Budget 2021-22: Action on wage theft left for another day

Key points

  1. The 2021-22 Federal Budget provides no additional funding to the Fair Work Ombudsman, the agency that helps enforce wage laws in Australia.
  2. Additional funding has been granted to the Registered Organisations Commission, which is charged with scrutinising the activities of trade unions.
  3. Despite a lack of temporary workers, there is evidence that wage theft and other forms of exploitation are continuing in Australia.
  4. The Federal Government's decision in early 2021 to walk away from its own bill criminalising wage theft has created a policy vacuum on worker exploitation, leaving the issue unaddressed.

In December 2020, the McKell Institute released Blue Harvest, a deep dive into wage theft and labour exploitation occurring in northern New South Wales’ horticultural industry. 

Some of our findings shocked even us. We heard of workers earning just $3 an hour, of workers being abused, and of the difficulties workers faced accessing justice – even when their cases were irrefutable examples of intentional underpayment. 

It was testament to how out of control wage theft has become in Australia.

But despite statements from senior Government ministers that they were committed to addressing wage theft, Budget 2021-22 has seen action left for another day.

Cop on the wage theft beat granted no additional resourcing

One of the drivers of widespread exploitation in Australia is the inadequate resourcing of the Fair Work Ombudsman (FWO). 

Now, to be clear, allocating additional resources to the FWO alone cannot solve wage theft: there are a range of determinants of underpayment, and there are a number of community-based groups, legal centers and trade unions, that have an important role to play in assisting workers who are underpaid. 

But the FWO plays an essential role in investigating the problem, and enforcing the laws we currently have on the books. It is the Government’s official cop on the beat, and has the capacity to warn and punish businesses deliberately doing the wrong thing. 

For years, however, its lack of personnel has meant the FWO’s capacity to enforce workplace laws has been constrained. It is estimated that there is just one inspector for every 65,000 workers in Australia. These resource constraints mean that most cases of wage theft are never proactively identified through random auditing. Even when the FWO is made aware of cases of exploitation, there’s no guarantee it will be able to achieve justice for a victim. As one research subject of our Blue Harvest report outlined: 

“I asked the Fair Work Ombudsman for help. It [wasn’t] worth it to go through the process. My English was not good and it was too complicated”- Makato, underpaid while working in Coffs Harbour in 2020. 

The budget papers commit no additional resourcing to the FWO, continuing the status quo.

With nearly $100 billion committed in Budget 2021-22, this recession-era spending program will make a big difference in a range of policy areas. No Budget can solve every issue, but it is alarming that addressing the resource constraints of the FWO was not considered by the Morrison Government. 

No more funding for the FWO, but $8m for union watchdog

Because of the FWO’s resource constraints, supporting the work of non-government entities that help exploited workers should be a focus.  Trade unions play a unique role in identifying wage theft and other forms of exploitation, and work with both employees and employers to ensure that it is addressed, understood and prevented. 

Though the Government was unable to allocate additional resourcing to the FWO, it did find an additional $8 million to fund the Registered Organisations Commission (ROC), an entity that was established to scrutinise the activity of trade unions. 

The ROC often impedes the activities of trade unions, creating additional complexities as unions try to aid their members and workers in the industries they cover. 

Trade unions have been pivotal in highlighting the extent of wage theft in Australia. But they also play an important role in assisting workers who are the victims of underpayment. They can in fact lighten the work load of the FWO, by helping workers prepare their legal cases before seeking the FWO’s assistance to investigate a matter further. 

Given the Treasurer’s insistence that the COVID-19 crisis left no room for ideology, Budget 2021-22 provided a unique opportunity to foster greater collaboration between unions and government on the issue of exploitation. The Government’s decision to go the other way is a disappointing outcome for all those who have been subject to intentional underpayment.

Government is walking away from action on wage theft

Ultimately, budgets are statements of principles and priorities. 

Although senior members of the Morrison Government have raised concerns over widespread wage theft in Australia, their unwillingness to allocate resources to fix it gives us a sense of how seriously the Government takes the issue. 

It also follows the Morrison Government’s decision to walk away from legislation that would have criminalised intentional underpayment earlier in 2021. 

For some policymakers, wage theft is a peripheral issue. It won’t be discussed in the budget wrap ups in the major newspapers or TV bulletins. Addressing it might not have any immediate political benefits. 

But it is the right thing to do. And ensuring all workers are paid fairly also means more money will find its way into workers’ back pockets – a goal the Morrison Government should pursue to help drive our post-COVID recovery. 

Today in Australia, hundreds of thousands of people went to work and came home with less money than they are legally entitled to. The Government’s inaction likely won’t make headlines – but it will have a material impact on their lives.