DAWSON, Ms Emma, Executive Director, Chifley Research Centre McKENZIE, Ms Sarah, Research Associate, Chifley Research Centre Committee met at 09 : 36 ACTING CHAIR ( Ms Coker ): I declare open this public hearing of the Standing Committee on Employment, Workplace Relations, Skills and Training for its inquiry into the operation and adequacy of the National Employment Standards. The chair has been challenged this morning by the transport system. I'd like to acknowledge that she is taking our public transport system. Well done to her! She will be here, I would say, any minute, but due to time we will commence. I begin by acknowledging the traditional custodians of Naarm, where we meet today, and, for those viewing proceedings online, the traditional owners of the lands that they are on as well. I pay my respects to ancestors past, present and emerging and extend that respect to all Aboriginal and Torres Strait Islander peoples and their cultural and spiritual connections to Australian lands and waters. In accordance with the committee's resolution, this hearing will be broadcast on the parliament's website, and the proof and official transcripts of proceedings will also be published on the parliamentary website. I remind all present that, in my role as acting chair for the moment, I will ensure that proceedings are conducted in an orderly, respectful and courteous way. Those present here today are advised that filming and recording are permitted during the hearing. I remind members of the media who may be present or listening on the web of the need to fairly and accurately report the proceedings of the committee. I now welcome our witnesses. Thank you very much for coming today and sharing your knowledge and wisdom with us. Would you like to give an opening statement? Ms McKenzie : I'll give a brief one. ACTING CHAIR: The chair's here. Hello, Chair. We will wait for the chair to get settled in. CHAIR ( Dr Garland ): Thank you. I understand Ms Coker has done an excellent job getting us started, and I look forward to hearing your opening statement. Ms McKenzie : [inaudible] The National Employment Standards, as you know, are the foundation of Australia's workplace safety net. They're intended to provide minimal protections for workers regardless of their bargaining powers or circumstances. [inaudible] That's why our submission focuses on changes to how the National Employment Standards impact and work for casual employees. Casual employees make up a significant part of the workforce, and many are performing regular and ongoing work. We know that casual employees get a loading and that that will be the pushback to our suggestion that they should get paid annual leave and paid personal leave pro rata like any other worker. But we say that that loading shouldn't just be thought of as compensation for forgoing leave. It should reflect the fact that the risks associated with insecure work sit disproportionately with casual workers. Annual leave and personal leave do a lot more for not just the individual and the workforce but the whole community. They support health, rest and recovery, and they allow workers to stay home when they're sick. We saw the consequences of [inaudible] coverage during the pandemic, not just for workers but for our entire communities. I think this is a really important point, and we make it in our submission: despite the fact that casual employees get this 25 per cent loading, hour upon hour, in terms of the actual money that they take home, they are earning less than their permanent counterparts. It's not just workforce-wide. When we look at it based on skills, occupations, industry, gender and age groups, we see casual workers take home less money than their permanent counterparts, even with the 25 per cent loading. That tells us that there are structural differences in bargaining power and it's not simply workforce compensation. We would argue that the National Employment Standards, this safety net, are most important for these workers, yet they are cut out of so much of it. That's why we focus so much on that. We also note in our submission that we're really pleased this is happening. There have been changes to the National Employment Standards, but it has been 16 years, and we would like to see a more regular review of the National Employment Standards. Changes made in 2022 that explicitly recognise the importance of promoting job security and gender equity in the act require us to say, 'Do the National Employment Standards hold true to that?' We're going to see more changes in the workforce and more changes in other parts of the act, and we want to make sure that there's a mechanism that means that governments can regularly be advised by an independent body telling them, 'You should have a look at this, you should have a look at this and you should change that.' CHAIR: Thank you very much. I'll take my chair's prerogative to start with some of the questions. Perhaps we'll start where you finished, which is around the regular review. This is something I think we've discussed a little bit in this inquiry already. It's interesting to hear you add to some of the voices around wanting more regular reviews. I want to draw out what that would look like. How would a good regular review system operate? Who would be responsible for administering it? What would be the time periods you think would be most appropriate? Would there be anything that would trigger a review? Ms McKenzie : I haven't thought about it in such detail. I do think that it would likely be something that would happen within the Fair Work Commission, similar to the minimum wage review, but I'm not saying that it would need to happen every year. I suppose what we've seen is a pattern of changes to the National Employment Standards really only in the last couple of years or so. We can do some guesswork about the changing nature of work, but things are moving very fast in technology with the rise of artificial intelligence, so I'd say you'd be wanting to do it at least within each term of government. And it would be something that would advise the government. Whether they take on those recommendations or not obviously is for the government of the day and the parliament, but it should be something that is open to the public so that we can see what the advice of an independent group like the Fair Work Commission is making around National Employment Standards. CHAIR: You mean the minimum wage review where people make submissions? Ms McKenzie : Yes, that's what I'm imagining it to be, but it could be any sort of thing. I'm not here to say exactly what the mechanism is, but I am here to say that we're lacking one. It's not until inquiries like this are initiated—which I congratulate you for doing—that we can start to dig into it. It just shouldn't be because there is a government that wants to look into it. This is something that impacts all Australian workers. Ms Dawson : I think that's the high-level principle—that it shouldn't be left to the whims of the government of the day or to a reactive process driven by the parliament to regularly review the standards as they apply to a rapidly changing workforce. Therefore, inserting something into the act to require some sort of regulatory or statutory review of the operation of the NES every three years or so, given the nature of the economy and the changing workforce, is something that the parliament should consider recommending to the government. CHAIR: That's very helpful feedback. I'm really interested to hear your reflections on the casual workforce and insecure work. Obviously, there have been a number of changes in the act around insecure work, including with the previous government around casual conversion clauses and requirements for employers to put the request to workers. Do you have any thoughts around that—how that is working or where there could be improvements? Ms McKenzie : The submission didn't go into detailed work on section 15 or whatever it is of casuals. Obviously, those reviews have happened before, but what we're pointing to is that there is a large number of casuals. The conversion will allow some casuals to move over, but it won't for every casual employee. I don't think that we're going to go from one in five employees to one in 20 in a number of years. We've got a huge number of people that are currently cut out of significant parts of the National Employment Standards that carry a lot of risk as workers. I suppose that's what we are getting at here. Whether the conversion works or not doesn't really impact the fact that we think that, if you are casually employed, you should be able to have paid personal leave and paid annual leave. I just want to go into that point as well. I've thought about this and the possible pushbacks, as I already raised—this idea of 'well, they've already got the 25 per cent loading'. Of course, we say that they don't earn as much. But no other worker is required to insure themselves against getting sick. When I'm sick and I have paid sick leave, I'm not also losing my wage for that week. We don't expect casual employees to take their 25 per cent and put it in a box under their bed just for when they're sick. We also don't expect any other worker to potentially work every single week of the year without a break, and that is something that casual employees can be expected to do. Now you may say, 'Well, casuals don't have to accept the shifts,' but we know that they do. We know that, if you're rejecting shifts as a casual employee, you're putting yourself at risk of not having any more shifts in your workplace ever. Ms Dawson : I can add to that. I think the casual conversion measures that were amongst many other well-overdue changes to industrial relations laws that were passed in 2022 and 2023 are an important right and an important ballast for some of those very insecure workers. But, as my colleague has said, many casual workers will not be eligible for that, or will not pursue a conversion to permanence, for a number of reasons. The fact is that the system, as it was, was designed, as again Sarah alluded to, on the assumption that a significant additional hourly loading to your rate of pay would compensate for the loss of that leave, on the assumption that workers could somehow set aside some money for a rainy day. The prevalence, now, of casual work in our economy, and the proportion of it which is paid at award wage and minimum wage, combined with the pressures on families and the cost of living, mean that that is a completely unrealistic expectation. Moreover, there is a plethora of research—not just from us, but from the University of Melbourne and others—to show that very few casual award-wage workers do receive a 25 per cent loading. They're much more likely to receive, if anything, up to five per cent, depending on their award. So the loss of that access to sick pay not only jeopardises their regular income and their household wellbeing and security, but also—as they are workers that tend to be customer-facing award-wage workers in retail, in hospitality and in the care sector in particular—then they are putting at risk members of the public and, in many cases, very vulnerable people by having to go to work because they have no other option. So, as work is changing, the idea of a standard job being a full-time permanent position is long in the past, and we are only seeing—despite the government's excellent efforts to pull some of that insecurity back—more risk going onto people in the workplace than we do think. And that's a reason for the regular review. But it's time to consider giving that essential safety net to casual workers, for that reason. CHAIR: Ms Coker. Ms COKER: Going back to casual workers: you suggest that we need to extend paid parental leave and annual leave entitlements to casual employees— Ms McKenzie : And personal leave. Ms COKER: In regard to that, when do you think that needs to be put in place: when someone begins work, or after a certain period of being a casual worker? What are the parameters around that? Ms McKenzie : Again, this is a sort of principled position; there could be different mechanisms for how you do it. But I don't see any reason why it shouldn't start from when you begin work. I acknowledge there'll be some difficulties with the irregularity of some casual work. But employers already deal with that when they're calculating tax and super and a whole lot of other things. I don't see any reason why you would need to wait, say, six months or something. No other worker is required to do that for their leave entitlements. Ms COKER: You have also talked about sick leave. If there was priority given to the type of leave that a casual worker could receive, would you say that sick leave should be a priority? Ms McKenzie : Yes. I would like to see both. I think that annual leave and sick leave serve different purposes. If you had a certain number of days of annual leave and not paid sick leave, I think people would use their annual leave for sick leave. If I'm thinking about not just the individual worker but the workplace and the wider community, personal leave serves a really big purpose in that space. We know that people go to work sick because they cannot afford to not go to work; we saw that during the pandemic. It's why governments stepped in and put in place arrangements to help casuals take time away from workplaces and not spread diseases that would cause significant health issues. So 'yes' is the answer to your question. Ms Dawson : We would prioritise sick leave. If there were a choice, sick leave would be the first priority. Ms McKenzie : Also, if it did come down to that sort of choice, it most fits in with the new objects of the act around promoting job security. It would, I believe, show that it's quite an easy exercise. Sure, it would have costs attached to it, but it would be quite an easy exercise for employers to work out pro-rataed sick leave on casual employment and different casual employment patterns. Then, with this regular review process, we could look at other sorts of leave. Ms COKER: At the moment we have 25 per cent loading for casual workers. Casual workers are receiving other benefits which are the same as permanent workers. Should they still receive that 25 per cent loading? Ms McKenzie : Yes. As I said at the beginning, I don't think it should be viewed—I appreciate that it has historically been a sort of a buy-out of leave. I think it should be reviewed almost as a danger loading, a risk loading or an insecurity loading. We should be encouraging and using this system to encourage employers to provide more secure workplaces for the workers that they rely on to run their businesses. Ms Dawson : All forms of casualisation of work are effectively a means of shifting the risk of business operations from the business owner onto the worker. With a permanent staff member, a business owner has to take on the risk of managing fluctuating demand and fluctuating workplace needs. With casual staff, that risk is put onto the worker. We're not saying there's not a place for casualisation, and certainly, if every casual worker were receiving pay that was 25 per cent higher than the rate of pay for a permanent worker, the argument would be harder to make. But, as I've said, the evidence is that very few of them are. Some of them, in fact, have a wage penalty compared to permanent workers. I'm happy to provide evidence on notice of that finding. Ms McKenzie : We say in our submission as well that we're seeing the gap between permanent workers and casual workers—not just workforce-wide but if you look at it in their skill levels, their occupation levels and their industry levels, casual workers are taking home less money. Across the whole workforce, it's $12 now. It keeps on going up. That's because of those structural differences between permanent workers and casual workers, the fact that fewer of them are in unions, they're more likely to be women—that part of it. Sorry, I know you've got— Ms COKER: No, this is great. The level of detail on that cohort—it's very helpful to understand that. I'll throw to Ms Fernando. Ms FERNANDO: Thank you so much for being here this morning. As we know, the NES haven't been looked at for over 16 years. What do you believe is the most important amendment that needs to be made to the NES so they're fit for purpose for today's working environment? Ms McKenzie : Our submission focuses on a couple of things, and I'm not going to say that they are the most important. I've read through the other submissions that this committee has got, and there is a lot in there, particularly around working hours, that I think should be taken really seriously in this inquiry. We do say that what we're suggesting around casual employees getting paid personal leave and paid annual leave is important because it is such a large amount of workers, a large section of the workforce, and workers who are most likely to not be able to negotiate for themselves—and the safety net is meant to be for that cohort. But I am sure that there are other areas. I think what ties together a lot of the parts of other submissions around significant changes is the focus on making sure that those workers who cannot negotiate for themselves and those workers who are in more insecure work aren't working excessive hours, aren't doing it without pay and aren't rocking up to work sick. Did you want to add any thoughts? Ms Dawson : I missed part of your question, sorry, but essentially we haven't gone into this in detail in our submission. I would like to put on the record that I do think the National Employment Standards, over time, should be actively engaging with a reduction in standard working hours. The labour movement achieved many reductions in standard working hours, going back over 150 years now, to get to the eight-hour day and the 40-hour week and codifying the weekend in the 1940s. The final time we reduced the standard working week in this country was in 1983, when we went to 38 hours. The argument that I have made in other forums—and I'll try to do it quickly here because it's not in our submission—is that, as the average two-income fairly typical heterosexual couple family home now requires two incomes, at least one full time and one part time, supposedly, to keep a roof over people's heads, the hours of work that are needed domestically, the unpaid work that's required to run a household, has not diminished as women have entered the workforce in greater numbers and for greater hours. So actually, having looked at the productivity gains we've achieved since 1983, when we last looked at reducing standard working hours, Australians are actually working longer hours than ever. When you combine the number of hours that a household is now working in the paid economy and in the unpaid economy people simply do not have any more hours to work. Primarily it's women that are coming home and taking on that second shift. I think the long-term answer to that is for workers to get some share of those massive productivity gains. We produce in an hour roughly five times what we were able to produce when we last reduced working hours in 1983. Those productivity gains should come back in time with no loss of pay. That's popularly referred to as the four-day-week movement around the world. It can be seen as just a shorter working hours movement. It's not a new idea. It was the foundation of the labour movement in the 19th century. It is more than past time that we reconsider whether a 38-hour standard working week is the best thing for workers and particularly for families. If everyone worked slightly fewer hours with no loss of pay the evidence shows that productivity actually can increase, staff turnover can decrease, the costs of things like sick leave and absenteeism goes down and families have more time to divide more equally those domestic, unpaid working hours at home as well, leading to benefits for them and, importantly, for their children. Ms FERNANDO: Just on those reflections on the historical context that has led us to this point and the evidence you have presented in relation to loading not necessarily meeting the requirements of casuals today and this idea of buying out leave that was established decades ago as a principle, we've heard from other witnesses too around how some assumptions that were made throughout history have really shaped the industrial relations system we have in Australia today. Listening to some of the cohorts as well who are most affected, I invite final reflections on how that history has shaped where we are, who is left out and what we may need to consider further in making sure that we have a safety net that actually works for everybody. Ms McKenzie : Yes, you're right—the history of the labour movement has shaped where we are today. That is part of the history of Australia and part of that is why we end up with these incredibly crucial industries and occupations that are paid less than others. That is why we've got educators, people who are doing the most important jobs in our economy, who are struggling to put food on the table, and they are women. The changes to the Fair Work Act in the last government was the first time that we had seen the Fair Work Act actually say: 'This is about not just male workers. This is about Australian workers, this is about job security and this is about gender equality.' If I'm to step a little outside of NES, I'm loving the work of looking back over our awards. I'm loving the priority review, because this government and this parliament have decided to make some changes in how we view our labour market, and that has all of these flow-on effects. That's why I'm so pleased that the NES inquiry is happening at the moment, because we can say, 'Does the NES—which is meant to support the workers who have the least power in the labour market, many of whom are women—ring true to these new objects of the act to promote job security and gender equality?' If I can be cheeky, we make some suggestions and recommendations, and there are recommendations across all of the others, but, if that is the core driver, does the NES do what we now say the object of the act is? That is the one thing I would want this committee to be thinking about and have in its mind as you're making recommendations to the parliament for changes to the NES, because that really is the core of it: are we promoting a gender-equal workforce and an Australia where people are in secure jobs? Ms Dawson : The Chifley Research Centre is, of course, the official think tank of the Australian Labor Party—and the Australian labour movement, in a way—and we are charged with protecting that history. So I would reflect that it is absolutely the purpose of the government—and of the Labor government in particular—to represent the interests of working people and to ensure that they are provided with not just the jobs but the conditions that will enable them to have a good life. If we look back through Australian history, we led the world on the provision of strong workers' rights, right back to the Harvester judgement over 100 years ago—almost 120 years ago now. That judgement was framed around the concept that a wage should be sufficient to keep, in the parlance of the time, a working man and his wife and family in 'frugal comfort'. What we must continue to do is ensure that the provisions around workers' rights are fit for the times in which we live, and that's what my colleague's really talking about today—that people should work to support their lives, not live to support their workplace. Effectively, what we see happen when working hours become too long, when rights become conditional and when insecurity and risk become a feature of workplaces is that people's wellbeing and that of their families and of our society is damaged. I think taking an historical view allows us to see how much the workplace has changed over time—not just the entrance of women into many more paid hours of work, particularly over the last 40 years, but the changing demographics of our country, the changing nature of work itself—a shift from a manufacturing to a care and services based economy—and now the impact of technology and really deregulated forms of work like gig work. It's absolutely essential that we keep our regulatory and legislative structures up to date with the modern challenges of the workforce so that we are able to offer young people an opportunity, as they enter adulthood, to find work that is not just fulfilling and meaningful but adequate to meet the needs of a modern household's demands. So regular review of these conditions and active shepherding of the system are fundamental to the role of government in a country like Australia. It's one of the reasons that Australia was once known as a working man's paradise and one of the reasons that we have historically led the world in the achievement of shorter working hours and better working conditions. So I think this is an important development in that space, and we commend the committee's work and hope that some of our ideas may prove useful to ensuring the NES is fit for the second quarter of the 21st century, which we're now in—which makes me feel very old indeed! Thank you. CHAIR: Thank you very much. We're really grateful for your attendance here today and, for your submission. You'll be sent a copy of the transcript to request any required corrections to. Enjoy the rest of your Wednesday..