Sussan Ley (Farrer, Liberal Party, Shadow Minister for Childcare and Early Childhood Learning) Share this | Hansard source

I am delighted to speak today on the Fair Entitlements Guarantee Bill 2012. This is a bill that replaces the administrative General Employee Entitlements and Redundancy Scheme, known as GEERS, which currently assists employees who have lost their employment due to the liquidation or bankruptcy of their employer and who are owed certain employee entitlements. The GEERS program was very proudly established by the Leader of the Opposition as workplace relations minister in 2001. As I said, this bill seeks to replace the administrative General Employee Entitlements and Redundancy Scheme, GEERS, and put it into legislation. At the moment it is an administrative scheme administered by the Department of Employment, Education and Workplace Relations.

The scheme was an important one and made a great deal of difference to members or employees who lost their jobs in circumstances where their employer went into liquidation and who therefore lost their entitlements. I think all of us as local members of parliament can recall instances where sometimes large employers went belly up at short notice, not necessarily through any fault of their own, and employees were left absolutely high and dry.

So at the time this was a very sensible and very compassionate creation of the previous, Howard government and, as I said, we all know of many circumstances where it did indeed work well.

This bill does not change the rationale for GEERS coming into action; it simply puts it in legislation. What it does change is the amount of redundancy that each worker can be entitled to under GEERS, and that is the key subject for discussion and the rationale for the coalition moving amendments to the bill that I foreshadow for the consideration-in-detail stage.

The primary objective of the bill is to set up a scheme for the provision of financial assistance, called an advance, to former employees where the end of their employment is linked to insolvency or bankruptcy of the employer. After making an advance, the Commonwealth assumes the individual's right to recover the amount that was advanced through the winding-up or bankruptcy of their employer. Many employees have to wait until the entire long, convoluted liquidation process is concluded, and often there may be other creditors ahead of them in the queue. That process is considerably shortened with GEERS. The employees are paid their redundancy by the Australian taxpayer, effectively, and then the Commonwealth embarks on the recovery of that money. Some of the key eligibility requirements of which the secretary must be satisfied in order for an advance to be paid include that the person's employment has ended, the end of the employment is actually linked to the insolvency of their employer, the employer is in liquidation or bankruptcy, and the person has unpaid employment entitlements that cannot be obtained from another source.

So this bill enshrines in legislation a redundancy package calculated at four weeks per year of service, instead of a total of 16 weeks, which is what it is at the moment under the department's administrative scheme. Four weeks for every year of service would add up, in many cases, to a considerable amount. Now, the coalition are very cautious about this because the redundancy package under GEERS always had, in line with community expectations, a cap of 16 weeks, so we will move an amendment that reinstates that 16-week cap. While we do not object to the movement of the scheme from administration to legislation, we believe that the scheme should be kept the same in that process.

Despite our strong support for GEERS, this bill, as I said, enshrines in legislation a redundancy package calculated at four weeks per year of service, and what this may well do is set a new, high bar for union bosses as they go about enterprise bargaining. That brings me to reflect on two problems with the legislation that were identified, and they have been captured by the Australian Industry Group in their comments on this bill. They have said that it will create major risks for the federal budget and would lock in arrangements which are unfair. It is not fair, they say, for employees in large, unionised workplaces to receive much more generous compensation upon insolvency than employees working for other companies. The bill protects redundancy entitlements for up to four weeks per year of service upon insolvency, and very generous redundancy packages typically operate in large, unionised workplaces. The problem with this is that four weeks per year of service is actually relatively uncommon. It is at the top end of entitlements even for unionised workplaces. Arguably, the provisions of this bill will fuel union claims for employers to agree to similar redundancy benefits in enterprise agreements; and why would they not point to this bill as the benchmark for redundancy payouts? That redundancy payout benchmark would be considerably different from what it is now—in fact, as I said, a new, high bar which could be an ambit claim in enterprise negotiations on normal redundancies, when GEERS is obviously not about normal redundancies.

Industry has been a strong supporter of the GEER Scheme: 99.9 per cent of employers do not become insolvent and leave their employees without their entitlements and, in the relatively small number of cases where the employees would have otherwise lost entitlements, GEERS has played an extremely important role.

I understand the government has increased redundancy protection under GEERS from the 16-week cap to four weeks a year of service uncapped prior to this piece of legislation, and industry did express concern at the time that such a generous increase in benefits was very risky. This risk remains. The bill would lock in these very generous benefits into legislation and the insolvency of even one large company with a generous redundancy scheme could be a major hit on the federal budget. It is not a popular position to take. Obviously employees are very keen that they receive all of their entitlements, and we are keen too that they are not left as insolvent as their ex-employers. Obviously employers themselves, in some respects, would say that it is good that the government is picking up the tab, but government picking up the tab is the Australian taxpayer picking up the tab. Somebody has to be fiscally responsible, even if the government does not want to be, in the current climate, so it is worth reflecting, in the context of this bill, on the position that the opposition is going to take on Labor's ever-increasing debt because every day this government has been in charge of the budget that debt has been increasing.

Labor has sought to increase the limit on the government's debt ceiling on four separate occasions now. The government amended the debt ceiling in 2008 to $75 billion, this was increased again in 2009 to $200 billion during the global financial crisis, in 2011 the government increased this limit yet again to $250 billion, and in the budget this year the government increased this limit to $300 billion. That is four times the debt ceiling has been increased. I make the point that much of that is well beyond the scope of the global financial crisis and well beyond the period at which the government's stimulus packages had expired. We certainly saw evidence today from a Treasury paper about exactly how unsuccessful those stimulus packages were. Designed to make people spend money, in fact they simply did not.

Mr Champion interjecting—

Mr Deputy Speaker, the member opposite is a persistent interjector, and I would ask that you ask him to sit quietly.

See this speech in context