Chapter 1Introduction and background
1.1On 21 November 2024, the provisions of the Workplace Gender Equality Amendment (Setting Gender Equality Targets) Bill2024 (the bill) were referred to the Senate Finance and Public Administration Legislation Committee (thecommittee) for inquiry and report by 30January2025.
Background and purpose of the bill
1.2The Workplace Gender Equality Act 2012 (the Act) established the WorkplaceGender Equality Agency (WGEA), and required various employers to lodge reports every year containing information relating to various gender equality indicators, including equal remuneration between men and women.
1.3WGEA's function under the Act includes 'advising and assisting employers in promoting and improving gender equality in the workplace and undertaking research and programs for the purpose of promoting and improving gender equality in the workplace'.Additionally:
WGEA may review a relevant employer's compliance with this Act by seeking further information from theemployer.
If a relevant employer fails to comply with this Act, the Agency may name the employer in a report given to the Minister or by electronic or other means (for example, on the Agency's website or in anewspaper).
1.4'Relevant employers' defined in the Actinclude:
a registered higher education institution that is an employer; or
a natural person, or a body or association (whether incorporated or not), being the employer of 100 or more employees in Australia;or
a Commonwealth company that is an employer of 100 or more employees inAustralia;or
a Commonwealth entity that is an employer of 100 or more employees inAustralia.
Review of the Act and recommendations
1.5A review of the Act and WGEA's function was undertaken in 2021. The Explanatory Memorandum of the bill notes that the government accepted the findings of this review in principle and, in so doing, committed to 'accelerating action to improve gender equality in Australian workplaces.'
1.6Of the ten recommendations made by the review, recommendations 2, 3, 5 and 9 were fulfilled by the Workplace Gender Equality Amendment (Closing the Gender Pay Gap) Bill 2023 that was passed by Parliament on 30 March 2023.
1.7The bill currently under consideration would fulfil Recommendation 3.1(a), by:
…[adding]a new minimum standard [to the Act] to require relevant employers with 500 or more employees to commit to, achieve and report to WGEA on measurable genuine targets to improve gender equality in their workplace against three of the six gender equality indicators.
1.8According to the Explanatory Memorandum, the government undertook consultation in the development of the targets set out in the bill,with:
...a range of key stakeholders including: the business and not-for-profit sectors, employee organisations, higher education providers, the women's sector, users of the Agency's datasets, and Australian Government agencies. Broader public consultations occurred in August and September of 2022, with more targeted consultations in mid-late 2023. Participants in the targeted consultation included employers from the Agency's database that represented a spread of industry. Further consultation in April 2024 was conducted with peak business and industryrepresentatives.
1.9The Explanatory Memorandum also notes that the proposed gender equality targets scheme would be the 'first of its kind globally', and that by implementing the scheme:
…Australia would pioneer the path to accelerate gender equality through a targets scheme that seeks to motivate action and embed systemic cultural change in largeemployers.
Overview of the bill
1.10The bill contains amendments to the Act that would:
change the definition of 'relevant employer' to explicitly include subsidiaries (with 100 or more employees) as relevant employers
provide the Minister with a new power to set targets and specify the rules in relation to the selection of the gender equality targets
introduce a new requirement that relevant employers with 500 or more employees will be required to select and meet gender equality targets in a three year period and report on their progress to WGEA;and
provide that where an employer has not met the gender equality targets or demonstrated improvements within that period, they are considered to have failed to comply with their obligations under the Act.
1.11The Explanatory Memorandum states that Ministers would have new power to set targets and the rules in relation to the selection of targets by relevant employers. Regarding these, it notes that instruments attached to the Act will set out:
categories of target, and how many relevant employers must select; and
a full list of targets or a 'menu of targets' from which relevant employers can selecttargets.
1.12On targets, the Explanatory Memorandum provides the following outline:
Targets will be categorised as either 'action' or 'numeric' under the gender equality indicators [GEIs]. For example, a numeric target will require a reduction or increase of percentage points related to either gender representation or remuneration gaps. An action target requires an employer to implement or improve upon one or more policy or strategyobjectives.
Some GEIs will have multiple targets from which an employer can select. Targets range in complexity, which accounts for variances in the maturity of employers and their readiness to achieve (or at a minimum, improve on) them in the three-year cycle. Targets are designed to be genuine and achievable in the three-year cycle and offer opportunities for ambition as employers progress through the cycles of the scheme.
The intent is for designated reporting entities [DREs] to select at least three targets in every three-year cycle with at least one numeric target in any three-year cycle. These employers will not be permitted to alter or abandon any targets once they have been selected for this target cycle. The instrument will set the rules for selection inmoredetail.
1.13The Explanatory Memorandum provides an outline of compliance with thesetargets:
…at the end of the three-year cycle, a DRE must have met or demonstrated improvement against the selected target as compared to the baseline. Positive movement from the baseline towards the target will be sufficient to demonstrate improvement and satisfy the requirement for compliance at the end of the three-year target cycle. Compliance will be assessed immediately fornumerictargets…
The Bill provides that employers will be non-compliant with the Act if, at the end of the three-year cycle, they have either: not achieved the target; or not demonstrated improvement against the baseline for all of their targets without reasonable excuse. In addition, employers would fail to meet their obligations under the Act for that reporting period where they fail to set targets at the start of Year 1 ofthecycle.
1.14As noted above, non-compliant employers could be publicly named in a report given to the Minister, or by electronic or other means (for example, on WGEA's website or in a newspaper). While there are no direct financial penalties for non-compliance, a relevant employer may not be eligible to compete for future Commonwealth contracts under the procurementframework:
In accordance with the Workplace Gender Equality Procurement Principles, the consequence of non-compliance is that the employer will not be issued with a certificate of compliance. The existence of a certificate of compliance is considered as part of the employer's eligibility to contract with the Australian Government through procurementprocesses.
1.15The Workplace Gender Equality Procurement Principlesstipulate:
Relevant employers seeking to supply goods or services to government at or above $80,000, must provide a Certificate of Compliance as part of theprocurementprocess.
WGEA issues letters of compliance. To be eligible for a certificate, employers must submit a report to WGEA by 31 May or seek an extension before 31 May and submit their report within the extensionperiod.
1.16On potential review of decisions, the Explanatory Memorandumnotes:
If found non-compliant without reasonable excuse, DREs may be named publicly as non-compliant by the Agency but have an opportunity to make representations to the Agency as to why naming should not occur. This is consistent with existing provisions in the Act. Where the Agency accepts a reasonable excuse for failure to comply, the employer may not be publicly named by theAgency…
It is noted that there is no review mechanism provided for employers under the WGE legislative scheme. Under the current scheme, a review mechanism has not been necessary because employers are not publicly named if they provide a reasonable excuse for the non-compliance and are also given 28 days to make representations to the Agency if it proposes tonamethem.
1.17Furthermore, it set out the rationale for not creating a review system forthismeasure:
Under the new targets scheme, it is not proposed to establish a review mechanism. The primary reason is that whilst the Act does not currently contain an internal review mechanism it does provide for procedural fairness in the opportunity to provide a reasonable excuse for non-compliance and the opportunity to make representations as to why naming should not occur, in the event a reasonable excuse is not accepted. To be compliant under the targets scheme, employers are, at a minimum, required to demonstrate improvement against their baseline data. They are not required to fully meet their selected target to be found compliant. Given the generous scope for employers to demonstrate compliance and provide a reasonable excuse, if relevant, the establishment of a review mechanism is not proportional with the outcomes of a finding ofnon-compliance.
Whilst a review mechanism is not being established at this time, continued work is being undertaken to consider the development of a fit for purpose review mechanism for future introduction as the Agency continues to grow and mature with the implementation of the targetsscheme.
Human rights and consideration by other committees
1.18The Explanatory Memorandum states that the bill is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny)Act2011.
1.19The Parliamentary Joint Committee on Human Rights made 'no comment' onthebill.
1.20The Senate Committee for the Scrutiny of Bills (Scrutiny Committee) noted that the bill would empower the ministerto:
…by legislative instrument, set targets in relation to specified gender equality indicators and specified target cycles, and specify rules for the selection of targets by employers in specified target cycles. Failure to comply with these gender equality targets without reasonable excuse will result in the employer being named in a report given to the minister by the Workplace Gender Equality Agency and tabled inParliament.
1.21The Scrutiny Committee considered that essential parts of the Workplace Gender Equality Scheme, including this ministerial power, should be 'included in primary legislation unless a sound justification for the use of delegated legislation is provided'. It noted that the Explanatory Memorandum did not set out a justification on this matter,andso:
The committee requests that an addendum to the explanatory memorandum containing a justification for the use of delegated legislation, to set gender equality targets and selection rules, be tabled in the Parliament as soon as practicable, noting the importance of these explanatory materials as a point of access to understanding the law and, if needed, as extrinsic material to assist withinterpretation.
1.22The committee is aware that the government has considered the recommendations of the Scrutiny Committee's report into the bill and that it will be looking to undertake some amendments on thisbasis.
Financial Impact Statement and Impact Analysis
1.23The Explanatory Memorandum includes a Financial Impact Statement, which notes that there 'are no financial impacts associated with thisBill'.
1.24An impact analysis is included as an addendum to the Explanatory Memorandum. This notes that a full impact analysis was published in February 2023 that considered the regulatory impact of a number of recommendations made by the Review (as discussed above).
1.25The Impact Analysis included in the Explanatory Memorandum focuses on the implementation of recommendation 3.1(a) of the Review, i.e. the potential burden that could be placed on affected businesses by new targets set out in the bill.This analysis first sets out the three main elements to the 'problem with the current regulatory framework which governs the Agency's reporting',namely:
…gaps in the current data set, the burdensome nature of some reporting requirements and that current regulation is not ambitious enough to drive change in achieving gender equality. Reforms in 2023 address these issues in part, but further changes are needed to achieve the desired outcome of accelerating the rate of progress towards gender equality in Australia.
1.26Given this outlook, it considers three key policyoptions:
Option 1: Maintain status quo;
Option 2: Accelerate the rate of change on gender equality through action by requiring designated relevant employers to set three targets from a select list of targets related to gender equality and achieve (or at minimum improve on) these targets in a three-year period. This will implement Review Recommendation 3.1.a.
Option 3: Accelerate the rate of change on gender equality through action by requiring designated relevant employers to set at least three targets from a menu of targets and achieve (or at minimum improve on) these targets in a three-year period. This will implement Review Recommendation 3.1a.
1.27The impact analysis confirms that Option 3 would be preferable, 'as it aligns most closely with consultation feedback of providing guidance for targets while offering some choice for employers to select targets which are achievable for them'. While this acknowledges the risk that some employers may initially select less ambitious targets, it also suggests that it would advance gender equality in Australian workplaces, and that the WGEA would work with employers on managing these risks.
1.28More details on these options, as well as the consultations with stakeholders that informed them, are provided in the ImpactAnalysis.
Conduct of the inquiry
1.29The committee advertised the inquiry on its website and wrote to a range of key stakeholder organisations and individuals, inviting them to make a submission by 20December2024.
1.30The committee published 31 submissions, which are all available on the committee's website, and listed in this report atAppendix1.
1.31The committee held a public hearing in Canberra on 22 January 2025. A list of witnesses that appeared is at Appendix2.
Structure of this report
1.32This report comprises two chapters:
this chapter provides background information relating the bill, as well as an overview of the purpose of the bill and its key provisions;and
chapter 2 considers evidence provided to the committee, including support for the bill, and concerns raised in submissions and evidence at the hearing, before setting out the committee's views andrecommendations.
Acknowledgements
1.33The committee thanks all those who contributed to the inquiry by making submissions and giving evidence at the publichearing.
Note on references
1.34References to Committee Hansard in this report are to the Proof Hansard, and so page numbers may vary between Proof and Official Hansardtranscripts.
1.35All references to webpages cited in footnotes are current as at the time oftabling.