Cathy O'Toole (Herbert, Australian Labor Party) Share this | Hansard source

My home town of Townsville is a strong and resilient community, but the collapse of Queensland Nickel saw our community brought to its knees, so I know better than most how important this bill is for workers. More than 800 people lost their jobs at Queensland Nickel through no fault of their own. They went to work every day, they worked hard every day and they put their trust in the executives of that company to do the right thing. Unfortunately, the company did not look after the workers and, when those 800 works lost their jobs, they were also told that they would not be paid their entitlements. Those entitlements were rightfully theirs and they had every right to expect that those entitlements would be paid to them. QNI workers had collectively more than $74 million in outstanding entitlements to be paid. Luckily for those 800 workers, when Labor was last in government we created a scheme to protect workers in scenarios exactly like what unfolded at QNI. It is a scheme that protects workers where a company has collapsed and the workers are not paid their entitlements through no fault of their own. Labor established a safety net, and that scheme was the Fair Entitlements Guarantee.

In 2012, Labor passed the Fair Entitlements Guarantee legislation, which delivered the strongest protections for workers' entitlements that this country has ever seen. Labor established the Fair Entitlement Guarantee because we believed that employees should not be punished when an employer's business fails and workers lose their legal entitlements, like unpaid wages and leave, through no fault of their own. Legislating protections for workers is in Labor's DNA. Labor is the party of jobs and Labor is the party for workers.

In contrast, this out-of-touch LNP government tried to abolish the FEG in 2014. The same government tried to abolish a scheme that more than 800 workers in my community relied upon. This simple fact alone should always be remembered when considering this government's priorities when it comes to workers. The LNP is clearly not the party that stands with the worker who has lost his or her job through no fault of his or her own but due to the fact that the company folded and there was no money to pay workers' entitlements. The government's priorities are not with the workers but, rather, with the big banks and, especially in this case, with big business that tried to dodge their responsibility to workers.

Back in 2016, the LNP government had to be dragged kicking and screaming to pay the QNI workers their entitlements from the FEG scheme. Not only were the workers being let down by the company that employed them; they were also being let down by this LNP government. Whilst this government was refusing to pay workers, Labor's shadow minister for employment and workplace relations, Brendan O'Connor, and Senator Doug Cameron came to Townsville to meet with the former QNI workers. The differences in the commitment to workers could not have been more stark. The coalition had no real commitment to protecting these workers' entitlements. In fact, the best my predecessor could do was cry on television about it. No-one should ever forget that, when it comes to the FEG, this government's primary motivation is to reduce the fiscal cost to the Commonwealth, rather than having a true commitment to protecting workers' entitlements.

As the creators and guardians of workers' rights, Labor will do whatever it takes to protect the FEG, as it is essential to providing a safety net for Australians and it is essential to former QNI workers in Townsville. After many rallies held by Labor, the AMWU, the ETU and the AWU, the LNP finally released the fair entitlements to the QNI workers, but many of these workers have still not been paid their full entitlements.

That brings us to the bill before us today, the Corporations Amendment (Strengthening Protections for Employee Entitlements) Bill 2018. Once again, the current LNP government has enacted a bill after being brought to account by Labor. On 24 May last year, the shadow minister for employment and workplace relations, the shadow Assistant Treasurer and the then shadow minister for small business and financial services announced a suite of Labor policies to crack down on abuse by directors and the real problems associated with phoenixing in this country. One of those measures was that a Labor government would introduce an objective test for transactions depriving employees of their entitlements. Labor also announced that we would reform provisions for accessorial liability. This government bill adopts and implements those measures. I support the changes in this bill 100 per cent, as hopefully they will see a greater degree of recovery for employees who are owed entitlements. And hopefully the government will be able to use these new capabilities to recover more of taxpayers' money to replenish the thousands, indeed millions, of dollars currently being paid out under the FEG scheme.

This bill will strengthen the Corporations Act to better reduce the incidence of dodgy companies structuring their arrangements in a way that evades paying employees' entitlements and deliberately shifts liability for unpaid employee entitlements to the Commonwealth via the Fair Entitlements Guarantee scheme. The Corporations Act currently contains a criminal offence provision that covers what is commonly known as illegal phoenix activity—that is, where a director forms a company structure or enters into an agreement with the intention of avoiding having to pay workers their entitlements. Essentially, they walk away from their business, leaving employees without what is owed to them. Too often, the director or business just starts up again as a new company with no liabilities. While this criminal offence has been in the act since 2000, there has never been a conviction recorded. Labor announced in May last year that we would reform the criminal offence of deliberately avoiding employee entitlements to make it easier to prove and to make it easier to prosecute accessories. I'm pleased that the government has, more than a year later, adopted Labor's policy in this bill.

This bill will amend the Corporations Act to make it easier to prove the criminal offence of entering into an arrangement to avoid paying employee entitlements by including recklessness as a fault element; significantly increase the maximum fine for the offence of entering into an arrangement to avoid paying employee entitlements; introduce a new civil penalty provision for avoiding paying employee entitlements, with an objective reasonable person test; give the Fair Work Ombudsman, the ATO and the Department of Jobs and Small Business the standing to commence compensation proceedings to recoup moneys paid out via the Fair Entitlements Guarantee; extend liability for unpaid entitlements to a related corporate entity; and extend ASIC's power to disqualify directors and other officers, either directly or on application to the court, when they have a track record of corporate contraventions and inappropriately using the Fair Entitlements Guarantee scheme to pay outstanding employee entitlements.

Although Labor supports this bill, it could still be improved to give registered organisations standing to commence civil proceedings under the new provisions for compensation and the recovery of unpaid entitlements. At this point, it's worth noting that the increase in the financial penalty for the criminal offence is significant. At the moment, the penalty is minor in comparison to the monetary amount that many of these individuals and body corporates are squirrelling away into complicated mechanisms. The current penalty is 10 years of imprisonment or 1,000 penalty units, which equates to $210,000. The new penalties are for an individual to be imprisoned for 10 years or a fine of the greater of the following: 4,500 penalty units, which equates to $945,000; three times the total value of the benefits obtained by committing the offence or both. For a body corporate, it is a fine of the greatest of the following: 45,000 penalty units, which equates to $9.45 million; three times the total value of the benefits obtained by committing the offence or 10 per cent of the body corporate's annual turnover during the 12 months before the body corporate committed or began committing the offence.

The substantial increases in penalties are important, because unfortunately we are witnessing companies deliberately structuring their businesses and their arrangements to avoid paying workers' entitlements. The average annual cost under the FEG scheme has more than tripled from $70.7 million in the four-year period between 1 July 2005 and 30 June 2009 to $235.3 million in the four-year period between 1 July 2014 and 30 June 2018. According to the government, the startling fact behind these figures is that the increase in the FEG claims can be attributed to a small number of corporations shifting liability. The FEG was always designed to be there asking a safety net, as a guaranteed way that employees could be paid their entitlements in a timely manner and not wait for drawn-out processes before they were able to receive a cent. Hopefully, these substantial increases in penalties will reinforce the serious nature of these crimes and will also be a substantial deterrent for persons who may otherwise seek to engage in these evasive types of behaviour. It is also the case that the civil penalty provision will make it easier to hold directors and companies liable for avoiding liability for employee entitlements.

I'm happy to support this bill and subsequently Townsville workers. I only wish that this bill had been presented and legislated before 2015 and then hopefully this would have provided more support for former Queensland Nickel employees. It is timely to remember that although the FEG has provided a huge safety net for many workers and is paying the majority of entitlements to former QNI workers, there are still Townsville workers who have not received their full entitlements. There are people like John from Burdell, who still has not received $10,000 in entitlements. Laura from Burdell still has not received $7,000. Chris from Deeragun has still not received $15,000. Chris from Bushland Beach has not received $10,000. Cheryl from Mount Low has still not received $9,800. Peter from Kirwan still has not received $10,000. George from Kirwin still has not received $10,000. Glen from Gulliver still has not received $10,000. Nigel from Mundingburra still has not received $7,000. There is Peter, who has six children, and he told me personally that he still hasn't received $25,000 in entitlements.

These entitlements must be paid. I call on those responsible to pay these workers. I will not be threatened or intimidated into silence. I certainly won't be bullied into silence by an out-of-town billionaire. If the former member for Fairfax, Clive Palmer, thinks that he can bully North Queenslanders into silence, then he does not know North Queenslanders very well at all. The former member for Fairfax, Clive Palmer, is trying to revive his political career, like he's trying to raise Titanic II. But he is not fooling anyone. His barrage of advertisements won't work. They are instead a continual and painful reminder to the former QNI workers. Today I am happy to support this bill. I will always support a bill that will benefit workers and—as an extension of that—taxpayers, who will have their valuable tax dollars returned to them.

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