Election 2022: Labor’s jobs plan ‘to cost billions’, says business

The nation’s largest employer groups are warning Labor’s secure jobs plan could force business to pay billions in entitlements each year into new union-linked funds.

Master Builders Australia chief executive Denita Wawn.

The nation’s largest employer groups are warning Labor’s secure jobs plan could force business to pay billions in entitlements each year into new union-linked funds, driving-up costs for companies and consumers while putting the economic recovery at risk.

The Australian Industry Group, Business Council of Australia and Master Builders Australia have sounded the alarm on key planks of Anthony Albanese’s ­Secure Australian Jobs Plan which commits Labor to consultations on new portable entitlement schemes “where it is practical”.

The entitlements – which are not specified in Labor’s policy but could include long-service leave, annual leave and sick leave, among others – would be developed for Australians in “insecure work”, which employer groups argue could ­capture workers across the economy from casual employees to ­independent contractors and ­hundreds of thousands of self-­employed tradies.

Ahead of the May 21 election, the Opposition Leader – who is ­already under pressure over his economic credentials – now faces a major intervention from business to explain the details of his policy, including which workers would be captured, how much extra employers would need to pay, who would control the funds, and how the profits would be used.

Labor’s industrial relations spokesman, Tony Burke, told The Weekend Australian there was “no cost to business – or to anyone – for a consultation process”.

But the MBA warned an extra $2.3bn a year could be poured into the new entitlement funds if the 230,000 tradies in the construction sector were captured, and the Ai Group said some employers would be slapped with a new levy of 15 per cent.

The BCA said it would complicate IR rules, increase costs, and act as a drag on productivity.

MBA chief executive Denita Wawn said she was “alarmed that Labor’s policy could amount to a war on tradies and those who ­relish being their own boss”.

“Labor needs to immediately clarify if it is their intent to force more than 230,000 self-employed tradies, or the businesses they often work for, to pay billions into entitlement funds,” she said.

“Labor’s Secure Jobs Policy, if it becomes law, will be nothing less than a total disaster for small business, tradies and subcontractors and would put the economic recovery at risk.”

Ai Group chief executive Innes Willox said Labor could win government without having explained how its entitlement scheme would work, with the true costs of the policy to be discovered only later.

“How would it be administered? How would the money raised be invested, and by whom? Under what circumstances would it be paid out? What would be the impact on employment?” Mr Willox asked.

“There is obviously a lot of ­detail to be filled in on who is ­impacted. Employers can only think they will all be impacted in some way or another, so as much detail as soon as possible is vital.”

He said that casuals – one of the groups defined by the ACTU as being in “insecure work” – already received a 25 per cent loading to cover annual leave, long-service leave and personal leave.

“To receive another payment from an employer would amount to ‘double dipping’, meaning that workers would inevitably have to lose their casual loading and all the income that comes with it,” Mr Willox said.

“That means 2.5 million Australians now paid the casual loading would face a significant wage cut to fund such a scheme. Employers would not willingly pay twice. The simplest calculation is that a union-inspired portable ­entitlement scheme would result in a levy of at least 15 per cent on employment.”

Mr Burke said portable entitlement schemes would “not be the answer for every industry or for every worker, but for some people they have been life-changing”.

He also provided an assurance that most casuals did not have ­existing entitlements and would therefore not be included in the portable entitlement scheme.

“The vast majority of casuals do not have entitlements that can be made portable so this element of our plan simply won’t apply to them,” he said. “We have announced other measures to help casuals with job security.”

However, Victorian Premier Daniel Andrews has recently unveiled a two-year $245m pilot program providing casual workers with sick leave and carer’s leave. Eligible occupations include workers in the hospitality, retail, cleaning, security, aged care and disability care sectors.

Industrial Relations Minister Michaelia Cash described the ­Opposition Leader’s workplace reform as a “hidden tax on industry”.

If the entitlement scheme was applied broadly to construction, Senator Cash said, it would “drive up the cost of building and buying a house, and drive up the cost of employing more people”.

“This is another clear example of Labor having no idea what impact their policies will have on jobs and the Australian economy.”

The BCA said that to create more secure jobs, government needed to “fix the workplace relations system by making it less complex”.

“This proposal doesn’t do that – it risks making the system even more complicated and adding costs for businesses and consumers just as the economy begins to recover,” the council said in a statement.

“Needless complexity is a drain on productivity and competitiveness, and it acts as a deterrent to ­attracting investment and the ­innovation needed to strengthen existing industries and create new ones,” the BCA added.

The board members on Australia’s largest existing entitlement scheme, Incolink, include leading Victorian union figures such as controversial CFMEU boss John Setka and Plumbing and Pipe Trades Employees Union state secretary Earl Setches.

Mr Setka, who joined the board in January, also sits on Incolink’s remuneration committee. Master Builders Victoria, Master Painters and Master Plumbers are also ­Incolink stakeholders.

Former Victorian Trades Hall Council secretary and convener of the Building Industry Group of Unions Brian Boyd chairs Incolink, which “provides a safety net for workers in the commercial building and construction industry where permanency and con­tinuity of employment are sig­nificant issues”.

When Mr Albanese launched the Secure Australian Jobs Plan last year, he said locking in “portable entitlements for workers in insecure industries” was a top priority. The policy says Labor would work with state and territory governments, unions and industry to develop, “where it is practical, portable entitlement schemes for Australians in insecure work”.

CFMEU national construction division secretary Dave Noonan told The Weekend Australian the MBA was running “scare campaigns for the Liberal Party” and pointed out that portable long-­service leave in the construction industry had ­existed since 1974.

“Superannuation in construction has existed since 1985,” Mr Noonan said. “Severance pay schemes have existed since 1987.

“All of these schemes have ­robust governance. The Master Builders opposed the establishment of all of these institutions at the time, but now sit on the governing boards in partnership with trade unions.

“The recent collapses of Probuild, Condev, ABD and others has left small businesses and workers owed millions. Yet the MBA ­refused to support the recomm­endations of the Murray review to introduce statutory trusts for subcontractors’ progress payments.”