First ‘Annual’ Report
[This first ‘annual’ report is an 18-month report covering the first 18 months of operation as permitted under ICA’s constitution.]
ICA was formed in mid-2001. It originated in response to the major reforms to the Australian tax system mooted at that time and the associated debate over the legitimacy (or otherwise) of independent contractors and their tax treatment.
The allegation being made, from a wide variety of sources, was that independent contractors somehow ripped off the tax system and that alleged loopholes needed to be closed. Those allegations were not substantiated by hard evidence and, in fact, the only serious audit done of independent contractors’ tax by the Australian Tax Office concluded that no systemic rorting of the tax system was occurring. As a consequence of this campaign against independent contractors, the changes to the tax system proposed in 2001 sought to deny independent contractors their right to access business tax arrangements.
The issue was simple but hugely important—would the Australian tax system allow independent contractors the right to run their working lives as small business people, with equitable access to business-type tax treatment? The alternative being proposed was to deny independent contractors the right to business tax treatment and to force them into employee-like tax arrangements. The issue was not simply about tax, but about bigger social issues, namely, the right of people to escape the bondage of employment and to become truly independent business people, with all the lifestyle choices that go with being self-employed.
During this tax debate, a small group of independent contractors from a variety of industry sectors—for example, IT, housing, finance, farming, transport, etc—formed an unofficial network that worked behind the scenes to lobby on the tax issue. In undertaking the lobbying, however, the network members realised that they had struck upon a greater and more pressing need. 26 per cent of the private-sector workforce were independent contractors, but no single organization existed to represent them. Industry bodies did exist to argue for industry needs, and unions and employers represented their respective class of persons. But no organization existed to focus exclusively on the independent contractor view. Further, it was realised that the information available on independent contractors was largely negative and portrayed independent contractors in a bad light. For whatever reason, there seemed to be forces working aggressively against independent contractors.
Faced with this realisation, the network decided to form Independent Contractors of Australia, with operations based on several guiding ideas. ICA would:
- Seek to develop and make available high quality, easy-to-understand information on independent contractor facts and issues.
- Lobby on independent contractor issues so as to protect independent contractors’ rights.
- Complement and add to the work of industry and other representative organizations where appropriate.
Rely heavily on networking.
- To achieve these key purposes it was decided to make ICA a ‘virtual’ organization and to operate primarily through a Website. Funds were raised for the site and an initial temporary Website was launched in August 2001.
ICA continued to lobby heavily on the tax issue during the second half of 2001 and, late in 2001, a resolution was achieved which ensured that independent contractors had rights to access business tax status and treatment.
With fairer tax legislation secured for independent contractors, ICA turned its attention to developing the full Website, an exercise of mammoth proportions. The now-permanent site was launched in February 2002, with improvements continuing until mid-2002. The Website result, we believe, is pleasing. Feedback from visitors to the site is consistently positive, indicating that we have achieved the core objectives of a user-friendly site which supplies quality information to subscribers and visitors.
An essential feature of the Website is the ability to join ICA as a subscriber member and to pay via credit card through the linked National Bank secure Website. The steady flow of subscriber member registrations during 2002 has been predominantly through the credit card facility.
With the Website well in place, ICA found itself continuing to need to lobby on a wide variety of issues during 2002. We produced a series of issue/discussion/position papers, drew public attention to the issues and argued for resolution. The expanded content on the Website attests to the range of issues covered and the consistent and persistent effort that has been required. Aside from continued attention to tax matters, some other issues covered included:
- Two major submissions to the Cole Royal Commission into the building industry.
- A submission to the review of the Trade Practices Act.
- A submission to the review into the South Australian Workers’ Compensation scheme.
- A position paper on union ‘service fees’.
Towards the end of 2002, another important issue emerged to which ICA had to respond and which proved the value of the organisation. The ATO released tax advice regarding independent contractors working through labour hire companies. The advice was clearly wrong in that it was not a correct interpretation of the Tax Act. ICA undertook an analysis and released information stating that the ATO were ‘spin doctoring’. This was picked up by the press. Communication with the ATO followed and we were pleased to discover that the ATO accepted ICA’s criticism as valid and engaged in genuine and constructive dialogue on the issue. As a result, the revised information on the ATO Website (released late in 2002) is an accurate reflection of the Tax Act and provides reliable information for independent contractors who work through labour hire companies.
Our lobbying efforts have been much enhanced by the bulk e-mail facility that has been developed as part of the Website. During 2002, ICA averaged an e-mail alert to subscriber members and other people registered on the site database, of about one every two weeks. Through this simple e-mail communication system, ICA is able to keep subscriber members and interested persons alert to developments and issues in a timely fashion.
Feedback and queries through the Website from independent contractors have been steady, averaging about four responses a week. This has proved important because it has helped ICA keep its feet ‘on the ground’ and in tune with independent contractors’ concerns. Significantly, most queries are still tax-related and often exhibit a misunderstanding of the outcome of the tax resolution of 2001. In particular, many people still believe that the 80/20 rule was the dominant test of independence. These queries have been clarified when people realised that the results test was now the key tax issue for independent contractors.
ICA’s information campaigns have attracted considerable attention from the press during 2001-02. ICA has had consistent coverage in The Australian, The Age, The Sydney Morning Herald and The Australian Financial Review. The IT sections of these papers have shown particular interest. At all times, press interest has related to issues on which ICA has been lobbying.
Another important aspect of ICA activity is the linkages to independent contractor orientated or interested bodies. These are listed in the Website and provide a valuable resource for independent contractors needing advice or information on specific areas. Expanding the links is a priority for 2003.
Overall, an assessment of the first 18 months of ICA’s operations reveals that a solid and constructive start has been made. We have a highly useable Website through which the entire organization is able to operate. We have quickly developed a reputation and are being watched for what we have to say. ICA is well positioned to move forward to protect the rights of independent contractors.
It is necessary, of course, to thank the many people who have put in long hours of work establishing and now running ICA. Other than Website maintenance and operation, all people involved with ICA work on a voluntary basis. There are no paid staff. ICA is truly an organization of independent contractors for independent contractors.