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State Govt to 'weed out' dodgy labour hire operators

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The State Government will introduce a state licensing scheme for labour hire operators in a bid to clean up the industry which it says is avoiding paying proper workers' compensation premiums by massively underestimating its payroll.

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Labour hire companies have been under scrutiny since 2015, when a Four Corners report uncovered virtual slave labour operations being run in Australia. That report found unscrupulous labour hire companies were operating black market labour gangs in farms and factories, with mostly migrant workers being massively underpaid and subjected to terrible living conditions and brutally long hours.

Attorney-General John Rau revealed today that a subsequent ReturnToWorkSA investigation discovered labour hire companies were underestimating their wages bill by “hundreds of millions of dollars” in order to lower their workers’ compensation insurance bill.

He said these unscrupulous operators were exploiting workers and damaging honest employers by underpaying their Return to Work Industry Premium (previously known as the Workcover premium).

He promised to introduce a state-based licensing scheme, which might include a fit and proper person test for owners and directors, annual reporting requirements, a fee to contribute to compliance and enforcement costs, and “significant penalties” for employers that use unlicensed labour hire firms.

Inquiries into the industry in Victoria and Queensland have led to those governments promising state-based schemes, but Rau said he also wanted to see a national licensing system.

The Victorian Government announced a similar licensing scheme in May this year, after its inquiry found unscrupulous operators were exploiting workers.

A South Australian Economic and Finance Committee report also recommended the state assist in the introduction of a national scheme or institute a state-based scheme.

“Rogue operators are underpaying workers, failing to ensure proper safety standards and abusing worker visas,” Rau said in a statement.

“These actions undermine minimum standards of employment for workers and undercut those businesses doing the right thing.”

Every inquiry into the industry, including an additional investigation by the Senate, has found a problem with “phoenixing” – the practice where operators avoid legal obligations to pay tax, workers’ compensation, superannuation and wages by winding up failing companies and re-incorporating them under a new name.

Rau said ReturnToWorkSA had set up a dedicated area to monitoring premium avoidance, which also included the ability to identify potential “phoenix” activity.

The Government is drafting the Bill now and hopes to introduce it to Parliament after the winter break.

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