The federal government should promote payroll software to boost small and medium businesses’ compliance with complex industrial awards setting pay, the financial technology and regulatory technology inquiry has concluded.
The Senate committee’s report, tabled on Wednesday, lends weight to a push from small and family business ombudsman Kate Carnell to use industrial relations reforms to boost uptake of payroll solutions to underpayment, including the possibility of “safe harbour” from prosecution.
The committee chairman, Liberal senator Andrew Bragg, told Guardian Australia the best case was agreement between unions and employers to simplify awards, and use of payroll software was the “second best option” but one he would endorse.
The inquiry also recommended making temporary Covid-19 measures including telehealth and electronic AGMs a permanent feature of health and corporations laws, and extending portable digital data laws to the superannuation and insurance sectors.
In August, Guardian Australia revealed the industrial relations roundtables on compliance and award simplification had considered reforms to allow businesses that accidentally underpaid staff to make backpayment without further penalty if they used payroll tools approved by the government.
The fintech and regtech inquiry noted Carnell’s call for the fair work ombudsman to accredit particular solutions and provide safe harbour for employers who use them and payroll company Tanda’s proposal for a rating system for software.
The committee recommended that the Australian government “explore options to promote the use of regtech solutions in assisting small and medium-sized enterprises to comply with their obligations under industrial awards”.
Bragg said although it was “very hard for a government agency to approve an algorithm” the FWO could offer safe harbour – declining to prosecute employers who used a certified payroll software.
“This is a second best option,” he told Guardian Australia. “The best option is that the attorney general is able to solve these issues via award simplification.
“What you’re saying here is that ‘we’ve failed to simplify the awards and therefore we now need a computer program to help simplify these horribly complicated provisions’ – in the retail and hospitality awards it can be up to 500 different pay points.
“But it’s not a bad insurance policy to have. Everyone agrees that simplification is ideal – the challenge is to get the vested interests to agree which is what the attorney is trying to do as we speak.”
Bragg said “large employer groups are just as guilty as big unions” at failing to reform the system.
Some employer participants have privately expressed the view the roundtable process has largely stalled, with the best hope now to develop a set of options for government to choose from rather than achieving a grand bargain bringing unions into agreement on major reforms.
On Tuesday the attorney general, Christian Porter, said that was a “very austere summary” of the process, telling reporters in Canberra there was still an enormous amount of “good faith, good will and intelligence” on display in talks.
Porter said the five roundtables were narrowing the issues and were “moving towards outcomes” and he was “considerably more optimistic” they will produce “consequential outcomes” to boost jobs.
Guardian Australia understands that after being excluded from early sessions of the industrial relations roundtables for breaching confidentiality rules, KPMG did provide independent expertise – including on the issue of payroll software to improve compliance.
A spokeswoman for payroll company Xero told Guardian Australia although it has no ongoing role it had presented to the roundtables on 12 August, discussing “the capability and limitations of software to support the correct payment of award wages”.
“Many of our app partners that integrate with Xero, including Tanda and Deputy, offer an award interpretation feature,” she said.
The fintech and regtech inquiry called on the government to “lock in technology gains” made during the Covid-19 pandemic, including allowing companies to communicate with shareholders electronically, sign documents electronically and witness them via videoconferencing.
It called on the government to provide “further clarity around eligibility for the research and development tax incentive” – including limits on clawing back payments retrospectively, and ensuring software innovation qualifies.
The committee called for the council of financial regulators gain a mandate to report on competition in financial services markets.
