Terri Butler (Griffith, Australian Labor Party) Share this | Hansard source

There is in this country, unfortunately, a history of corporate collapses, and when a firm goes into liquidation for insolvency then obviously there's a distribution to creditors of any remaining moneys. Secured creditors, usually the banks, get their money first. Employees have priority over other unsecured creditors, but often there is nothing left for the employees because all the money has been used to pay down, often not completely, the debts owed to secured creditors. Having priority over other unsecured creditors doesn't necessarily mean the employees get any of the money owed to them by their employer. Obviously we had what used to be called GEERS, now the Fair Entitlements Guarantee scheme, which has waxed and waned over a long period of time. Probably the first government payment for employee entitlements that should have been paid by an employer was back under the Howard government, but it has been maintained in a bipartisan fashion since then. So there are some public moneys that can be devoted to paying out employee entitlements, but that is just socialising the losses. It just means that, instead of the employer paying the employees' entitlements, the public purse pays for those entitlements in the event that the employer is wound up in insolvency.

Over many years unions, organisations of employees, have looked at ways they could protect employees, their members, in the event of a corporate insolvency leading to redundancy of the workforce. Obviously, in parallel with the creation and establishment of redundancy severance entitlements—which is an entitlement that is of itself a creation of the union movement and union movement advocacy, bargaining and activism—there has been an increasing focus on trying to make sure that people can actually get the benefit of those redundancy and severance entitlements. An entitlement is not much use if you don't get it. They have looked at a range of things, and one of the options is to have the employer make special provision in its own accounts to ensure that it is keeping the money on hand that it would need in the event of redundancy—so, basically, a contingency fund. That is no use in the event of corporate insolvency because that money, like all of the other money that would be on hand for the employer, would be paid out to creditors, according to the Corporations Act provisions, which, as I said, means that the secured creditors—the banks—would get the money first and probably there would not be much left over, if anything, for employees.

Another alternative that unions have looked at is the establishment of worker entitlement funds, for example redundancy funds. In the course of negotiating a collective agreement, using whatever enterprise bargaining provisions exist at the time, one of the provisions that you include in the enterprise bargaining agreement is a provision that says that, each week or each quarter or over whatever period, the employer will make a payment in respect of the employee into a redundancy trust fund. These redundancy trust funds have by and large been set up in a relationship between the relevant industry unions and the relevant industry organisations of employers. So a group of employers might form what is effectively an employers union, and they are recognised in the same way under industrial law; at the same time you have groups of employees that form unions. Those unions and employer associations can then join together to establish a trust fund into which moneys can be paid. So if there is a corporate insolvency, if you're an employee who has been working your whole life for a firm and that firm goes broke, goes belly up, you get redundancy payments out of the trust fund that have been held in trust for you as a member of the fund, because those moneys don't get used to pay off the big banks. They're not part of the pool of funds that can be distributed to the creditors of the employer; these are moneys that have been held in trust for employees.

These are really important funds for two reasons. First, they avoid the socialisation of losses; they avoid having to dip into the pockets of the public to pay for worker entitlements that employers should have been able to pay. Second, much more importantly, people aren't left destitute when the employer they work for goes belly up. Of course, these aren't the only sorts of entitlement funds, but I'd say redundancy trusts are a very important form of entitlement fund.

Another form of entitlement fund is a fund that provides income protection insurance or income protection payments, not necessarily insurance, to workers. Again, often it forms part of enterprise bargaining, where a union, on behalf of its members, and an employer will put into the terms of an enterprise agreement a provision that the employer will make payments into the income protection fund. Then, if something calamitous happens to a union member—or other employees, for that matter, because employees who aren't members of unions can have the benefit of these things as well; you can't discriminate under our present laws—such as being diagnosed with lung cancer and not being able to work, there is a source of income protection through that entitlement fund.

We know all too well that sometimes when you have an illness or injury you're not covered by your ordinary insurer because you've got a pre-existing condition. It happened to my own father when his melanoma metastasised. His insurance didn't cover the year he had off work on chemo, because it was a melanoma he had had before he joined that particular super fund with that particular insurance. So there certainly are times when people don't get income protection through their ordinary insurer. These entitlement funds that can provide an additional source of income protection can be really important.

There is another example. We have redundancy funds, we have income protection funds and there might be portable long service leave funds. If you work in an industry where it is uncommon to work for a decade for the same employer but you might work in the same industry for a decade—perhaps it's the construction industry, where you have a range of contractors and they have a pool of subcontractors and you might move from subcontractor to subcontractor and the subcontractor might move from principal contractor to principal contractor—and, because of the nature of the industry, it is really hard to rack up a decade of working for the same firm. But these guys are working very hard, doing physical jobs, and they deserve their long service leave as much as anyone. So you might see a fund where people agree, again through enterprise bargaining, that there will be payments made into a long service leave fund that will benefit people who have stayed in the same industry but have moved from employer to employer.

These worker entitlement funds are a really sensible response to problems that face working people. It is absolutely true to say that they generate income streams—of course they do. Moneys are put in and they're invested wisely. It is also absolutely true to say that those income streams are usually reinvested back into the industry for the benefit of the industry—and I say 'industry', not just employees. As you can gather from what I have said about the way these funds are ordinarily set up, they usually have unions and employers on their boards and they use their money for the benefit of the industry. It might be training. One of the big issues we face as a society is the collapse of apprenticeships and traineeships. It might be that those funds can be used to promote the idea of getting into an apprenticeship or traineeship. It might be that those funds that are generated from these worker entitlement funds, the additional moneys, can be used for occupational health and safety work, for going in and providing additional support and training of delegates so that they understand occupational health and safety, and training of managers so that they understand. It might be that these funds go to support colleges or vocational education providers that might be set up in a particular industry.

So it is absolutely true to say that there are income streams generated from these funds, and isn't it a good thing? It means sustainable revenue sources for institutions and programs that provide a public benefit, but without having to tap the public purse. I think that's a very positive thing. When you hear some of the florid rhetoric we get from the government in relation to the matters that are the subject of the present legislation we are debating, you really do forget the importance of these funds. I think that's partly because they have this almost irrational hatred of the Australian union movement. It's quite hard to understand. I know that, in politics, sometimes you look at the people who back the other side and you think you don't really like them, but we're not just talking here about personalities or individuals. We're talking about an institution in our society. Just as corporations are institutions in our society and unions of employers are institutions in our society, so too unions of employees are institutions within our society.

The fact is that this particular institution, the labour movement, has been getting weaker. People aren't joining like they used to. What's the consequence of that? We have a regulatory structure that privileges bargaining ahead of centralised wage fixing, and I support that. But, for bargaining to work, people have to feel like they have the power to bargain. If bargaining is just a euphemism for the unilateral imposition by employers of, 'This is what it's going to be; take it or leave it,' then that doesn't work for anyone, ultimately. It certainly doesn't work for the employees themselves, because bargaining takes power, we all know that. And we're seeing the erosion of power that has been happening as a consequence of the erosion of union membership, directly translating into very poor wage outcomes for working people. So you see things like public sector employees going four years without a new deal and a new enterprise agreement, and therefore four years without a pay rise. You see things like private sector firms having low rates of unionisation and, therefore, long periods going by without pay rises and without deals. That then flows onto other sectors of the economy, because wages growth overall is quite flat. Then you get what we have now: record low wages growth and stagnant wages. That is a direct consequence of the erosion of unionisation in this country.

I understand some members opposite may not like unions and may see them as too close to the Labor Party. They may not like some of the individuals and some of the personalities in the Australian union movement, but that should not be conflated with seeking to undermine and delegitimise the institution of the union movement in this country. Because, when those wages stay flat, what happens to the economy? It has an impact on household consumption. In other words, it has an impact on GDP growth, and we are seeing that now. What else happens? Low wages growth means an impact on government revenue, and an impact on government revenue means an impact on government spending. Again, this directly affects GDP growth in this country. We need to be really careful when we talk about wages, because wages drive so many other things. I encourage those members opposite: by all means take issue with individual personalities in the union movement and take issue with policies, ideas and programs. But delegitimising and undermining the union movement itself is not just wrong; it's deeply irresponsible for our economy and for our nation.

It's interesting to be debating this particular bill in relation to worker entitlements funds when we've just recently had a change in the law in relation to the duty of directors to prevent insolvent trading. The Productivity Commission recommended that there be a safe-harbour defence for directors to allow them to take more risk and to trade out of trouble, and I support that. I support the proposal of the Productivity Commission for a defence. Of course, the government, not content with doing something that could have bipartisan support, went even further and created an entire exemption from insolvent trading laws, effectively rendering the civil prohibition on insolvent trading useless. The difficulty that I have with what's happening, the reason it's so incongruous, is that, at the same time this government gave a blank cheque to directors to behave in a more risky way that puts firms more at risk of winding up in insolvency, it is simultaneously attacking the worker entitlement funds aimed at protecting the interests of working people. It really is quite revealing of the priorities of the government and of where the government's interests in this matter lie. As I say, I supported the idea of the defence, but I do make the observation that weakening protections against insolvent trading and then attacking workers' entitlements is incongruent, at best.

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