Brendan O’Connor, the Federal member for Gorton and Labour’s shadow minister for employment and workplace relations, on Wednesday urged a crackdown on companies outsourcing work to drive down wages and said collective bargaining needs to be expanded beyond a worker’s direct employer.

In a speech at the National Press Club, O’Connor said Australia needs a workplace relations system that provides for security of employment, allows people to balance work and leisure, and upholds the right to be safe at work. He cited stagnant wage growth and said Labour “acknowledges that the problem with wages is real, complex and requires positive action from government.”

“Larger employers and corporations are outsourcing their labour to smaller employers — through franchises, subsidiaries and related corporate entities, subcontracting, independent contracting (both real and sham) and labour hire,” O’Connor said. This practice means that it is less likely that a worker is employed by the economic decision maker, and their wages are effectively set by the head of the chain, not by their direct employer.

“It makes it harder for workers to collectively bargain, because although they may work at the same site or in the same business, it is not necessarily for the same employer,” he said. “It can also set up a situation where the only point of competitive tension in the industry is the cost of labour.”

This means that employers who do negotiate better pay and conditions with their workers are vulnerable to being undercut by those who won’t, or by “unscrupulous or greedy” employers who underpay and exploit workers in order to make a profit.

More than 1.6 million temporary visa holders have work rights in Australia, according to O’Conner. “They should not be used as cheap labour — and they should not be here on a skilled visa doing a job for a day longer than it takes to train an Australian worker,” he said. “And of course, local workers should always be given the first shot at local jobs.”

O’Connor also addressed the gig economy and the classification of workers as independent contractors. “To be clear, Labour’s position on the emergence of the ‘gig economy’ is that there is a place for new forms of work organization,” he said. “But, if your business model can only succeed on the basis of undermining workers’ rights, avoiding workers’ entitlements, and avoiding paying tax, that is not acceptable.”

O’Connor discussed the following tactics a Labour government would take, if elected, to stop the use of labour hire by employers to undermine the pay and conditions of direct employees:

• Require that workers at a site who do the same job get the same pay.
• Introduce a national labour-hire licensing scheme, to rid the industry of employers who exploit vulnerable workers.
• Give job security to workers and legal certainty to employers by introducing an objective definition of casual employment.
• Increase penalties for systemic and intentional underpayment of wages, making employers liable to a penalty three times the size of the underpayment.
• Hold corporations who are the economic decision makers responsible for underpayments that occur along their supply chain, unless they can prove that they took all reasonable steps to prevent it from occurring.
• Tighten up the definition of sham independent contracting.

“Under a Labour government, if a reasonable person would think someone is an employee, then the person must be treated as an employee, with access to workplace entitlements,” O’Connor said.

The full speech is available online.