Businesses question impact of IR reforms amid 'flawed data'

Warn of 'higher, wide-ranging' costs from government changes

Businesses question impact of IR reforms amid 'flawed data'

The impact of the government's proposed industrial relations reforms is under scrutiny as businesses called out outdated and limited data in the bill's explanatory memorandum.

The Business Council of Australia (BCA) on Tuesday pointed out that the government admitted in the 521-page memorandum that it relied on "outdated, limited, or unavailable data" to justify its proposed changes in the Closing Loopholes Bill.

"These flaws call into question the government's estimates of the impact on individual businesses, and the extra $9.1 billion the labour hire and gig economy reforms alone are forecast to cost over 10 years – costs that will increase pressures on households already coping with a cost-of-living crisis," said BCA chief executive Bran Black in a statement.

Concerning 'complex' test

 Among the council's significant concerns is how the government came up with a new test that determines if casual hires should be offered permanent roles, a system that could cost employers hiring casuals an estimated $593,055 annually if implemented.

In the explanatory memorandum, the government revealed that it only carried out qualitative interviews with 12 current and recent casual employees and eight employers of casual staff.

"The analysis in the explanatory memorandum just doesn't stand up," Black said. "Imagine polling just 1200 of the 2.7 million casual employees in Australia, and interviewing just 12, before proposing a complex new test that will affect every business employing casual workers in Australia."

It also expressed concern about how the new system will just take 15 minutes for employers to determine whether a casual hire can be offered a permanent role despite requiring up to 12 different criteria to be considered.

"Imagine estimating that it will take a small business just 15 minutes to step through a dozen different criteria to determine if an employee is a casual – and then having no idea about the cost to Australian business if the process ends in a dispute determined by the Fair Work Commission," Black said.

Other concerns pointed out by the BCA include the government's admission of reliance on KPMG's review of the Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021 and the Senate Select Committee on Job Security, which drew dissenting reports from Senators.

It also noted that the government admitted to a "high degree of uncertainty" regarding the labour hire workforce.

'Higher, wide-ranging' cost impacts

The BCA then renewed its call to the government to go back to the drawing board to identify the problem it's trying to solve before imposing more changes and confuse employers.

"What is abundantly clear is that the cost impacts of the bill, which will hit employers, employees, and consumers, will be significantly higher and wider-ranging than claimed," Black said.

"We recommend the government take the opportunity to go back to the drawing board to identify the problem it is trying to solve before it imposes increased complexity, confusion and cost into the workplace relations system at a time when business and workers are facing a cost-of-living crisis."

The BCA's latest call reflects its continuous opposition on the government's suggested reforms in the Closing Loopholes Bill, which seeks to address issues in the gig sector, wage theft, and labour hire.

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