Almost $1 billion a year could be added to gig economy, labour-hire wage bill under IR changes

Almost $1 billion a year is expected to be added to the wage bill in the gig economy and the labour-hire sector under the second tranche of Labor’s industrial relations reforms.

Rideshare drivers and food deliverers would collectively receive an extra $400 million a year, with the government warning some of that cost could be passed on to consumers and restaurants.

Workplace Relations Minister Tony Burke said the bill would close loopholes that weakened the industrial relations system.Credit: Joe Armao

Documents attached to the government’s Closing Loopholes Bill, introduced into parliament on Monday, also estimate the labour-hire changes – which aim to ensure employers aren’t undercutting enterprise agreements by bringing in auxiliary workers on lower wages – will lift wages in the sector by $510 million annually.

The business lobby is demanding the government rein in the definition of digital platform workers eligible for minimum pay and conditions under the bill, which requires workers to satisfy only one of four criteria to be deemed “employee-like”.

But Workplace Relations Minister Tony Burke said the bill – which also criminalises wage theft, sets minimum conditions for road transport workers and makes it easier for casual workers to convert to permanent positions – would close loopholes that weakened the industrial relations system.

“The loopholes that have been harming workers, families, employers and our community can be closed here this year,” Burke told parliament.

“The businesses which use these loopholes are able to undercut Australia’s best employers in a race to the bottom. If we want workers to be paid properly, we need to close the loopholes. If we want casuals to have a pathway to secure work, we need to close the loopholes.”

According to a regulatory impact statement produced by the Department of Employment and Workplace Relations and attached to the bill, allowing the Fair Work Commission to set minimum pay and conditions for digital platform workers would result in an annual wage increase of $403.8 million over the next 10 years. That figure is based on an assumption that wages for digital platform workers may be close to the relevant award wages.

The wage bill is expected to be $472 million in the first year, 2025-26.

“If subject to a minimum standards order that increases their operating costs, digital platform businesses may pass on some of this cost to consumers and/or third-party businesses (for example, restaurants that use digital platforms to connect with workers to deliver food to consumers),” the impact statement says.

The statement also acknowledges that care work, including the disability sector, could potentially be affected in regional and rural areas, which rely on apps such as Mable.

Rideshare and delivery giant Uber welcomed setting minimum standards for its 150,000 drivers and riders.

“We will continue to work constructively with the government as they progress the bill and in the meantime look forward to examining the details when the bill is introduced to parliament,” an Uber spokesperson said.

Labor is relying on department estimates that the change to labour-hire laws would affect only about 67,000 workers, meaning it would have a negligible economic impact.

Labour hire is the use of an often-temporary workforce outside a business’s normal employee cohort.

The Australian Council of Trade Unions applauded the legislation, including for gig economy workers. ACTU secretary Sally McManus rubbished employers’ claims that the changes would damage the economy, and questioned how Australians could accept workers being paid less than the minimum wage.

“We’re about making sure people at least get the absolute bare minimum, modest and fair changes,” McManus said.

However, she criticised one of several carve-outs that meant the labour-hire overhaul would not apply to small businesses.

The legislation lays out a multifactor test for digital platform workers to satisfy before they can be deemed “employee-like” by the Fair Work Commission, including whether they have low-bargaining power, low pay and little authority over their work.

Australian Chamber of Commerce and Industry head Andrew McKellar said the fact workers had to meet only one, rather than all, criteria, meant it would capture a broader range of contractors than intended and urged the government to tighten the definition.

McKellar said he was also wary of a provision in the bill that gave the minister the power to make regulations relating to entities within the road transport supply chain, which, he said, would affect “everyone from ship to supermarket, and road to restaurant”.

The government is facing a concerted campaign against the changes from a coalition of business groups, and Minerals Council chief executive Tania Constable labelled them the “most extreme, interventionist workplace changes that have ever been proposed in Australia”.

Burke is allowing four weeks of debate in the lower house before the bill is sent to the Senate. The opposition on Monday lost a motion to push debate back to October 16 rather than Tuesday, due to the bill’s size and complexity.

“Mr Burke himself has admitted that the new laws will increase costs for consumers for everyday services they have come to rely on,” opposition industrial relations spokeswoman Michaelia Cash said.

The Greens, whose numbers in the Senate are crucial for the bill’s success, want workers to be given the legal right to ignore calls or emails from their bosses after hours, known as the “right to disconnect”.

However, Greens leader Adam Bandt said the party was yet to decide whether its support for Labor’s legislation was contingent on that amendment.

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