If Anthony Albanese becomes the 31st Australian prime minister at the next election he plans to totally transform the way business is conducted in Australia.
And although Albanese uses different words his revolutionary plan is a duplicate of what Joe Biden intends to do in the US.
Both Biden and Albanese have embraced a policy that will slash independent contracting in areas like home building, (plus repairs, maintenance and renovation), information technology, health services, mining and many others.
Both the US and Australia have transformed their communities using this mechanism to flexibility provide skills and services. In many cases enterprises and government don’t have sufficient work to justify full time employment or, more often, they need specialised skills. Massive labour hire companies have developed to mobilise people. .
Governments, private enterprises and households are all wide users of independent contracting.
There is also the so called “gig” economy highlighted by Uber and Uber Eats.
During the week I set out the 10 major planks in the Biden US revolution. But there is an 11th — to ban independent contracting in US federal jurisdictions.
Albanese may challenge my statement that he proposes an independent contracting ban. Later I will explain why what he proposes makes most independent contracting in Australia impossible. As an election nears he may more carefully target his policies.
Similarly, in the US election campaign, Joe Biden downplayed independent contracting bans.
But in late campaign tweets he made it clear that he would support the Democrats’ proposed legislation called ProAct which is very similar to the Californian AB5 legislation which bans independent contracting.
There is a left wing ideological twist to Biden’s actions because in California AB5 has been a disaster. It boosted unemployment and caused large IT companies to leave the state. At the same time as the presidential election, a Californian referendum was held on whether independent contracting should be allowed in Uber and similar enterprises. Californians endorsed the continuation of the Uber contracting system. To be fair, Uber spent large sums on the campaign.
The Californian AB5 ban remains, covering non-transport but it allows exemptions and there is now a queue of people demanding and receiving those exemptions.
Obviously it is possible that Biden will back off on independent contracting, at least until the impact of his other major changes can be assessed
But Biden is looking to boost unions. And in both the US and Australia it’s the unions which want independent contracting removed from the landscape.
Just as they woke up to Bill Shorten’s franking credit unfairness, Australians are so deeply involved in independent contracting that they will understand all sides of the contracting issue.
Australia has a system of differentiating contracting and employment by using the so-called “common law”. This centuries-old set of precedents underpins Australian contracting legislation nationwide.
And so, if a person makes arrangement to undertake a task for remuneration and that arrangement gives all the control over hours, times of work and locations etc to the “employer” , then it’s an employment relationship.
Sadly, many people who claim they are “contractors” actually have an employment relationship. Cleaning is an area where this is prevalent. And for those “contractors” who are really “employees” the Albanese protections make good sense.
Under Australian independent contracting legislation, if the person performing the task has a choice as to whether to accept the work and, where appropriate, to be able to choose when the work is done and how a task is carried out, then it is a contracting relationship. Usually, in contracting, you can do work for others and you often provide your own “tools” .
While Bill Shorten didn’t understand how franking credits actually worked Anthony Albanese understands the magnitude of what he is proposing when he declares: “Nearly a third of Australian workers are in arrangements with unpredictable, fluctuating pay and hours. They endure few or no protections such as sick and holiday leave, or superannuation”.
To “remedy” this Albanese proposes a series of measures:
‘Job security’ explicitly inserted into the Fair Work Act;
Rights for gig economy workers through the Fair Work Commission;
Portable entitlements for workers in insecure industries;
Casual work properly defined in law;
A crackdown on cowboy labour hire firms to guarantee same job, same pay;
A cap on back-to-back short-term contracts for the same role;
More secure public sector jobs by ending inappropriate temporary contracts.
And finally, the big weapon – government contracts to companies and organisations that offer secure work for their employees.
Independent contracting is about flexibility and when all those restrictions are placed on the activity it is tantamount to a ban.
Many Australian couples use legitimate contracting to gain flexibility in their lifestyles.
COVID-19 underlined that there is no job security in private enterprise and those who remember history know that also applies to government employment.
But there is another aspect to independent contracting that is not understood by the ALP—-the way Australians use the so called “gig economy”.
We are fortunate that the Victorian ALP government undertook a national survey of 14000 people that found that just 7.1 per cent were currently doing “gig” work.
But of that 7.1 per cent just 2.7 per cent had gig work as their full-time income—ie just 0.19 per cent of the total Australian workforce use the “gig” economy for their full time income.
The report shows that workers use the various “gig” platforms and the choice of contracting available to work around other commitments to gain additional opportunities to generate income.
It’s true there is no superannuation but if the gig economy is used as an income adjunct then holidays are available at any time by stopping the supplementary income. This is exactly what the Californian advocates of AB5 didn’t understand and its why they were defeated in a referendum. The Californian politicians also did not understand that independent contracting was the engine room driving the Californian economy as it is in Australia.