Mr PALLAS (Treasurer) (16:29:18) — I move: That this bill be now read a second time. I ask that my second-reading speech be incorporated into Hansard. Incorporated speech as follows: This Bill, which implements the Government’s commitment, made before its first term, to expand the range of matters that may be included in an enterprise agreement made under the Fair Work Act 2009 (Fair Work Act). Parliament did not pass the Bill during the previous term of Government, limiting the bargaining rights of 130,000 Victorian workers, including teachers, prison staff, transport planners and legal aid workers. The Andrews Labor Government committed to reintroducing the Bill, and I’m pleased we have reintroduced this Bill, one of the first Bills of our second term of Government, as a demonstration of our commitment to fairness for our public sector workforce. The Bill would amend the Fair Work (Commonwealth Powers) Act 2009 (Referral Act) to enable public sector employers that are covered by this Act (Referral employers) and their employees to bargain over, and reach agreement on a greater range of matters. The Bill would allow bargaining over the number, identity or appointment of employees in the public sector. This means, for example, that public sector employees (excluding law enforcement officers) could collectively bargain over and reach agreement on matters such as minimum staffing levels, restrictions on how staff are to be engaged or the number of casual, seasonal or fixed term employees. This will enable Referral employers and their employees to bargain over these matters in the same way that public sector employers and employees of constitutional corporations may now bargain. It will ensure a greater level of fairness and consistency in the bargaining and enterprise agreement making process across the Victorian public sector. Background In 2009, the Government undertook to ensure that all Victorians had the benefit and protection of the federal workplace laws by referring certain workplace relations matters to the Commonwealth (Referral). The Referral Act fulfilled that promise. An important objective of the Referral was to safeguard the ability for employers and employees to collectively bargain and make enterprise agreements under the federal workplace laws. Since that time, most workers in Victoria have had the benefit of the Fair Work Act and many would be covered by an enterprise agreement approved by the Fair Work Commission (Commission). The Referral Act was necessary because, in its absence, only workplaces where the employer was a constitutional corporation could be assured of proper coverage by the federal workplace laws. Employers that were not constitutional corporations, being primarily small businesses, partnerships, non-trading community and some public sector organisations and the Victorian public service would have been excluded. The Referral Act, with some exceptions, captured those employers to ensure that all Victorian businesses and their employees were treated equally. At that time, Victoria did not refer certain matters in relation to public sector employees. These exclusions are set out in section 5(1) of the Referral Act (section 5(1) exclusions). In particular, Victoria did not refer matters relating to the number, identity and appointment of public sector employees (section 5(1)(a) matters). These matters were excluded from the referral as they related to matters that the High Court in the Re Australian Education Union; Ex parte Victoria (Re AEU) decision held to be essential to the functioning of the states. The High Court decided that such matters were beyond the legislative power of the Commonwealth. The Fair Work (Commonwealth Powers) Amendment Bill 2018 is a further step to ensure that the objectives of the Referral Act continue to be met, by removing the limitation that prevents Referral employers and their employees from bargaining about section 5(1)(a) matters. Why is the Bill necessary? Since 2009, the legal position has evolved. In 2015, the Full Court of the Federal Court in United Firefighters Union v Country Fire Authority (UFU v CFA) found that some matters previously thought to be beyond the legislative power of the Commonwealth could validly be included in an enterprise agreement. This means that the Referral Act now excludes matters for Referral employers and employees which are not excluded for constitutional corporation employers and employees. Objective of the Bill The central purpose of the Bill is to remedy the disparity between public sector employers that are constitutional corporations and public sector employers that are not constitutional corporations (Referral employers) by legislating to ensure that section 5(1)(a) matters may be included in public sector enterprise agreements covering Referral employers and those terms may be enforced by way of civil remedy provisions under the Fair Work Act. If an amended referral is not made in the manner proposed by the Bill, some public sector employers and their employees are free to bargain about section 5(1)(a) matters, while others are not. Overview of the Bill The Bill would allow for Referral employers and their employees to bargain over and make enterprise agreements containing terms pertaining to the number, identity or appointment of employees in the public sector. Bargaining about such terms will be subject to the bargaining processes in the Fair Work Act, including the good faith bargaining requirements. Parties will be able to apply for bargaining orders and serious breach declarations if there are concerns the good faith bargaining requirements are not being met. Employers and their employees will also be able to take protected industrial action in support of claims in relation to terms about section 5(1)(a) matters and the Bill would permit right of entry for suspected contraventions of such terms. The Commission will have jurisdiction to approve enterprise agreements that contain terms about section 5(1)(a) matters and such terms will be enforceable under the Fair Work Act and subject to the enterprise agreement’s dispute resolution procedures. The Commission may deal with a dispute about a term of an agreement about a section 5(1)(a) matter by mediation or conciliation, by expressing an opinion or making a recommendation or arbitration (where arbitration is expressly provided for in the enterprise agreement). The Bill would also allow for the civil remedy provisions, as set out in the Fair Work Act, to apply to a contravention of a term of an enterprise agreement about a section 5(1)(a) matter. This means that the relevant courts would have power to impose penalties and other orders on public sector employers in respect of breaches of such terms. However, the Bill would not permit a term pertaining to a section 5(1)(a) matter to be imposed on a Referral employer and as such, the Bill limits the inclusion of section 5(1)(a) matters in some industrial instruments. The principal effect of these limitations is to ensure that a section 5(1)(a) matter is only included in an industrial instrument with the agreement of the parties and not as the result of any arbitral function on the part of the Commission. This means that the Commission would not have jurisdiction to arbitrate (even with the agreement of the parties) a bargaining dispute about a section 5(1)(a) matter. This also means that the Commission would be able to make a workplace determination containing terms pertaining to a section 5(1)(a) matter but only where those terms are ‘agreed terms’ as defined by the Fair Work Act. The Bill would not permit the Commission to make an award, where that award includes a section 5(1)(a) matter. The Bill will also not permit a section 5(1)(a) matter to apply to a Referral employer by way of transfer of business. This means that a section 5(1)(a) matter in a transferring instrument (as defined by the Fair Work Act) will not be enforceable where that instrument covers a Referral Employer. Further, the Commission will not be permitted to make an order in relation to transfer of business that a transferable instrument which imposes a section 5(1)(a) matter will cover a Referral employer. Who is not covered by the amended referral? In 2009, Victoria did not refer certain matters in relation to law enforcement officers as they were considered necessary to maintaining the integrity of state laws governing law enforcement officers. The exclusions for law enforcement officers are set out in section 5(2) of the Referral Act. It is appropriate to maintain the existing exclusion pertaining to law enforcement officers to ensure the integrity and operational independence of state laws governing law enforcement officers. As such, the Bill would not alter the position with respect to law enforcement officers. I commend the Bill to the house.