prescribed body as a bargaining agent.
143 Labor acknowledges that small businesses bear an especially heavy compliance burden from government regulation and that small businesses are less well equipped than larger businesses to bear this burden. To maximise the economic dynamism that flows from the personal enterprise of small business operators, they must be relieved of excessive government regulation, subject to meeting their obligations to employees and their social obligations.
ICA believes that ALL business bears a heavy compliance burden from government regulation. ICA is not in the business of supporting policy that pits small business against big business. Bad regulation is bad regulation. It affects all the community through increased costs and restrictions on the things people should legitimately be able to do. ICA stands as one with ALL business, workers and the community in opposing burdensome regulation.
ICA supports the ALP's reducing regulation on all business and the community.
144 In recognition of the risks and heavier compliance burden borne by small business, Labor supports simplifying the tax system for small business and, where fiscally prudent, reducing the tax burden on small business.
ICA supports continuing simplification of the tax system. We are keen to see the detail of the ALP policy in relation to the tax burden for small business.
145 Labor supports reducing business regulation affecting small business, including reductions in and greater harmonisation of federal, state and local government business regulation.
ICA strongly supports the right type of business harmonization. There are two areas of urgent priority:
- OHS laws: OHS laws across the States are inconsistent, a situation that contributes to unsafe work practices. ICA would strongly oppose any harmonization that sought to replicate nationally NSW's OHS laws, but would strongly support harmonization that sought to replicate nationally Victoria's OHS laws.
- Workers' compensation: There is confusion across the States about who is in the workers' compensation schemes and who is not. NSW runs a particularly aggressive scheme which sues small businesses and independent contractors on highly suspect grounds. The NSW government's actions in this respect would be considered unconscionable and actionable if it were subject to normal business laws.
146 The viability of small businesses and independent contractors is highly sensitive to interest rate rises. Through its economic management and economic reform programs, Labor will put downward pressure on interest rates.
ICA strongly supports any policies that reduce interest rates but waits to see the detail of the ALP in this respect before commenting further.
147 Labor recognises the imperative of small businesses and independent contractors to have access to low-cost, timely and informal dispute resolution procedures in respect of their employment and commercial disputes and will ensure that such avenues are available. Dispute resolution procedures will be able to deal with claims of unfair contracts.
ICA strongly supports this and encourages the ALP to move strongly in the direction of developing and promoting small claims-type processes for independent contractors as already exist in some States.
148 Labor acknowledges that small businesspeople need ready access to low-cost advice when seeking to start new businesses or expand existing operations and will facilitate the provision of such advice.
ICA strongly supports this.
149 Labor recognises the value of high-speed broadband in boosting the viability of small businesses and independent contractors and will ensure the provision of high-speed broadband through a national broadband network.
ICA strongly supports all policy that improves communications systems for independent contractors and the community at large.
150 Labor recognises the important and growing role of women in establishing small businesses, including home-based micro-businesses. Labor will ensure that its small business advisory services are tailored to the needs of women.
ICA strongly supports the provision of small business advice to all small business persons and the tailoring of such advice to each individual's specific needs.
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