Brendan O'Connor (Gorton, Australian Labor Party, Shadow Minister for Employment and Workplace Relations) Share this | Hansard source

The Fair Entitlements Guarantee is a legislative safety net scheme to ensure that people who lose their job receive reasonable entitlements. It is a last resort that covers certain unpaid employment entitlements when employees lose their jobs through the liquidation or bankruptcy of their employer.

In 2012, Labor passed the Fair Entitlements Guarantee legislation, which delivered the strongest protections for workers' entitlements ever seen in this country and replaced the General Employee Entitlements and Redundancy Scheme, which the minister referred to in his second reading speech. It is important for the House to note that there was no legislative basis for GEERS. It was simply an administrative arrangement operated by the department in accordance with the GEERS's operating arrangements. Therefore, this would have made it fairly easy for the government that proposed it or, indeed, any future government to amend or dismantle the scheme. I note also that it may well have been the government's intention to do exactly that sometime after it was introduced. Indeed, it may well be the intention of the government now.

Labor, of course, legislated our scheme, and I think it is fortunate that we did, because the Fair Entitlements Guarantee is under assault by this government—by the Prime Minister, by the Minister for Employment and by other ministers, who support cutting away the safety net for thousands upon thousands of Australian workers who may lose their jobs through no fault of their own. We legislated because Labor are the party of jobs and Labor are the party for workers.

In this bill, among other things the government seeks to cut the Fair Entitlements Guarantee. It is important for context to note that this is a recommendation from the National Commission of Audit, an audit that was undertaken, effectively, by the Business Council of Australia—big business, making a decision on whether workers deserve an entitlement pursuant to an enterprise agreement that they bargained at the workplace. That audit and the Business Council of Australia, in a very self-interested and self-serving way, recommended the abolition of the legislation that would affect these workers.

The government's proposal, in effect, would change the maximum payment from four weeks per year of service to a maximum of 16 weeks, regardless of how many years a worker may have served—whether they have served 10 years, 20 years, 30 years or, in some cases, as we know, 40 years with a company. The government's proposal to change the maximum payment from four weeks per year of service is a problem. The changes to FEG spell disaster for workers in many sectors of our economy. Make no mistake, the intent of this bill is a simple proposition to undermine the safety net afforded to those workers pursuant to an industrial instrument that has been affirmed by the commission and agreed to by the employer.

If passed into law this cut will have a seriously detrimental effect on the lives and living standards of those Australians who lose their wages and entitlements although they are not the cause of that loss. Let's consider, therefore, exactly what the government's cut to the scheme will mean. One example is that of a number of workers from ACL in Launceston who lose their jobs in 2009 under the old GEERS scheme, which also capped redundancy entitlements at 16 weeks. There was one worker who had over 40 years of service who would have been owed in excess of $100,000; but, because of the limits of GEERS at the time, he received less than $30,000—a worker whose family missed out on over $80,000 in payments, a payment that would have seen this worker enjoy an adequate retirement. It would not be a rich retirement, not one that would allow him necessarily to do all sorts of things beyond what a decent hard worker deserves but an adequate retirement. It was a payment that would have given a respectful end to his years of commitment and hard work not only for that factory and community but for this country.

Another example is when Melbatex Pty Ltd went into liquidation in 2009. A longstanding collective agreement which included redundancy provisions was in place. However, the old GEERS, including the 16-week cap, was paid out to the employees. One 59-year-old male employee who had worked for more than 43 years at the time of termination was left with over $98,000 in unpaid severance because he was paid under GEERS and not paid pursuant to the entitlements within the enterprise bargaining agreement negotiated by his employer and the union. Again a great travesty resulted. A 63-year-old woman who had worked for just under 40 years also had about $100,000 severance unpaid.

These examples go to not insignificant amounts of money that these workers did not receive—money that could have made the difference between struggling to make ends meet after decades of work or doing okay and having a decent retirement, something that should be afforded to all Australians. I say that because many of these retrenched employees—and history will bear this out—when they are retrenched near the end of their retirement are not eligible for the pension, because they are too young. The way in which this government is proceeding, of course, they will have to be 70 in the future to receive any pension. And yet they are having grave difficulties finding work. People who have worked all their lives and who want to work cannot find sufficient work to provide them and their families sustenance and a reasonable standard of living. They will be in a position where they fall between the stools of public policy: not old enough to reach the pension; too old, it would appear, to be re-employed, because of a whole series of reasons which sometimes go to discrimination towards older workers, which for the life of me I do not understand, because they are equipped with experience, wisdom and a history of good work—we can see a situation where there are people who will be left adrift as a result, and that is the reason we have a problem with this proposed legislation.

On this side of the House we know that employees who lose their jobs through insolvency or bankruptcy of their employer have enough to worry about. They have to worry about paying the kids' school fees, buying their children's clothes, helping grown-up kids at university, making the mortgage payments or finding the money to cover unexpected bills or emergency situations. That is why we believe that these employees should not have to worry about being paid what they are entitled to under law and have now lost through no fault of their own.

The government's cuts to the scheme, the opposition argues, disproportionately affects older Australians. The government has overlooked or, worse still, deliberately neglected to consider the impact the changes will have on mature-age workers who are unemployed, as I referred to earlier. The outcome that will occur from the proposed changes should they be enacted are contrary to the government's other policy objectives, including, as I said earlier, the raising of the pension age to 70 and also the change of indexation for the rates of the pension, which will see the deterioration in real terms of the pension over coming years.

This contradiction in terms leads us to think about the rationale behind the change. In the end I can only conclude that this is an ideological assault on workers and their families. Employees who have significant redundancy entitlements have only accrued them through long-term employment at a particular workplace, and it is only payable once their employment has been terminated under certain circumstances.

Labor knows the difficulties older Australians have getting back into the workforce. I think the government, in their own small way, have sought to fix this problem—or at least mitigate against the problems that older workers have confronted. They did so with the introduction of the Restart program. Whilst I do not agree with all of the elements of the Restart program I think that that program is an effort to encourage employers to employ older Australians—I think it is Australians over the age of 50—to get into work if they are disconnected from the labour market. Whilst we will have to see whether it is an effective initiative, I think there is an intention behind it.

However, at the same time, we are going to have older workers losing jobs because our economy is in transition, with much structural change. Yet this bill will tear away entitlements for so many people. We will have to wait and see about the effectiveness of the Restart program—providing money to employers, effectively, to employ older Australians—but this bill, if enacted, would rip away elements of the safety net for people in particular industries where those industries are faced with major challenges at best. In some cases—for example, the car industry—under this government we have already seen a death notice.

Labor knows that the difficulties that workers confront in certain sectors of our economy are greater than in others, particularly in manufacturing, automotive, textile, timber and wood product industries. We are committed to finding ways to assist these people—not drag them down. The decision to cut the Fair Entitlements Guarantee is particularly galling given the government's dismantlement of the automotive sector of Australia.

The sector will be hit, and hit hard. The cut to the FEG, as it is known, is compounded by cuts to the Automotive Transformation Scheme and other industry programs. The Labor scheme encouraged competitive investment and innovation in the Australian automotive industry to place it on an economically sustainable footing. Yet, in the budget papers, the budget states that it will save $618.5 million by terminating such a scheme from 1 January 2018. This includes $200 million in cuts over the next two years—long before the scheduled closures of manufacturing operations for Ford, Holden and Toyota.

We can remember what happened in this place in December. The Treasurer of this nation stood up and goaded Holden to leave our shores. The next day, Holden decided to take the advice of the Treasurer. How do you keep companies like Holden in Australia when the federal government turns its back on the industry and that particular company? The consequence of that decision by Holden—followed by Toyota—is that there will be more workers who will be in exactly the position where they will be relying upon the Fair Entitlements Guarantee. The consequences will run through the automotive parts sector of our economy. Smaller medium enterprises are more likely to go into liquidation or be declared bankrupt. We will have thousands of workers affected. Areas affected will not be confined to South Australia and Melbourne and pockets around the country; the automotive parts sector of our economy runs right up the east coast, including in South Australia, Victoria, New South Wales, Queensland and beyond—to the west.

I should add that this is a direct contradiction to what Assistant Minister Briggs said before the election, when he said:

The Coalition has committed to ongoing support for the auto industry and has agreed to continue funding the Automotive Transformation Scheme.

He is from South Australia so he would say that, but unfortunately that is not true. That has been cut. And, as I said, this comes on top of the Treasurer rising to his feet to speak about this in the parliament earlier. So you can imagine how workers are feeling when, on one hand, they see the government turning its back on a sector of our economy which is vital for manufacturing, and, on the other hand, they see legislation incidental to that decision—namely the underwriting and supporting of fair entitlements—being enacted by the government to take away what might be their only support when the sector suffers from the major car companies leaving and other effects on the sector more generally.

There are workers who have been in the automotive manufacturing and supply chain that have been there for many, many years. Under the current scheme they would be entitled to FEG based on their years of service. Under the government scheme, if it is enacted, they will be entitled to 16 weeks maximum, irrespective of their service.

As I have said, the government has overseen the death of the automotive manufacturing sector, which I think has dire consequences for the rest of the supply chain. As I said earlier, the government should think about how this legislation will intersect with what is happening in the real economy—in certain sectors of the labour market. In consultations, Labor has heard from the automotive sector stakeholders, who are deeply concerned that the changes to the FEG may act as an incentive for vulnerable automotive component manufacturers to close their doors early, while their employees remain covered by the current FEG arrangements.

In particular, if automotive component manufacturers close early this may deprive car makers of key components for the assembly of their vehicles, making continued production of specific models no longer possible. With a knock-on effect, this, in turn, make cause or precipitate the early closure of production at Ford, Toyota and Holden, which will in turn potentially result in the early closure of further automotive component producers that supply other car makers.

In this way, the closure of two or three small automotive component manufacturers may spark that mass closure of automotive manufacturing in a short period of time. Fifty thousand jobs directly depend on the automotive industry, and another 200,000 indirectly depend on it. I would strongly argue that the government's decision to cut the FEG could result in accelerating that transition or those closures, those changes and those job cuts.

These job cuts that will take place through to when car manufacturing ceases in Australia are a direct result of the government's actions. With the cut to the FEG, Prime Minister Abbott is rubbing salt into the wounds of the automotive sector workers and their families. Everything this government seems to do this about attacking workers, not supporting workers, not supporting conditions of employment, or taking conditions of employment away. It is not just the automotive sector that will be hit by these cuts; there are those in the textile-clothing sector, the childcare sector, nursing and manufacturing—the list goes on and on.

Given that Mr Abetz is charged with responsibility for this piece of legislation, perhaps the most unconscionable but, sadly, not surprising component of this cut to the FEG is that the government made no mention of it before the election. In fact, before the election the then shadow minister, the now Minister for Employment, Senator Abetz, gave a concrete commitment not to change the FEG. He said, 'As far as I can see, it's as sound as a pound.' At least his words were; his deed clearly was not.

On 17 July 2013, in response to a letter from automotive car company worker Pierre Rault from Dandenong South, Minister Abetz, the then Leader of the Opposition in the Senate and shadow minister for employment, wrote:

…you can be assured that the Coalition would not seek to do anything to water down these important protections for Australian workers. Some seven weeks ago or so, I released the Coalition's Workplace Relations policy with the Coalition leader, Mr Tony Abbott. We were explicit in the policy that but for the changes proposed in that document we would not make any other changes.

That letter is in direct defiance of this bill. However, here we are today in this House debating a bill that contains yet another broken promise. It may well be the tactic of the government that, if you break so many promises, people just will not notice; there are so many of them that you run out of puff just trying to get through them all. But cutting the entitlements for workers when you expressly send a letter to a worker who will be directly affected saying that there will not be such changes is unconscionable, reprehensible behaviour.

I would like to know—as would the opposition generally and, more importantly, thousands and thousands of Australian workers—why the minister broke the personal promise he made in his letter by reducing workers' entitlements under the FEG if this bill is enacted. I think it is a reasonable question to ask the minister. The Leader of the Senate put his signature to a statement prior to the election assuring the worker. He said: 'No problems, we won't hurt you, we're up front, we're going to do what we say, no excuses, no surprises.' How could it be that the sentiments in this letter are so starkly different from the provisions of this bill? Why was the minister assuring hardworking Australians that you can be 'satisfied there is no risk to your entitlements' before the election, only to break the promise after the election?

Despite telling voters before the election that they would not make changes to workers' pay and conditions the government is slowly eroding our industrial relations system. Again, this is an element of what was then Work Choices, and that is of grave concern to the opposition. The former Labor government stood up for workers. We supported ways to improve employment. In response to the global financial crisis, we responded quickly and sufficiently to support or even in some cases create, in total, approximately 200,000 jobs. In this area Labor was proud of the fact that we managed to ensure that unpaid entitlements were being provided in many instances to 70,000 employees who would have missed out.

Instead of demonising hardworking Australian workers, the government should be getting on with articulating a plan for jobs. As we know, unemployment has been rising. The unemployment rate is in excess of six per cent. I heard Minister Pyne say on some TV show last night that there was no crisis in youth unemployment. Youth unemployment is now at 13.4 per cent nationally—more than double the national average—and in some areas it is north of 20 per cent. In northern Tasmania it is 20 per cent. In northern Adelaide it is more than 20 per cent. At the same time that unemployment is rising among young people this government wants to rip away any support whatsoever for those workers by not giving them any support in the form of either Newstart or youth allowance. That is just another element of the cruelty of this government.

Demonising the unemployed and going after everyone under the age of 30—even if they look for a job each day, each week, each month, for six months they do not receive one cent—the government is in breach of the principles of mutual obligation. On top of all of those things this bill will hurt workers who are most likely to be vulnerable to companies going into liquidation or bankruptcy. It could not be a worse time for this bill to come in. It is a perfect storm for workers in manufacturing. It is an outrage that the government would have the gall to introduce this bill even though it is in complete contradiction to the minister's own letter that he actually wrote and sent to a worker in Dandenong in Melbourne.

This is a bad bill. This will only hurt those workers who need the support from government the most. It is going to hurt older Australians who are going to struggle finding work in some instances. It is going to make it harder at a time when the government itself is suggesting that the pension should not even kick in until you are 70. If you are going to have car workers being made redundant at 50. They are not all going to find work under the Restart program. That program is not travelling particularly well at the moment. I hope it does get better results than it has done to date, but so far it is not doing the job that was intended. This is a recipe for disaster for so many workers and their families that the government should rethink its position.

I understand there is one government member to speak on this bill—to his credit, because he has to support the bill. The member for Hughes I think it is; is that right?

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