Self Employed Australia

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“Everyone needs an Advocate”

Pay on time

You don’t save something by destroying it!

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Senate-committeeOn Friday last (10 November) I appeared before the Senate Committee looking at the Loophole Bill.

Earlier in the day the Transport Workers Union had organised gig workers and others to appear before the Committee to describe how difficult their jobs are. We totally agree that all workers need protections. But gig workers are self-employed people, and they are not ‘protected’ if their right to be self-employed, to be their own boss, is destroyed.

This is the point I made in my presentation to the Senate Committee on Friday. (19 minutes)

Ken-Phillips

The government might have a declared intent to ‘protect’ gig workers and self-employed owner-drivers, but its ‘solution’ is all wrong. It wants to ‘protect’ us by denying us the right to be self-employed—to be an owner-driver or to be a self-employed person working through a gig platform.

There are better and more effective ways to ‘protect’ us self-employed people and we’re campaigning for this. These include:

  • Making government departments subject to unfair contract laws.
  • Having security of payment laws, particularly for construction and housing tradies.
  • Prompt pay on time laws.
  • And more.

These are real solutions that make common sense.

Labor’s ‘employee-like’ agenda assaults competition law

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employee-likeWe informed you on 7 May that the Federal government’s anti-small business plan was progressing. It released a Consultation Paper on 13 April requiring submissions by 12 May. We’ve lodged our submission opposing the planned legislation. The submission is here.

Sorry, but the submission is long—yep, 11,000 words.

The reason for the length is that the government’s plan is presented as if it’s a ‘tweaking’ of law and of limited application. It’s not. It’s a massive assault against the very principles and practices of contract that determine your right to be your own boss, to be self-employed. This can only be understood by understanding the detail.

We’ll explain the detail in shorter ‘chunks’ through this and a series of future news alerts. If you have queries, please contact us.

Competition law ‘protects’ self-employed, small business people

Today we cover the grave threats posed to competition policy and law, the jurisdictional authority of the Australian Consumer and Competition Commission (ACCC), and the right of people in Australia to earn their income as a small business person.

Competition law regulates commercial contracts.

Employment law regulates employment contracts.

  • The government’s plan is to allow employment regulation to regulate commercial contracts.

This is a massive step across a fundamental threshold.

The plan is to legislatively redefine commercial contracts to be employment contracts on the alleged grounds that some self-employed people are ‘employee-like’.

This defies the High Court’s declaration in February 2022 (Personnel Case) that:

  • “The employment relationship with which the common law is concerned must be a legal It is not a social or psychological concept like friendship…”

In effect, the plan is to ‘invent’ a new legislative contract form that is outside common law to thwart common law contract.

This also breaches Australia’s International Labour Organisation obligations where the ILO declared in 2006 that:

  • “National policy for protection of workers in an employment relationship should not interfere with true civil and commercial relationships…”

Competition clash

The provisions will immediately set up a clash between competition law and employment regulation. Specifically, the ACCC and the Fair Work Commission (FWC) will both be required to regulate commercial contracts that have been declared ‘employee-like’, but each with different and opposing public policy objectives. The ACCC to prevent collusion over pricing and ensure competition. The FWC to facilitate price collusion thereby creating the circumstances for anti-competitive behaviour.

This is being done under the pretext that some self-employed people need ‘protections’.

But protections are already in place:

  1. Sham contracting laws in Australia are possibly the strongest in the world.
  2. The Independent Contractors Act outlaws payment below similar pay to an employee.
  3. ‘Beefed up’ unfair contract laws begin in November 2023 and will be handled by the ACCC.
  4. Collective bargaining for the self-employed is already available through the ACCC.
  5. Improved, easier dispute resolution can be made available through small business ombudsmen, etc.
  6. New ‘pay on time’ laws are currently being considered.

We are now undertaking a major advocacy campaign directed at Federal MHRs and Senators. We’ll keep you informed.

Paying small business on time. Albo: Please keep the good bits of the ABCC!

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paying-on-timeThe most important, practical issue facing all small business people is getting paid on time. But when working for a large business, far too many of us self-employed ‘mugs’ discover that we’re being used as a cheap source of finance for our ‘clients’ through delayed payments.

Payment reporting

The Morrison government set up a ‘big business–pay small business on time’ reporting system. The Small Business Ombudsman’s latest analysis of payment times shows that ‘more than half of big businesses are missing their own deadlines for paying their small business suppliers’. This is damning of Australian big business. It’s a rort that’s being going on for decades.

Construction sector ‘pay on time’

But there is one brighter spot. In the construction sector, subbies are routinely screwed over by big builders paying invoices really late. However, the construction regulator, the ABCC, runs a system requiring builders to pay subbies on time. It’s very effective.

This is because the ABCC’s power enables a significant ‘closing of the stable door before the horse bolts’. The key is that the ABCC’s powers rely on commercial triggers, rather than complex legal or administrative processes.

That is, construction contractors risk losing access to Commonwealth government-funded contracts if they fail to pay their subcontractors on time. It works really well. The outcome is that big builders don’t dare pay subbies late. The commercial risk is too high.

However, the construction unions hate the ABCC because the ABCC takes militant unions to court for breaking the law. Now the Albanese government is to close the ABCC to keep the unions happy. Okay. Fair enough. We all understand the political play.

Please keep the good bits, Albo!

We’re asking the Albanese government to ‘please keep the good bits of the ABCC’. In other words, keep the processes in construction that ensure that small business subbies are paid on time. It’s really important.

Numerous attempts by governments to find regulatory fixes for late payments in the construction sector have a poor record. The ABCC’s model, on the other hand, has worked.

  • When payments are within agreed/required terms, better cash flow management operates throughout the sector.
  • Better financial discipline operates through the sector when builders do not/can not exploit subcontractors as forced financiers of their businesses.
  • When payment times are tight and major builders go broke, the loss exposure of subcontractors should be/is limited to the agreed/required terms of trade. That is, loss exposure should be limited to (say) 30 days of trading instead of (say) 90–120 days of trading.

Our interest is of course the construction subbies—that is, the self-employed people who actually work on the tools, physically doing the building—and the myriad of self-employed specialist construction consultants as well. But frankly, proper payment times are good for everyone.

Campaign to defend self-employed people: It’s going to be a battle

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self-employed-battleWith the election of the Albanese government, there’s been a frenzy of academic, union and Labor government commentary about how big changes are coming for self-employed people. There’s the:

  • Demonisation of the ‘gig’ economy, as if every gig worker works in some sort of oppressive Dickensian environment.
  • Pushing of ‘employee-like’ independent contractor concepts and of bringing such people into employment regulation.
  • Calls to change the definition of self-employment/independent contracting.
  • Renewed attack against owner-drivers.

Let’s be clear. The Albanese government has stated its intent to implement new, aggressive policies around each of these issues. Workplace Relations Minister Tony Bourke explained on ABC Radio the ‘big shift’ that’s to happen.

Frankly, we (SEA) have been around too long (since 2000) and we are too experienced to fall for the spin that this is to ‘protect’ self-employed workers. These types of agendas have been promoted by the broad Labor movement (unions, ALP, Labor academics) since the 1990s. The agenda is to squeeze the life blood out of people who are, and want to be, their own boss. We know the game.

But this time is different from the last three decades-or-so. With The Greens and at least one independent Senator, Labor has the numbers to push its agenda through parliament.

Their agenda is, of course, damn nonsense and will be cancerous to the livelihoods of Australia’s 2.1 million self-employed people. You won’t know the cancer is there until you start feeling the pain.

However, don’t expect something different from the Dutton opposition. After the Morrison government’s 2019 win, the Coalition demonstrated a brain deadness on small business issues.

  • Yes, it introduced some good ‘pay small business on time’ requirements but didn’t go far enough.

But,

  • It continued to allow the ATO to bully, harass and oppress small business people without any checks and balances.
  • It failed to implement the beefing up of unfair contract laws that were ‘ready to go’. Did it do a deal with the big end of town to put this off?

Now for some balance. While we’re warning about, and will campaign against, Labor’s destructive agenda for the self-employed, there’s some good news.

The upshot is that we have a battle on our hands. The are some positives in the Albanese government’s small business agenda, but also some shockers. We’ll be producing considerable commentary and analysis to explain the good and the bad over the coming months.

Morrison’s dead flat small business pitch

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election-2022-pitchLast week Morrison made his pitch for the small business vote. It fell dead flat. That’s strange really.

It’s almost an Australian political truism that political parties cannot win government in Australia without a sizable chunk of the small business vote. So, for Morrison, who’s supposed to be ‘Scotty from marketing,’ his seeming blindness to this alleged truism is odd.

Morrison’s pitch was that by lowering overhead costs and energy bills he’d create a vast number of new small businesses. This pitch is not specific and applies generally to any business (or family) in the economy. There’s no ‘joining of the dots’ between the pitch and the lives of the self-employed, small and family businesses.

Again, it’s strange that Morrison has totally missed his small business target. The Coalition in fact has a substantial history of not only spouting the small business mantra, but of having substance to support the mantra as well. Take some examples.

John Howard created the Independent Contractors Act to protect the status of the self-employed. Tony Abbott committed to the introduction of a Federal Small and Family Business Ombudsman and put the wheels in motion for unfair contract laws for small business.  The Abbott-era commitments were finalised and delivered under the Turnbull coalition government.

Self-employed, small business people profile strongly on the measure of informed and swinging voters. They are extensive seekers of information. This again is why Morrison’s dead flat small business pitch seems so strange at this election.

At the 2019 election Morrison promised to introduce security of payment laws for small business. He’s done this. And it’s good. It’s strange that he’s not pitching it.

He also promised to ‘beef up’ unfair contract protections for small business people. The Bill was ready to go. But strangely this major pro-small business Bill was deserted immediately before the election was called. Did the ‘big end of town’ get to Morrison to pull the Bill?

Then there is the elephant in the room. The Australian Taxation Office has been crucifying small business. The ATO has destroyed small businesses in the research and development space—claiming dodgy use of grants—but the ATO subsequently admitted that it was wrong.

The ATO has been attacking small and family business trusts, forcing trust beneficiaries to pay tax when (even the ATO admits) the beneficiaries have not received any income. The ATO has also sought to change trust distribution rules retrospectively, thereby creating tax debts in the past where, under then-existing ATO rules, no tax debt existed.

In the 2021 Budget the Morrison government declared in Parliament that “We are backing small business in over the ATO. No longer will the ATO be able to garnishee and takeaway (alleged tax debt) while the dispute is in train”. But this promise turned out to be false. The implemented policy only enables small business people to ‘apply’ to have a disputed debt ‘paused’ until appeals have been heard.

Morrison’s pitch to create large numbers of small businesses falls dead flat if those new (and existing) small businesses find themselves under unfair attack from the ATO without the protections afforded by a rule of law regime.

To win and retain the small business vote the Coalition has historically made a policy of substance that it then delivers when in government.  This time Morrison is not selling what he’s done and not promising anything new for small business.

It’s almost as if Morrison has abandoned the small business vote. How odd!

Closing the construction watchdog will harm self-employed tradies

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Unfair contract laws

In March we praised the Morrison government for moving to ‘beef up’ the unfair contract laws for small business people. Albanese’s Labor also supports this, which is great. Unfortunately, the Bill did not pass through Parliament before the election was called.

Integrity Commission – ATO

Labor has made a big noise about Morrison failing to establish a Federal Integrity (anti-corruption) Commission. Here’s our assessment of the issues and politics of this. Morrison has a model, but Labor wants one based on the NSW Commission. The NSW Commission is, however, accused of being a kangaroo court that the High Court found breached the law. The Morrison model would, for the first time, make the ATO accountable to an external body. That’s a policy we strongly support.

Industrial relations

Last week Morrison announced he would move on some industrial relations reform. Labor attacked and Morrison quickly reversed his stance. Here’s our assessment of the politics around this issue. Essentially, we say that the ‘big end of town’ wants changes to suit themselves. But we reckon that the ‘big end of towners’ are incompetent in managing their workplace relations.

Construction Industry Watchdog

If there’s one Labor commitment that stands out, it’s that an Albanese Labor government will close down the Australian Building and Construction Commission (ABCC).  We see this as highly negative for self-employed people in the construction sector. We strongly oppose this Labor policy.

Here’s our longer assessment, but in summary:

  • The ABCC has brought some discipline to the mafia-like behaviour of construction unions. Over the last two years the ABCC has had the courts impose fines totalling some $5.7 million for illegal (thuggish) behaviour.
  • What’s extremely important is that the ABCC operates a Security of Payments system in the construction sector. It’s a vital service. All construction firms within the ABCC’s jurisdiction are required to pay their subcontractors within payment terms. If they are late, they must report this to the ABCC. Subcontractors can lodge complaints with the ABCC over late payment.
    If contractors do not pay on time, they risk sanctions that ultimately include being banned from all Commonwealth-funded work. Over around the last 5 years the ABCC has recovered some $10.7 million in outstanding payments owed to subcontractors. Some major contractors have been disciplined.
    An external review of the ABCC reports a “reduction in the number of delayed payments” and “greater efforts being made to pay subcontractors on time.” This is critically important.

There’s no doubt that should Anthony Albanese’s Labor win the election, one of its highest priorities will be the elimination of the ABCC. The outcome would be renewed, unrestrained thuggery on construction sites. Further, small business tradie subcontractors would again carry the risk of not being paid. A bad outcome for all except for the thugs.

(Disclosure: Ken Phillips is a member of the ABCC Security of Payments Working Group along with representatives from the ACTU and Building Industry Associations.)

We’ll produce more election assessments on issues for self-employed people over the coming weeks.

Xmas is here—Goodness. A quick update and Season’s Greetings!

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seasons's-greetingsSuddenly Xmas is upon us. What a year!  Season’s Greetings to all our members and followers! We wish you the very best for a ‘non-lockdown,’ ‘sudden rules change’ Xmas and holiday season.

Here’s a quick pre-Xmas update for you on our two main campaign activities.

Victorian Government OHS prosecution campaign

The fund-raising response has been outstanding. We’re looking solid in achieving our funding target for the legal campaign. We try and ring people to say thanks for contributions but the numbers have become a bit overwhelming. Please accept our thanks if we haven’t rung you.

The funding is so solid that we’ve started the process of spending serious money on lawyers. The full legal team had a long and highly productive Zoom conference early last week. Tasks have been allocated, research into the finer details of legal issues is occurring, and preparation of court papers has begun. We’ll keep you updated during January. I won’t go into the details at this stage.

We’ve had quite a few queries around the fact that WorkSafe is prosecuting the Victorian Health Department and what this means. I’ve prepared another short video explaining that the prosecution of Health doesn’t change the fact that individuals also need to be investigated with a view to prosecution.

Here’s the YouTube video:

NATL

Reform of the Australian Taxation Office

Our decade-long campaign to reform the ATO rules governing how it is required to treat small businesses continues. Yes, we’ve been on this case for 10 years. Yes, we are persistent.

Here’s the ABC coverage of what we’re seeking:

Helen

You’ll be pleased to hear that we are in discussions with the ATO on our Taxpayers Rights Agenda based on the USA model for regulating the IRS. The ATO is showing genuine interest and seems to want to understand. That’s good. We’ll continue the discussions.

Other major issues

  • The new Federal ‘pay on time’ laws are now in full implementation. This is hugely important for small business people and a great Xmas present. We’ll provide some updates in the New Year.
  • The beefing up of Unfair Contract laws is slower than we’d like. The new Federal Bill has across-the-board support but seems to be caught up in an overloaded Parliamentary backlog of Bills. We hope it proceeds before the next Federal election. We’ll certainly push for this.

So again. Season’s Greetings to everyone. Let’s all trust that planned holidays, long overdue family gatherings and some well-deserved relaxation occurs without Covid-reactive government interference.

Small business hugs Karl Marx? That’s a turnaround!

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karl-marxIn the nineteenth century, the father of communism, Karl Marx, ‘created’ class ideology where ‘evil’ capitalists always exploited the working class (who were little more than wage slaves). The worker–bosses war has been fought ever since. Workers have been allowed to strike and bargain collectively through unions to secure their rights against the exploitative bosses.

However self-employed, small business people upset this simple idea because we are both the worker and boss in one. How is it that we can ‘exploit’ ourselves? This has resulted in confused law. It’s confused unions who try hard to force self-employed people to be employees so we can be ‘exploited’ and join the union class. It’s pretty silly really.

But the Australian Consumer and Competition Commission (ACCC) has come to the rescue. The ACCC regulates the economy, checking that big businesses doesn’t use their dominant power to exploit consumers. But now the ACCC has taken another step to stop big businesses using their dominant power against self-employed, small business people. The ACCC is making it really easy for small businesses to bargain collectively with big businesses.

Small business collective bargaining has been available for a few years, but you needed significant legal knowledge to do it correctly. And you had to receive ACCC approval. Now it’s very simple. It:

Only requires a one-page form. No lodgement fee.

Authorisation is then automatic.

Your business turnover must be less than $10m a year.

The ACCC link is here.

What does this mean in practice? Here are some simple examples:

If you are (say) an IT contractor supplying services to (say) a government department that applies a standard pay rate across all similar services, a group of IT contractors could get together to negotiate a different rate.

If you are a retailer and want to bulk buy a product from a supplier, you could get together with other small retailers to negotiate a better price if you buy collectively.

If you are putting in a tender to supply (say) HR services to a large company, you could get together with other HR independent contractors to put in a collective tender.

This collective bargaining process offers opportunities to at least partially match the bargaining power of big business and government by self-employed, small business people. It creates real, additional opportunities for small business.

Combine this with the new pay-on-time laws and the planned ‘beefing up’ of the unfair contract laws and Australian small business people are really starting to receive a fair go in the Australian economy. These are big, important reforms.

The only problem is that unions and others who passionately believe in Karl Marx’s workers–bosses war might feel a bit annoyed. If class ideology is suppressed by new, fairer market regulation, how do unions and others still maintain the battle?

If you owe the money, pay up! That’s damn good policy

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pay-on-timeMy heart was gladdened recently by the spectacular collapse of Greensill Capital, once a darling of the financial and (some) political elites in Australia and the UK.

Greensill was a ‘leader’ in reverse factoring, also known as supply chain financing. In its simplest formulation, reverse factoring enables a supplier to receive faster payment of money owed to it by paying a fee to a finance company. The finance company pays the supplier and takes over the debt. It can be good.

But the way it was working under Greensill had the stench of ‘come in sucker’.

Greensill claimed to have hundreds of clients, all of whom seemed to be big-end-of-town types such as Telstra.

But the trick that was happening under Greensill is that its clients seemed to routinely screw their small business suppliers by extending payment terms out to 90+ days. The deal then was that the small businesses would pay a commission to Greensill so that Greensill would pay them the money they were owed by the conglomerate.

In summary, the conglomerate takes money from the small business by extending payment terms. Then the small business had to pay Greensill to be paid. For small business it was rip-off territory.

But what was really on display here was capitalism at its grubby, manipulative worst.

Market economies and societies are not Wild West, unrestrained capitalist societies. Successful markets regulate behaviour. Good market regulation is as ‘light touch’ as possible. In the Greensill case, the regulators had moved in on this reverse factoring model and went further.

In the 2019 Federal Election campaign the Morrison Coalition made a firm commitment to introduce a package of small business pay-on-time laws. This included the government paying small business suppliers within 20 days, as well as requiring large businesses contracting with government to do the same. And further, establishing a compulsory small business pay-on-time reporting system for all large businesses.

As of now, each of these promises has been implemented or is in the final stages of implementation. Cross-party political support has been firm.

In this case of Greensill the damage to small businesses by the exploitative reverse factoring game was limited. The regulatory push moved in comparatively early. Too often, if the market is unregulated and left to ‘self-correct’, the damage to individuals is horrendous. Harm done to a few cannot be justified by the alleged benefit of the greater good in the long term.

In this ‘pay on time’ story we can witness perhaps an example of quality, ‘light touch’ regulation.

And there’s one simple principle in play. If you owe money: Pay!

Without doubt, for small business people, being paid on time is the BIG issue!