19/05/2011 - 00:00

Budget focus on contractors irks industry

19/05/2011 - 00:00

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INDUSTRY groups are angered by the federal government’s budget announcement of new tax reporting requirements for businesses in the building and construction industry, which they believe are the latest in a string of attacks on independent contractors.

Budget focus on contractors irks industry

INDUSTRY groups are angered by the federal government’s budget announcement of new tax reporting requirements for businesses in the building and construction industry, which they believe are the latest in a string of attacks on independent contractors.

Assistant Treasurer Bill Shorten said the government would introduce a requirement for certain businesses to report to the ATO annually on payments made to contractors in the industry, with effect from July 1 2012.

Major Australian building and construction industry association, Master Builders Australia, has called for urgent discussions with Mr Shorten, fearing commercially confidential information will be accessed by building unions.

“Our concern is that if this information goes to the tax office, there could be an attempt by the unions to use this as a part of their industrial and wage bargaining campaigns,” Master Builders of WA construction director Kim Richardson said.

Independent Contractors of Australia executive director Ken Phillips said that the Gillard government could not comprehend the concept of ‘being your own boss’ and was determined to suppress the capacity of people to be self-employed.

“This isn’t about collecting tax, it’s entirely about making life difficult for people who are self-employed and the people who might engage them,” he said.

“The government is encouraging employment instead of self-employment and we are convinced that in every true sense of the word, this Labor government is purely a labour government.”

Mr Richardson said the new reporting requirements led back to the ‘sham contracting’ campaign the CFMEU had been running over the last couple of years.

The term sham contracting refers to a situation where people who ought to be treated as ‘employees’ are treated as independent contractors.

“The union is saying that evils such as tax evasion, lack of training and safety issues come with sham contracting, and that this is a cancer within the industry,” he said.

Mr Richardson said recent prosecutions by the Fair Work Ombudsmen of two call centre companies accused of sham contracting was evidence that the government was being “led by the nose” by the CFMEU in a campaign against sub-contractors.

“Anyone can see that by looking at the current prosecution actions by the ombudsman’s office,” he said.

CFMEU National Secretary Dave Noonan said a recent finding by the federal magistrate’s court that a construction company engaged in sham contracting vindicated the work undertaken by the union.

In Darlaston v Risetop Constructions, Rummukainen and Rummukainen, it was found that the company and two directors misrepresented the employment relationship between the company and five formworkers as one of ‘independent contractors’.

“Employer bodies like Master Builders Australia and Australian Industry Group have tried to deny that sham contracting is a problem,” Mr Noonan said.

“But here we have an employer saying to the court that the practice is ‘rife’ and the ‘norm’ in the industry.”

The CFMEU said its research indicated that up to 168,000 sham contracting arrangements existed in the building and construction industry.

The Australian Building and Construction Commission started an inquiry into sham contracting late last year.

“Unlike legitimate contracts, sham contracting means workers miss out on entitlements and decent employers in the building and construction industry can be placed at a competitive disadvantage,” Commissioner Leigh Johns said.

Almost 20 organisations submitted proposals to the ABCC outlining their views on sham contracting, which are currently being reviewed by the ABCC’s legal team.

Master Builders said the inquiry was a knee-jerk reaction to union claims, but supported the need for a bright line division between ‘contractor’ and ‘employee’.

Independent Contractors of Australia dismissed the inquiry and said there was no compelling evidence to suggest that sham contracting was endemic in the industry, or that the current regulatory framework under the Fair Work Act was inadequate.

“I consider the inquiry a ‘sham’ inquiry, the process is wrong and the ABCC have a pre-determined conclusion,” Mr Phillips said.

“The unions have made a proverbial mountain out of a molehill; we agree that there are people in the community who don’t comply with the law, but from our point of view the law in terms of stopping that is very strong.”

ABCC Head of Public Affairs, Glyn Cryer said Commissioner Johns wanted to move quickly on investigating sham contracting after receiving feedback from constituents in the building and construction industry.

“Commissioner Johns had no predetermined view of the problem or any response we might make to it. His view was ‘whatever you have to say about this practice, let’s hear it’ because we need to hear the full range of views to make a policy response,” Mr Cryer said.

The CFMEU has also hit out at the ABCC, accusing it of contributing to the growth of sham contracting by leaving the practice unchecked for more than five years.

“The ABCC’s sudden interest in the issue of sham contracting is a cynical attempt to reinvent itself as an impartial regulator, the inquiry into sham contracting is a sham in itself,” it said.

Once the submissions are reviewed, the ABCC will release a report summarising the submissions and outlining recommendations for a policy response.

 

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